Starting a business in Dubai is one of the best decisions for entrepreneurs who want to expand into the Middle East. The UAE offers global connectivity, a tax-free environment, and a thriving economy, but many people get confused about one question:
Do you really need a local sponsor to start a business in Dubai?
Let’s clear that up!
What Is a Local Sponsor in Dubai?
A local sponsor (also called a local service agent) is a UAE national who partners with a foreign entrepreneur to help them set up a business in Dubai’s mainland jurisdiction.
Previously, it was mandatory for expats to have a local sponsor owning 51% of the company shares. However, in recent years, Dubai’s business laws have evolved and the rules are now much more flexible.
When Do You Need a Local Sponsor?
You only need a local sponsor if you are setting up a mainland company under specific professional or commercial activities that require local participation.
For example:
- Certain professional services (legal, auditing, etc.)
- Activities that are strategic to the UAE economy
- Government contracting or security-related businesses
In these cases, a UAE national acts as your service agent, but you retain 100% operational control and profit.
When You Don’t Need a Local Sponsor
Here’s the good news:
You don’t need a local sponsor if you choose one of the following options:
- Free Zone Company Setup
Free Zones like IFZA, DMCC, Meydan, and Dubai South allow 100% foreign ownership.
You can run your business, open a corporate bank account, and even apply for visas, all without needing a local sponsor.
Free zones are perfect for:
- E-commerce and online businesses
- Marketing, media, and consultancy services
- Tech startups and international trading
- 100% Foreign Ownership (Mainland)
As of the UAE’s Commercial Companies Law (2021), most mainland businesses can now be fully owned by foreign investors.
That means you can register your company under your name without giving up any equity, depending on your activity type.
Local Sponsor vs. Free Zone – Which Is Better?
| Feature | Mainland with Local Sponsor | Free Zone (No Sponsor Needed) |
| Ownership | 100% foreign in most cases (or 51–49 for few activities) | 100% foreign ownership |
| Business Scope | Can trade anywhere in UAE | Limited to Free Zone or through a distributor |
| Office Requirement | Mandatory | Optional (Flexi-desk available) |
| Visa Eligibility | Unlimited (based on office size) | Limited (based on package) |
| Setup Cost | Higher | More affordable |
Pro Tip:
- If your goal is to trade across the UAE, go for Mainland.
- If you want full ownership and low-cost setup, choose a Free Zone.
Not sure which fits you?
That’s where JPI Services helps, we guide you step-by-step to choose the right setup based on your business goals.
So, do you need a local sponsor to start a business in Dubai?
Not always.
With Dubai’s new regulations, most businesses can now enjoy 100% foreign ownership, especially in Free Zones and certain mainland activities.
The key is to choose the right jurisdiction, license type, and activity for your business.
Ready to start your company in Dubai?
At JPI Services, we make business setup simple, fast, and transparent, whether you’re going Mainland or Free Zone.
📞 Contact us today for a free consultation and find out which setup is right for you.
