Dubai Fact-File Part 1:
Business Formation for Individuals

1.8 Dubai Family Business Ownership

Types of ownership structure for individuals in business: As taxation in Dubai isn’t an issue for an individual or a company, the choice of business structure is likely to have more to do with the ease of running the business than the tax treatment of profits.

As in most countries, the creation of a sole establishment (by a sole proprietor) is the most straightforward form of business and is ideal for someone working alone. A business licence is still required, as is a local sponsor but once all this has been set up, actually conducting business is relatively light on red tape.

The establishment of a Limited Liability Company (LLC) is also an option, although an UAE partner prepared to assume at least 51% of the equity is almost always required (except for operations locating in the free zones). The requirement for a minimum level of capital at start-up has been removed, however, making the establishment of such a business a somewhat easier proposition.

In terms of partnerships, there are several forms of partnership available, although restrictions are imposed on who can participate. Common forms include:

A General Partnership, which can be formed by two or more UAE nationals who are jointly and severally liable for its debts. This form is not normally permitted for foreigners.
A Limited Partnership, which is comprised of one or more partners who are jointly and severally liable for the debts of the partnership. This business form must also have at least one partner who is liable for debts only to the share of his or her capital contribution. All general partners must be UAE nationals.
A Partnership Limited by Shares, which can have a mix of partners with unlimited liability and partners whose exposure to the debts of the business is limited by their share capital ownership. General partners must be UAE nationals, but participating partners (ie having an active role in the business) may be foreigners.