Who Is a Local Service Agent in Dubai and Why Do You Need One?

Foreign investors who plan to start a business outside Dubai’s or the UAE’s free zones need local sponsorship to run their businesses smoothly. This local sponsor can either be an individual UAE national or a UAE-based corporate entity known as a local service agent (LSA). According to Federal Law No. 2 of 2015, a company with a professional license must appoint a local service agent (LSA) to obtain a trade license on the mainland. 

Therefore, it is important to understand the role of an LSA in getting you to make the most of your business opportunities and earn profit. However, the rules about sponsorship of a local service agent can be difficult for new entrepreneurs and investors.

In this article, we explain why businesses need local service agents and how Now Consultant can provide foreign investors with local sponsorships at an affordable cost to empower their businesses in the UAE.

Who Is a Local Service Agent?

In the UAE, a local service agent must be an Emirati national to help set up business activities for sole proprietorships, civil businesses, or branch offices. They act as a company representative but do not receive a share of the profits. However, they are paid a fixed annual fee through a commercial contract for their services.

In Dubai, local service representatives are primarily responsible for the link between their employers and government bodies. In Dubai, a local service agent handles all the arrangements and schedules meetings with government officials and regulatory bodies on the company’s behalf.

What Does a Local Service Agent Do? 

A local service agent performs certain tasks for your business in Dubai. While they have no legal or financial responsibilities to the company, they must provide the services for which they were hired.

Here are the main responsibilities of a Local Service Agent in Dubai:

• Act as a link between the employer and authorities, such as the labor and immigration ministries.
• Ensure the smooth operation of the employer’s business.
• Handle government matters related to licenses, visas, and approvals.
• Attend meetings with regulatory bodies on behalf of the company.
• Address and resolve any issues that arise.
• Avoid interfering with the company’s management and daily operations.
• Be clear about the terms of their contract and service fees.

When Do You Need a Local Service Agent?

Federal Law No. 2 of 2015 requires you to appoint a local service agent to represent your business with authorities for professional licenses registered in that emirate’s DED. This agent acts as an Emirati representative but does not make decisions or influence your business’s capital. 

The local service agent provides their services at a fixed annual fee. In this case, the foreign investor owns all the company’s shares, so the local service agent has no authority within the organization.

What Are The Benefits of Local Service Agents in Dubai?

In the UAE, starting a business can be tough due to its dynamic rules and regulations. A local service agent can simplify the business setup process significantly.

The following are the benefits of hiring a local service agent in Dubai:

• Time-Saving: A local service agent can save you significant time by handling affairs with government and regulatory bodies on behalf of your company. You can spend more time running your business to achieve success.
• Accelerated Process: An experienced local service agent can speed up obtaining licenses, visas, and approvals due to their familiarity with the process.
• In-Time Documentation: A local service agent handles all the documentation for licenses and approvals in time, which reduces the chances of errors and mistakes.
• Contract Basis: The local service agents are hired on a contractual basis, and you will not have to pay if they do not fulfill their responsibilities.
• Networking Opportunities: Local service agents can connect foreign entrepreneurs with their wide network of business contacts, opening doors to strategic partnerships, collaborations, and new opportunities.
• Regulatory Compliance: The UAE’s legal and regulatory framework is dynamic in nature. Local service agents help foreign business owners stay updated with these changes, ensuring they comply with laws and regulations. This helps avoid penalties and legal issues and protects the company’s reputation.

What Is The Cost Of Hiring a Local Service Agent In Dubai?

The annual cost of hiring a local sponsor is around 8,000 AED. However, before finalizing the payment, you should consider several factors, including:

Here’s a simplified version:

• The kind of business you are starting with the help of a local service agent.
• The extent to which the local sponsor helps with administrative procedures and formalities.
• The involvement of local service agents in daily operations.
• How long will the partnership last with the local service agent?

Now Consultant provides local sponsorship management services to meet the demands of your business in compliance with the government regulations across the UAE.

Activities That Require a Local Service Agent In Dubai:

In Dubai, the following activities need a local service agent, such as:

1: Set up a Sole Proprietorship or Civil Company

A local service agent is required when foreign entrepreneurs or investors set up a sole proprietorship or civil company in the UAE. This requirement ensures that their businesses follow UAE laws and regulations.

2: Licensing Procedures

To start a business on the mainland in Dubai, you need a trade license, which involves a complicated legal process. A local service agent (LSA) simplifies the legal licensing procedure by handling all the paperwork and dealing with government agencies.

3: Liquidation of Trade License

If you want to cancel your trade license, you require the assistance of a local service agent. The local service agent makes sure the liquidation process goes smoothly and meets local regulations.

4: Visa Applications

Local service agents are needed to handle employee and investor visas. They work with immigration and labor departments to manage all visa paperwork and procedures.

5: Dealing with Government Departments

Whether you are registering with the DED, applying for permits, or dealing with other government departments, a local service agent ensures everything goes smoothly and adheres to government laws and regulations.

6: Branch Office Operations

Foreign companies who are interested in opening a branch office in Dubai must hire a local service agent. Although the foreign company keeps full ownership, the agent assists with setting up the office and manages all government-related tasks.

How Can We Help You?

A local service agent (LSA) is mandatory and plays a significant role in your business on the mainland in the UAE. The choice of LSA (an individual or a corporate entity) depends on your business conditions and activities. At Now Consultant, we offer local sponsorship management services to meet the demands of your business in compliance with government regulations across the UAE. 

We provide a special power of attorney to foreign investors as they do not need to rely on a UAE national sponsor. We provide a memorandum of understanding (an agreement with a local service agent) to safeguard the profits and shares of business owners. This way, we can help entrepreneurs to incorporate and grow their businesses in the UAE.

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