UAE markets are split into three economic zones or jurisdictions: the mainland, free zones, and offshore. mainland, free zones, and offshore Each jurisdiction has its own set of rules, as well as benefits and restrictions that are unique to it. Because of these differences, businesses based in Dubai free zones are unable to do business on the Dubai mainland.
Businesses operating in free zones are not allowed to engage in activities that are not within their authority. Before we can comprehend why this is the case and whether or not there is a method for Dubai free zone businesses to do business in Dubai mainland, we must first grasp the distinction between a free zone and the rest of the country.
What exactly is a “Free Zone”?
A free zone, often known as a free trade zone, is an economic territory that makes it simple to start a business in that area. It was decided to create the UAE free zones in order to boost foreign trade in the country. Foreign nationals may benefit from tax breaks as well as 100 percent ownership in free zones. Businesses operating in free zones may take advantage of the single-window simplicity provided by most free zones in Dubai and across the UAE.
What exactly is the Mainland?
In the United Arab Emirates, the mainland is the major portion of each of the seven emirates, and it is the jurisdiction that is more significant in terms of politics, economics, and demographics. Businesses and corporations based on the UAE’s mainland have less restrictions and are allowed to do business elsewhere in the country as well as globally. An onshore firm is a term used to describe a business based on the mainland. It is granted a licence by the Department of Economic Development (DED) of the emirate in which you want to establish your company.
Why is it not permitted for a Dubai free zone firm to do business on the Dubai mainland?
According to Law No. (13) of 2011, the Department of Economic Development (DED) in Dubai is the sole body authorised to grant trade permits for Dubai mainland commercial establishments within the jurisdiction of the United Arab Emirates. According to this legislation, no company is allowed to undertake economic operations in Dubai outside of the free zones unless it does so via a corporate organisation that has been licenced by the Dubai Economic Development Authority. It is possible to get a fine of up to AED 100,000 for breaking this legislation.
How can businesses based in free zones do business in Dubai?
Companies registered with free zone authorities are not permitted to do business on the Dubai Mainland, according to the rules of the jurisdiction. The majority of trade firms operating in free zones are entirely barred from doing business on the Dubai mainland. Certain professional pursuits, on the other hand, are allowed certain freedom.
If a free zone firm wishes to do business on the Dubai Mainland, it must first get the necessary permits and paperwork from the Dubai Department of Economic Development. Businesses in the free zone also have the option of partnering with a DED-licensed distributor in order to do business on the mainland. Additionally, free zone businesses may do business on the Dubai mainland via a civil company, limited liability corporation, or by setting up a branch office. Dubai Free Zone Companies
Our business setup experts can provide you with detailed information on whether free zone businesses are permitted to do business on the Dubai mainland. This group will walk you through the distinctions between operating a company on the mainland and in a free zone. They will also advise you on which jurisdiction is most appropriate for your company activity, offers you with the greatest development possibilities, and is also the most cost-effective.