The free zones of the United Arab Emirate are one of the country’s biggest economic success stories. Since the first free zones emerged in the 1980s, they have boosted the UAE’s business environment by encouraging massive amounts of entrepreneurialism and intriguing chances.
According to an article in Arab News, the UAE had over 60,000 free zone enterprises registered in 2021, up 4.4 per cent from the previous year. This demonstrates the popularity of Dubai free zones.
So, if you’re planning to launch a business in a Dubai free zone in 2022, read our blog to learn everything you need to know.
What is the distinction between the mainland and a free zone?
The majority of Dubai’s enterprises are located on the mainland or in a free zone. So, how do these two choices differ?
- Business in the Dubai mainland
In Dubai, a mainland firm is simply an onshore corporation that has been granted a licence by the Department of Economic Development (DED). All mainland enterprises in Dubai are free to trade anywhere in the UAE and worldwide. On imported goods, you’ll also have to pay a 5% customs fee.
- Businesses in the Dubai Free Zone
There are numerous well-known free zones in Dubai, which are designated places where enterprises can take advantage of special benefits. These benefits include no income tax, no customs duty, and 100 per cent foreign ownership without the need to find a local partner.
Enterprise in meydan free zone can deal with other free zone businesses worldwide, but they are not permitted to trade directly with customers in Dubai or the UAE mainland.
Can enterprises from free zones do business on the mainland?
Yes, some free zone enterprises can do business on the mainland of Dubai, but they must first obtain the proper free zone approvals. For specific business activities, companies can obtain a no-objection certificate (NOC), which allows them to open an office anywhere on the Dubai mainland. They should contact their respective free zone to see if their selected business activity qualifies for this incentive.
However, numerous free zones on Dubai’s mainland do not allow direct business. They are only allowed to trade with other enterprises in the same free zone or globally. Noncompliance can result in fines of up to 100,000 AED.
If you are established in a free zone and want to trade with the mainland, you must contact the Dubai DED, fill out an application, and pay costs.
