If you read the regulations of every free zone, you come across with a clause or articles that states that as a free zone company you are allowed to operate only within that particular free zone. If you read the laws of mainland too, you will find an article that states that “You cannot operate a business on Mainland without having a special license from the concerned department”. So, can free zone company do business on the mainland in Dubai? Of course, there is no simple yes or no answer to this question, it all depends upon the business activity. You need to do a research specifically for your business activity before making any conclusion.
What is Free Zone?
So, let’s first discuss what is free zone? Free zone is a designated area where certain benefits are available for businesses. For instance,
- 100 percent foreign ownership
- No requirement of local partner
- No custom duty
What is Mainland?
A mainland company is an onshore company authorized by the Department of Economic Development (DED) of the relevant emirate which is permitted to do business in the local market as well as outside UAE without any restriction. In Mainland
- You need to have either local partner or local service agent
- Custom duty on Import goods
What are the Options for Free zones to Expand Their Business to Dubai’s Mainland?
Opening a Freezone company branch with DED
By registering their branch with the Ministry of Economy and the DED, a Freezone company may expand their business to the mainland. The division must engage in the same type of business as the parent company and must have the same name as the parent company. The branch will be wholly owned by the Freezone corporation and will use the parent company’s trade name. It is also necessary to appoint a local service agent in the UAE.
Note: It should be remembered that the local service agent plays no part in the branch’s business operations. A local service agent’s job is to make sure the branch will keep doing business in Dubai. They would not have any rights to the branch’s legal, management, company profit-sharing, or asset ownership.
Creating a Civil Work Company
A civil construction company has been founded to carry out skilled tasks. It may be owned by a foreigner or a foreign corporate organization (100 percent ownership) licensed in a Free zone as long as the corporate body’s activities are compatible with the Civil Work Company’s activities.
In the Civil Work Business, a UAE Local Service Agent (LSA) must be named. LSAs, unlike local sponsors, have no financial interest in your business.
Business organizations may approach the DED for the submission of an application form and payment of fees for the issuance of a company license that allows them to conduct mainland business operations. As a result, as your company expands, you’ll need to extend your geographic reach, and companies in the Freezones will take advantage of this opportunity.
