New Dubai free zone rule clears way for 'more' business activities on Mainland
Dubai: Allowing more business activities on the mainland by free zone based companies in Dubai will be the single biggest incentive through the new incentives announced by the Dubai Government. The move assumes extra significance given that the UAE now has a corporate tax regime.
A second big boost would be if other emirates too allow free zone enterprises to launch multiple business activities through a branch on the mainland.
Now that free zones are allowed to open branches on the Dubai mainland, any physical presence inconvenience is also eliminated. But they would be required to maintain independent records for tax purposes
Dubai for some years has allowed businesses in the free zone and mainland to operate on a unified license. The latest announcement scales up possibilities for businesses, especially new entrants, to opt for. But with the UAE announcing that enterprises in the country will come under the corporate tax, it led businesses with free zone and mainland operations to wonder whether they would have to repurpose these operations.
Now, the latest Dubai initiative should help smooth out the process.
Dubai is adding more flexibility and scope for free zone companies to expand business in UAE mainland but this comes with a caution considering the corporate tax regime now in place in UAE,
What Dubai DET needs to do next
The DET, in collaboration with the licensing authority, is required to publish a list of economic activities that companies are permitted to undertake in Dubai within six months. This will rely on if they possess a branch license in the emirate, a branch based in the free zone, or a permit for particular activities.
1-year relief period
All businesses functioning outside the free zone and in the emirate of Dubai are required to adhere to the new regulations within one year of its implementation date. (The Director-General of the DET may, if necessary, prolong this duration'Await clarifications
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