An increase in GDP, stable economy, and strategic geographical location has made Dubai one of the most favourable locations in the UAE. For setting up a business in Dubai, be it the mainland or any of the free zones in Dubai, one must have a license. Getting a dual license in Dubai is fast prevailing now and has become a subject of demand among business people and entrepreneurs.
Earlier, the Department of Economic Development (DED) did not approve of acquiring more than one business license in Dubai. You can now get a dual license by registering a business at Dubai Airport Free Zone Authority (DAFZA) or Dubai International Financial Centre (DIFC) and later applying at the DED for a business license.
Breaking-Down Dual Licensing
Dual licensing was long demanded by the companies in free zones, whose interest lay in operating in multiple enterprises and also have a wider outreach in the UAE market. Before the dual license was approved, these companies were allowed to operate only within the boundaries of the free zone they were registered in. They missed out on many opportunities to trade in one of the fastest-growing markets in the Middle East.
Now that the DED has approved the dual licensing, it will allow the authorities to ensure better governance and regulations. The DED will have the power to alter or add to the existing activities of the businesses. It will also enhance monitoring and joint inspection, which will, in turn, improve transparency and compliance with the free zones and prevent frauds.
Benefits of Getting a Dual License
- Increase in opportunities and business choices for commercial enterprises
- Less risk. One or another business will get successful based on the choice of your business category
- The Dual Licensing system in Dubai will bring abundant value to the economy of Dubai and the UAE
Which Freezones are Eligible for Dual License?
Such free zones have offered dual Licensing as Dubai Design District (D3), Dubai Airport Free Zone (DAFZA), Dubai International Financial Centre (DIFC) and all Abu Dhabi Free Zones (ADGM, ADAFZ, KIZAD, Twofour54 and Masdar) and the latest addition; Dubai Multi Commodities Centre (DMCC).
What are the Restrictions under Dual License?
Currently, the Dual Licence Branch from the Freezone will not be able to register with the Ministry of Labour; therefore, the mainland dual licence will not hire staff or issues labour cards and work permits. That means that all staff will still be employed within the freezone company and hold freezone resident visas only. This also means that office space will have to be larger in the Freezone to accommodate these new staff members; in some Freezone, this can significantly increase costs.
How Does Dual Licensing in Dubai Happen?
DAFZA and DIFC got under an MoU (Memorandum of Understanding) to promote and operate a business across Dubai. Looking at the increasing number of foreign investors wanting to establish multiple enterprises, the MoU agreement permitted them to operate across Dubai. The MoU is an attempt to intensify Dubai as an ideal commercial destination that supports flexible strategies to create an investment-friendly environment. It is also important to note what the MoU exactly mentions. It says that:
- The Department of Economic Development in Dubai could modify any exercise related to the licensing of corporations
- The dual licensing is approved only by the particular free zones
- The company incorporation related to any free zone and dual license would be ascertained by the Department of Economic Development adhering to the law
- The MoU is an endeavour to strengthen Dubai as an exemplary business destination and promote compliant approaches to build an investment-friendly environment
Dual licensing will enable more business opportunities for the businessmen in Dubai as it will widen their markets outside their free zone. With adherence to the basic laws established according to the DED, the business credibility will also sharp rise across Dubai. And with the amazing benefits that it carries along, dual licensing can help your business grow further. As we look at the business success in Dubai, it is now the right time to start. But the right techniques with the right assistance and guidance will also be needed for business setup. We at Commitbiz can help and assist you all the way to make your process of getting a license a bit easier. Do contact us for more information.
What are the benefits of holding a dual license?
Businesses operating in the free zones can access the UAE market without setting up a branch on the Dubai mainland.
What are the advantages of establishing a Dual License branch on Dubai mainland for free zone companies?
- Possibilities for further business prospects on the mainland
- Save costs on renting additional offices space
- Expenses for accounting, administration, and operations should be reduced.
- 100% ownership of a mainland company
What is the purpose of Dubai's dual licensing system?
The dual licensing system will bring significant value to Dubai's and the UAE's economies and attract foreign and international investors.
What are the essential stages in establishing a business in the Dubai freezone?
- Determine the legal entity's nature
- Select a trading name
- Make an application for a company license
- Choose an office location
- Get pre-approvals, register your company and obtain a license
Whether I need to pay any tax in freezone?
If you do not conduct any business activity on the mainland, it is not necessary to pay tax in the freezone
In a freezone, who applies for a 9% tax?
The 9% tax applies to freezone enterprises who gain financially from the mainland.