Dubai allows free zone firms to expand mainland operations

Dubai has announced new rules that will allow companies based in free zones to expand their business activities on the mainland. This change is seen as a major incentive for businesses, especially in light of the UAE's new corporate tax. Currently, free zone companies can have branches on the mainland, but they faced restrictions when applying for licenses for different activities. Atik Munshi, a managing partner at a consultancy, explained that the Department of Economy and Tourism (DET) in Dubai will now begin issuing updated branch licenses, making it easier for businesses. This announcement is significant for both new and existing businesses. It raises the potential for more companies to operate across both free zones and the mainland under a unified license. The new corporate tax regime had previously caused some uncertainty for companies operating in both areas. With the latest initiative, the process should be smoother for these businesses. Under the UAE corporate tax law, companies in designated free zones can benefit from a 0% tax rate, while others pay a 9% tax. However, certain conditions must be met to qualify for the tax benefits. Munshi noted that many trading companies operate with low profit margins and rely on high volumes, making free zones a good fit for them. The DET is expected to issue a list of acceptable business activities in Dubai within six months. This will depend on the type of branch license a company holds. Overall, these changes aim to enhance the business environment in Dubai.