Foreign investors eyeing 100% ownership in their companies go for the free zones while initiating the process of business setup in Dubai. Although the free zone company formation in Dubai comes with the benefits of total repatriation of profits and access to world-class infrastructure, the inability to operate on the mainland remained to be a major snag. However, over the years, many free zones in Dubai introduced the system of Dual Licensing that allows the companies operating in the free zones to extend their operations to the mainland without leasing additional office space or having a local shareholder.
At present, the companies operating in the free zones Dubai Design District, DMCC, DAFZA, DWTC, and DIFC can apply for a Dual License in Dubai subject to certain conditions. The dual license mainly enables the free zone investors to set up consultancy companies in the mainland as there are many restrictions on activities. Foreign investors who are keen to know about the conditions and restrictions on activities related to the Dual Licensing are advised to seek the assistance of the best business setup consultants in Dubai before proceeding with the application. This article provides the free zone business owners with detailed guidance on Dual Licenses and how the initiative is transforming the evolving business landscape of Dubai.
The Dual License in Dubai: What is It?
The Dual Licensing initiative was introduced by some of the best free zones in Dubai in partnership with the Department of Economic Development (DED) to enable the free zone companies to operate in the mainland without renting an office space in the mainland. The mainland division of the free zone company under the Dual License is structured almost like a branch company set up in Dubai. The companies operating in the free zones do not need to appoint a local sponsor while availing the Dual License in Dubai mainland as the free zone itself acts as the National Service Agent (NSA) or sponsor.
The NSA will not have a shareholding right in the company’s mainland branch under the Dual License and will only function as the representative of the company. The NSA’s area of responsibility is limited to administrative and immigration matters. Consider availing the services of the best business setup consultants in Dubai for expert advice on the legalities of the Dual License system.
Conditions for Initiating Process of Dual License Business Setup in Dubai
Not all the free zones in Dubai provide the Dual License and therefore a company can establish the mainland presence if the free zone in which it operates has an agreement with the DED to provide the Dual License. Also, the companies cannot undertake all the activities under the Dual License. The following are some of the restrictions that the companies should be aware of before initiating the process of business setup in Dubai mainland under the Dual License:
- Only a selected few activities are allowed
- Activities should match with the activities of the parent company in the free zone
- Retail, trading, and Industrial activities not allowed
- Special activities that require external approvals not allowed
- The free zone companies can set up consultancy businesses in the mainland with a dual license
Can the Companies Hire Employees under Dual License?
Currently, the companies in the free zones are not allowed to hire employees in their mainland branches under the dual license company formation in Dubai. The Dual License Branches cannot register with the Ministry of Labour and therefore the hiring of staff and labour card issuance is not possible. The companies are only allowed to employ their staff within the free zone company itself the employees could hold only the free zone resident visas. This also means that the office space of the free zone company should be able to accommodate the new staff members. Consult with the best business setup consultants in Dubai to gain further insights into setting up a Dual License branch for the free zone companies.
Potential Benefits of Obtaining a Dual License
With a dual license, the companies operating in the free zones can access the UAE market without setting up a branch in Dubai mainland. The companies only need a DED license to operate in the mainland and this significantly cuts the costs and time for business setup in Dubai mainland. Apart from this, the following are some of the other benefits the free zone companies can have by setting up a Dual License branch in Dubai mainland.
- Chances for more business opportunities in the mainland market
- Save costs on renting additional offices space
- Cut costs on overall accounting, administrative, and operating expenses
- 100% ownership on mainland entity
Seek Advice from Best Business Setup Consultants in Dubai
The Dual License offered by the top free zones in Dubai enables the companies operating in the respective free zones to extend their operations into the mainland. The beauty of this License is that the companies can operate as a branch without requiring an office space in the mainland. Since the free zone acts as the NSA, the requirement of local sponsorship is eliminated giving rise to the benefit of 100% ownership. What makes the Dual Licensing option truly attractive to foreign investors is that they can enjoy the benefit of accessing the mainland market.
However, since there are certain restrictions on the activities and other requirements, the free zone investors would require the need of experts who are experienced in helping out companies with the process of business setup in Dubai. Here is where the services of prominent business setup consultants in Dubai such as Jitendra Business Consultants (JBC) become indispensable for the investors. JBC’s company formation specialists in Dubai assist the investors with the legal requirements they should meet to obtain a Dual License.