Dubai's new business license scheme to benefit existing and new companies at free zones
Dubai: The one license scheme for companies to operate out of one and more free zones in Dubai is turning out to be one of the biggest boosters for new businesses planning to launch in the UAE.
The scheme – called the Dubai ‘One Freezone Passport Initiative’ – is just as beneficial for existing businesses, according to consultancy sources. Put simply, a business with operations at more than one free zone in Dubai can now operate through a single unified license.
With the licenses being issued in days rather than weeks or months.
“The initiative may work for companies looking to split their locations based on infrastructure needs - i.e., (between) warehousing and office space,” said Muhammad Amir, Assistant Manager for Client Accounting at The Sovereign Group. “It may also benefit retailers looking to sell from multiple store locations.”
Dubai already allows businesses to have a single license to operate both from within a free zone and also on the mainland. Now, businesses can do the same from multiple free zones, if they so choose.
In July, Louis Vuitton, the luxury brand company, became the first to take the new One Freezone Passport Initiative. It operates a warehouse in Jebel Ali Free Zone while the corporate office is at One Za’abeel, part of DWTC Free Zone.
“By enabling businesses to expand seamlessly across our world-class free zones, we are reinforcing Dubai’s reputation as a premier investment destination,” Dr. Juma Al Matrooshi, Assistant Secretary-General at Dubai Free Zones Council, said in a statement at the time. “The swift and successful onboarding of Louis Vuitton through this program exemplifies the efficiency and attractiveness of Dubai’s regulatory framework for international businesses.”
Now, the new licensing option could also help when it comes to preparing for corporate tax requirements. Under UAE corporate tax code, businesses at designated free zones can operated at zero-rated tax if they meet the qualifying norms.
“It would allow a brand, theoretically, to have multiple branches under a single license - and only one tax registration,” said Amir. “So yes, it would simplify the tax regime and framework, but it does not automatically mean tax exemptions.
“If companies can navigate the free zone qualifying criteria and are able to make it a more tax efficient model, then we can anticipate further take up (for the Dubai One Freezone Passport Initiative). At this stage, our PROs (public relations officers) have indicated that government have not shared any specific information on what this initiative looks like in reality or as a mass market offering.”
According to consultants, free zone based companies that already have a high employee number typically incur more fees ‘due to the specific and limited space allocation of that free zone’.
So, ’being able to split their requirements across multiple free zones may be cost-effective’, said Amir.
The initial costs involved for businesses are in the Dh17,500 to Dh45,000 range, with ‘ongoing expenses for office space, visas, sponsorship, and compliance’, said Amit Anand, Head of Corporate Services at TASC Outsourcing.
“Dubai’s government is actively digitizing the entire licensing process - from submitting the application, tracking progress, and receiving approvals, everything can now be done online.
“The one freezone license program has received a positive response overall, as it significantly accelerates the process for obtaining business licenses for entrepreneurs and companies. Previously, approvals required lengthy waiting periods and multiple on-site inspections spanning several months.
“Under new system, applications for qualifying businesses can be processed and licenses issued in as little as one week.”
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