Do you work for or own one of the 60,000 enterprises in the UAE that have a free zone licence? If that’s the case, you’re already aware of all the advantages of operating from a free zone, such as zero income tax and 100 per cent foreign ownership. In most cases, establishing a free zone gives you access to everything you need to run your business. However, free zone businesses may feel compelled to open an office on the mainland for a variety of reasons:
- Give their employees more opportunities to work and expand their company’s footprint.
- On the Dubai mainland, represent their interests.
- Take advantage of lower office renting expenses on the UAE mainland.
- Closer contact with customers
Being established in a free zone, on the other hand, usually limits your capacity to do business with the mainland. So, know the process to rent an office on Dubai’s mainland while maintaining your free zone status.
What Exactly is a Designated Zone?
A designated zone is a specific geographic area in the United Arab Emirates that qualify for VAT reasons as being outside the UAE. Companies headquartered in designated zones, often known as gated zones (because they are normally in a fenced-off region with their customs regulations), are exempt from paying VAT in the UAE on certain commodities. These zones must keep track of items and persons as they enter and exit the area, as well as follow a variety of rules and internal procedures for storing and processing goods.
Working in a designated zone has the obvious advantage of eliminating the need to pay VAT on a variety of products and materials. This can be a particularly appealing choice for enterprises involved in manufacturing, logistics, and international trade because it avoids the UAE’s 5% VAT.
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The problem with designated free zones, however, is that they limit your capacity to do other things, such as open a mainland office. Most types of services are still subject to VAT for companies operating in specified zones, and there are extensive restrictions governing which commodities are VAT-free and which are not. As a result, selecting a defined zone is only useful for specific sorts of businesses.
In the United Arab Emirates currently, there are 45 free zones, nearly half of which are declared free zones. Therefore, choose the meydan free zone to know the strategies to build a successful business entity in Dubai.