Can Dubai Companies operate across multiple categories?

As a business hub in the Middle East, Dubai implements a policy of supporting cross-category operations in order to meet the diversified development needs of enterprises. Whether it is a local mainland company, a free zone company, or a company operating on a special license, it can conduct business across multiple categories under the premise of compliance.

Policy Framework: Free Zones and Native Firm Differentiation Rules

1. Free zone companies: flexibility and restrictions coexist

dubai's free zones (such as DMCC, DIFC, JAFZA, etc.) take "100 per cent foreign ownership" and "tax incentives" as their core advantages, but their scope of business is limited by the free zone positioning and industry list:

industry Coded Classification: The Dubai Department of Economic Affairs (DED) divides its business scope into major categories such as trade, services, and industry, with specific sub-categories.

Cross-class operating costs: If an enterprise needs to engage in trade and services at the same time (e. g. "electronic product sales + technical consulting"), it may need to apply for multiple licenses, increasing the cost of registration and annual fees. However, some free zones (such as IFZA) allow each license to cover 3 cross-industry activities at no additional cost.

Local Market Access Restrictions: Free Zone companies that need to do business in the UAE's local market must go through a local agent or registered branch and comply with the local scope of business.

2. Local Company (LLC): Breaking through the boundaries of free zones

A limited liability company (LLC) registered in Dubai can directly serve the UAE market, subject to the following conditions:

industry access: Some industries (e. g. oil, finance, legal services) still require special approval from local partners or governments.

Scope flexibility: LLC can apply for a broader scope of business, subject to compliance with the UAE Business Companies Act and industry regulatory requirements.

Risk Avoidance and Compliance Points

1. Industry qualification and pre-approval

special industry restrictions: medical, education, finance and other fields need to obtain permission in advance from federal or local authorities.

Notarization of qualification documents: if the shareholder is an overseas company, the business license, board resolution and other documents shall be notarized to avoid delay in registration due to defects in the documents.

2. Tax compliance and financial accounting

value added tax (VAT) management: Cross-category operations may involve different tax rates (e. g. standard rate of 5%, zero rate). Enterprises need to establish a classified accounting system to ensure accurate tax returns. For example, exports are subject to zero tax rates, but logistics documents are retained for audit purposes.

Enterprise income tax optimization: If a free zone enterprise engages in local market transactions, it is required to pay 9% enterprise income tax according to the federal tax law (the portion of annual profit exceeding 375000 dirhams). Businesses can seek tax exemptions through "substantive operations" planning (e. g. hiring local staff, leasing physical offices).

3. Localization and cultural adaptation

language and legal adaptation: contracts, trademarks and other documents should be provided in Arabic to avoid disputes caused by language ambiguity.

Employment compliance: The UAE has implemented a "localization policy" that requires private companies to gradually increase the proportion of UAE employees. Free zone enterprises are not subject to this restriction for the time being, but are subject to the provisions of the UAE Labor Law on working hours, annual leave and dismissal compensation.

Zhuoxin Enterprise provides agency services such as domestic and foreign company registration, bank account opening, annual tax return, agency bookkeeping, trademark registration, ODI Overseas Investment Filing, etc. If you have any business needs in this area, please feel free to consult our online customer service!