Dubai FZCO restrictions from doing business with mainland companies?

[discussionor]

Someone on the MGG mentioned that Mainland Dubai companies could make payments to FZCOs but I wasn't clear under what circumstances. I thought for example that FZCOs were precluded from doing business on the mainland, and hence payments for trade with the FZCO selling to a mainland company could be picked up by banks and raised as a red flag.

Does anyone have a FZCO which has sold for example ecommerce services to a mainland companies? If so any issues? I've heard that banks will reject/freeze payments that are not in line with the FZCO licence, hence my query.

 

[Gediminas]

Hey,

FZE might provide services to mainland companies, it should not be an issue, considering that the mainland is one of the clients (but not the only one).

Of course, VAT applies for such transactions. Basically, FZE can provide services to the local market as long as it is not required to have a physical place of business outside the free zone. Plus, we recommend setting up the mainland if the majority of the clients come from the local market. If it is just one of two clients, it is not an issue.

As regards local banks, they prefer to see as many as possible local transactions (both acquisitions and supplies), so it is more of an advantage in the eyes of the bank.

Hope this helps