Regulation of Free Zone Establishments Practicing their Activities within Dubai

The Dubai Executive Council recently issued Decision No. 11 of 2025 on 3 March 2025 (the Decision), which enables free zone companies to practice their activities outside their designated free zones and within mainland Dubai.

This Decision aims to streamline the process and ensure compliance with federal and local legislations. It supports the Dubai Economic Agenda (D33), which seeks to double Dubai’s economy by 2033 and to position the city among the world’s top economic cities.

Key Provisions

Scope of Application: This Decision applies to all free zone companies that are wishing to carry out their activities outside their designated free zones. This excludes financial companies that are licensed to operate in the Dubai International Financial Centre (DIFC).

Licensing and Permits: Establishments can now practice their activities outside the free zones by obtaining specific licenses or permits from the relevant authorities and in particular the Dubai Department of Economy and Tourism (DET). These include: (i) a license to establish a branch of the free zone entity within the Emirate of Dubai; (ii) a license to establish a branch of the free zone entity within the Emirate of Dubai with its headquarters in the relevant free zone; and (iii) temporary permits to carry out certain activities within the Emirate of Dubai which are valid for up to six (6) months.

The duration of the licences mentioned at (i) and (ii) is one (1) year, renewable for similar periods.

Free zone companies must also obtain the relevant consents and approvals of any other UAE regulatory authority which regulates the business activity that the free zone company wishes to conduct in mainland Dubai.

Compliance Requirements: Free zone companies will be required to adhere to the relevant federal and local legislations, and they must ensure that separate financial records are maintained for any activities that are conducted outside the designated free zone.

Activities List: It is expected that the DET, along with the relevant licensing authorities, will release the list of commercial activities which may be carried out by free zone companies in mainland Dubai within the next six (6) months.

Workforce: Free zone companies are permitted to use their workforce registered in the relevant free zone for activities within mainland Dubai which will help companies to optimise their human resources.

Fees: The annual fees for the license to establish a branch with its headquarters in the relevant free zone as well the renewal of this license will be AED10,000 annually. The fees for obtaining a temporary permit allowing a company to practice activities in mainland Dubai as well as the renewal of this permit will be AED5,000 annually.

Transition Period: Companies currently practicing activities outside the free zones must adjust their status to comply with the new regulations within one (1) year from the implementation of the Decision. This transition period allows businesses to adapt to the new requirements without disrupting their operations.

Conclusion

The issuance of this new Decision will benefit free zone companies by allowing them to expand their market reach and customer base, fostering business growth. The licensing process has been streamlined and simplified, making it easier for companies to navigate regulatory requirements while still enjoying the advantages of being a free zone company.

For more information or assistance with the obtaining of the aforementioned licenses and permits, please contact our team.