Hamdan bin Mohammed Regulates Free Zone Firms Operating Outside Their Zones

Photo: Dubai Government Media Office

Dubai has introduced a new rule that will allow businesses operating in free zones to expand their activities beyond their designated areas. This decision was made by His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, who serves as the Crown Prince of Dubai and the Chairman of The Executive Council of Dubai. He has issued Executive Council Resolution No. (11) of 2025 to regulate the operations of free zone companies in the city.

This new resolution will apply to businesses that wish to operate outside the free zones. However, financial institutions licensed under the Dubai International Financial Centre (DIFC) are not included in this rule. The decision aligns with Dubai’s Economic Agenda, known as D33, which aims to double the size of the city’s economy by 2033 and strengthen Dubai’s position as one of the top three global economic cities.

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Under the new rule, any company that is licensed by a free zone authority can operate outside its designated area. However, they must first obtain the required licenses and permits from the Dubai Department of Economy and Tourism (DET). This move makes it easier for businesses to expand and operate in the mainland, contributing to a more dynamic and competitive business environment.

This decision is part of Dubai’s broader goal to create a thriving business ecosystem. The government wants to ensure that companies can easily set up and expand, making Dubai one of the best places for business and investment. The city has always been known for its business-friendly environment, and this new rule further enhances that reputation. It encourages new business activities, supports job creation, and promotes innovation, making Dubai an attractive destination for entrepreneurs and investors worldwide.

To ensure smooth operations, companies must follow all federal and local laws related to their businesses. They are also required to maintain separate financial records for activities conducted outside the free zone. If a company wants to operate outside Dubai, it must get the necessary licenses from the relevant authorities in that location and comply with their rules.

The resolution gives DET the authority to permit companies to operate outside free zones by issuing different types of licenses. Businesses can apply for either a branch license in Dubai or a license for a branch that has its headquarters within the free zone. These licenses are valid for one year and can be renewed annually. Additionally, businesses can get special permits for specific activities within Dubai.

The resolution also sets guidelines for obtaining branch licenses, getting permits, and hiring employees. DET, in coordination with licensing authorities, will release a list of economic activities that businesses can carry out under this rule within six months. The allowed activities will depend on whether the business has a branch license in Dubai, a branch linked to a free zone headquarters, or a special activity permit.

Any business operating outside the free zone must comply with this new rule within one year from the date it becomes effective. If needed, the Director General of DET can extend the deadline for compliance by another year.

Furthermore, businesses that receive a license to operate under this resolution will be subject to inspections to ensure they follow all local and federal laws. DET and other licensing authorities will work together to enforce these rules and ensure businesses meet all the necessary legal requirements.

With the introduction of this resolution, Dubai is reinforcing its commitment to supporting businesses and fostering economic growth. This step will make it easier for companies to expand, attract new investments, and contribute to Dubai’s long-term vision of becoming a global business hub. The resolution will officially take effect once it is published in the Official Gazette.