Dubai has recently introduced significant changes to how free zone companies can operate within the emirate. On March 3, 2025, His Highness Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council, issued Executive Council Decision No. 11/2025 on the Regulation of Free Zone Establishments Practicing their Activities within the Emirate of Dubai.
This new regulation creates a clear framework for free zone companies looking to expand their operations beyond their designated free zones, potentially opening new business opportunities while maintaining many free zone benefits.
What’s the Purpose of This Decision?
The decision aims to:
- Regulate how free zone companies can conduct business outside their free zones but within Dubai
- Create clear licensing pathways for different operational models
- Ensure proper compliance with both federal and local legislation
- Maintain proper financial and regulatory oversight
Who Does This Affect?
This decision applies to all establishments wishing to practice activities outside any free zone in Dubai, with one notable exception: financial establishments licensed to operate in the Dubai International Financial Centre (DIFC) are exempt from these regulations.
Three Ways to Operate Outside the Free Zone
The Department of Economy and Tourism now offers three pathways for free zone establishments to operate outside their free zones:
- Branch License within Dubai: A full branch office established outside the free zone
- Branch License with Headquarters in the Free Zone: A branch that maintains its headquarters within the free zone
- Temporary Activity Permit: A six-month permit to conduct specific activities outside the free zone
Key Requirements for All Options
Regardless of which option a company chooses, there are several consistent requirements:
- Obtaining prior approval from the free zone licensing authority
- Maintaining valid free zone licenses
- Securing any necessary approvals from relevant government authorities
- Complying with all applicable federal and local regulations
- Maintaining separate financial records for activities conducted outside the free zone
Fee Structure
The Department has established the following fee structure:
- AED 10,000 annually for a branch license with headquarters in the free zone
- AED 5,000 for a temporary permit to practice activities within Dubai
Workforce Considerations: A Major Benefit
One of the most significant advantages in this new regulation is that establishments operating outside the free zone under these new licenses or permits can continue using their workforce registered on the free zone’s website. This means they can maintain the employment and visa benefits typically associated with free zone operations.
Timeline for Implementation
Companies currently operating outside their free zones have a one-year grace period to adjust their status to comply with these new regulations. The Director General of the Department of Economy and Tourism has the authority to extend this period by up to one additional year when necessary.
What Activities Can Be Practiced?
Within six months of the decision’s implementation, the Department of Economy and Tourism, in coordination with licensing authorities, will issue a comprehensive list of economic activities that establishments may practice within Dubai under each type of license or permit.
How CBC Corporate Services Can Help
As these new regulations take effect, companies will need expert guidance to navigate the application processes, ensure compliance, and maximize the benefits of these new operational opportunities. At CBC Corporate Services, we specialize in helping businesses optimize their corporate structures in Dubai’s dynamic regulatory environment.
Our team can assist with:
- Assessing which licensing option best suits your business needs
- Preparing and submitting all required documentation
- Facilitating approvals from free zone and other regulatory authorities
- Ensuring compliance with separate financial record-keeping requirements
- Guidance on maintaining workforce benefits
Conclusion
Executive Council Decision No. 11/2025 represents a significant development in Dubai’s business landscape, providing new flexibility for free zone companies while maintaining appropriate regulatory oversight. As the implementation proceeds and the list of permitted activities becomes available, businesses should be proactive in understanding how these changes can benefit their operations.
For more information on how CBC Corporate Services can help your business navigate these new regulations, visit www.cbccorporateservices.com or contact our team of specialists.
