Dubai has introduced a new regulation for companies operating in free zones, allowing them to expand their activities within the wider emirate. Under this new rule, any company licensed by a free zone authority can now operate outside its designated zone, provided it secures the necessary permits from the Dubai Department of Economy and Tourism (DET). This move is part of a broader effort to facilitate business growth and integration across Dubai.

Sheikh Hamdan bin Mohammed, Crown Prince of Dubai and Chairman of the Executive Council, announced a new regulation aimed at simplifying the expansion process for free zone companies beyond their designated zones. The regulation, however, does not apply to financial institutions licensed within the Dubai International Financial Centre (DIFC).

Key Highlights of the Resolution:

• Free zone companies can now operate in mainland Dubai by obtaining the necessary licenses from the Dubai Department of Economy and Tourism (DET).
• Financial institutions licensed under the Dubai International Financial Centre (DIFC) are exempt from this resolution.
• Companies must adhere to federal and local laws and maintain separate financial records for mainland and free zone operations.
• Firms wishing to operate outside Dubai must secure additional approvals from relevant authorities.
• The DET can issue one-year renewable licenses for free zone entities to establish mainland branches or conduct specific activities.

Supporting Dubai’s D33 Economic Vision

The initiative supports Dubai’s D33 vision, which aims to double the city’s economy to Dh32 Trillion ($8.71 trillion) by 2033 and position it among the world’s top three global cities. The plan also focuses on supporting 30 private companies to achieve unicorn status, fostering the growth of start-ups valued at over $1 billion. Dubai’s ambition is to become a leader in the global digital economy, a hub for sustainability, and a center for economic diversification.

Economic Growth and FDI Inflows

Dubai’s economy showed resilience, growing by 3.1% in the first nine months of 2023, with sectors like wholesale and retail trade, transport, storage, and financial services contributing significantly to the growth. Dubai has also solidified its position as the world’s top destination for greenfield foreign direct investment (FDI) projects, with a record-breaking 1,117 greenfield FDI projects worth AED 52.3 billion in 2023. This was a 33.2% increase from the previous year, marking the highest FDI inflows in Dubai’s history.

Implications for Business

This new regulation is expected to make business operations smoother and more flexible, helping free zone companies expand into mainland Dubai with ease. By simplifying the licensing process and offering greater operational freedom, the regulation is set to create new opportunities for businesses to tap into Dubai’s thriving marketplace.

The Road Ahead

As part of its ongoing commitment to supporting economic growth, the Dubai government is set to release further guidelines and a list of approved economic activities for free zone businesses. This list, due within six months, will help businesses navigate the regulatory landscape and ensure they are operating within the legal framework.

This regulation represents a vital step towards bolstering Dubai’s position as a global business hub, providing companies with the flexibility to grow and expand across the city. The changes will not only foster a more dynamic and integrated business environment but also contribute to Dubai’s long-term economic goals under the D33 vision.

In conclusion, with clearer guidelines and increased opportunities for expansion, the new regulation enhances Dubai’s business environment, making it even easier for free zone companies to venture into the mainland market and contribute to the city’s global competitiveness.