In a significant move to enhance regulatory oversight and streamline business operations in Dubai, His Highness Sheikh Hamdan Bin Mohammed Bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council, on 17 March 2025 issued a new Executive Council Resolution No. (11) of 2025, regulating the operations of free zone establishments in Dubai (“Resolution”) governing free zone companies operating outside their designated zones.This initiative aims to make it easier for these businesses to expand operations within the emirate, fostering economic growth and flexibility.
Expanding Business Opportunities Beyond Free Zones
The Resolution allows any company or institution licensed by a free zone authority to operate outside the free zone and within Dubai, provided they obtain the necessary licenses or permits from the Dubai Department of Economy and Tourism (DET). However, the regulation does not apply to financial institutions licensed to operate within the Dubai International Financial Centre (DIFC).
This measure marks a significant step in enabling free zone businesses to expand seamlessly beyond their designated areas while ensuring compliance with Dubai’s economic regulations.
This blog is a part of our General Corporate and Advisory Services .
Key Provisions of the Resolution
The Resolution outlines the following key aspects:
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- Free zone entities must obtain special approvals if they wish to operate outside their designated areas to establish a branch within our operate under a special activity permit. Relevant authorities will determine the specific nature of these permissions, ensuring businesses align with Dubai’s legal and economic policies. These licenses are renewable annually.
- Companies will be required to adhere to Dubai’s general business regulations, in addition to free zone-specific requirements. This ensures uniformity and transparency across all business activities in the emirate.
- Companies operating outside their free zones must maintain separate financial records for activities conducted in mainland Dubai. Additionally, they must comply with all relevant federal and local regulations.
- The DET, in coordination with the licensing authority, will issue a list of economic activities permissible for free zone entities operating in Dubai within six months. Businesses licensed under this Resolution will also be subject to inspection to ensure compliance.
- Businesses failing to comply with the new regulations may face penalties, restrictions, or revocation of their business licenses.
- The Resolution aligns with Dubai’s D33 agenda, which aims to double the city’s economy to AED 32 trillion ($8.71 trillion) over the next decade. The plan supports 30 private companies in becoming unicorns (startups valued at over $1 billion) and aims to establish Dubai among the top three global cities.
Impact on Free Zone Businesses
This Regulation is expected to bring about greater transparency and accountability in Dubai’s business environment. The main aim of introducing this Resolution was to align with the goals of the Dubai Economic Agenda, D33, to double the size of Dubai’s economy in the decade up to 2033 and consolidate its position among the world’s top three economic cities.
It provides a structured approach for free zone entities looking to expand operations outside their designated areas while maintaining alignment with Dubai’s overall economic policies.
For businesses, this means clearer guidelines on expansion opportunities, potential new licensing requirements, and a more harmonized business ecosystem. Companies currently operating outside their designated free zones without proper approvals should take immediate steps to ensure compliance with the new regulations.
Industry experts have welcomed the Resolution as a progressive step toward making business operations more seamless in Dubai. Paul Bryson, Managing Director of Virtuzone, commented, “While companies have previously been able to establish mainland branches from free zones, restrictions on certain commercial activities, particularly those involving physical goods trading, have posed challenges. The natural next step would be to enable corporate migration between the various jurisdictions within the UAE, further enhancing business flexibility and economic growth.”
The issuance of this Resolution by Sheikh Hamdan bin Mohammed reflects Dubai’s commitment to fostering a business-friendly environment while ensuring regulatory compliance. Businesses are encouraged to review their operational strategies and seek necessary approvals to align with the new legal framework. This initiative aligns with the city’s ambitious D33 Agenda to create a dynamic business ecosystem, guided by its visionary leadership, to further elevate the competitiveness of the city’s thriving business sector and improve efficiency for local and global businesses.
As the regulatory landscape evolves, staying informed and proactive will be key for companies to continue thriving in Dubai’s competitive market. For further details, businesses are advised to consult with relevant free zone authorities or legal experts to ensure full compliance with the new regulations.
Stay tuned to our blog for more updates on business regulations and investment opportunities in the UAE.
