No free zone company across the UAE can conduct business within Dubai unless it has a Department of Economic Development (DED) licence or opens a branch in Dubai in accordance with the conditions stated in Law No. 13 of 2011 on business registration and licensing in the Emirate, DED restated on Monday.
Issued by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, the Law No.13 of 2011 is meant to enable Free Zone companies to open branches in Dubai while maintaining their presence in the Free Zone.
“Under no circumstances can a free zone company in Dubai operate outside its jurisdiction unless it has a branch licensed by DED. The same applies to companies in any free zone in the UAE. Alternatively, such companies may appoint an intermediary to sell their products or services in Dubai, but the intermediary should have a DED licence,” said Mohammed Shael Al Saadi, Chief Executive Officer of Business Registration & Licensing (BRL) Sector, DED.
Al Saadi issued the clarification after reports in certain online media and subsequent enquiries on a Free Zone company in another emirate claiming to be a “virtual free zone” providing cheaper means of enabling “international entrepreneurs operate their businesses from a home or office anywhere in the UAE”.
“Recently, we have been receiving complaints from various Free Zone companies, most of them operating outside Dubai, that their licensors had promised they can do business in Dubai under the free zone license. We have clarified to them that there is an established route to doing business in Dubai,” Al Saadi stated.
“Through Law No.13 of 2011, Dubai has acknowledged the role of Free Zone companies in economic activity in the UAE and the leadership wants to allow such companies to contribute further to overall development. DED’s role is to enable businesses that choose Dubai as their base to benefit from a competitive environment and best practices.”
A free zone company can operate a branch in Dubai as long as it is active within the free zone but any termination of the Free Zone activity will reflect in the Dubai license as well.
The Law No. 13 also allows free zone companies that have no local partners to open branches in Dubai, provided such branch has a local service agent on board. A local service agent is a UAE national or UAE company who will sponsor employees for the Dubai branch of a free zone company at the Ministry of Labour. The local service agent will have no rights of voting or decision-making in the company.