In a significant step toward enhancing its business environment and attracting foreign investment, Dubai has issued Resolution No. 11 of 2025 on the Regulation of Free Zone Establishments Practicing their Activities within the Emirate of Dubai (the “Resolution”). This new framework marks a major policy shift, allowing free zone entities to operate more freely across jurisdictions within Dubai, a move that aligns with the Emirate’s ongoing commitment to regulatory efficiency and economic diversification.

Previously, free zone companies were largely restricted to operating within the confines of their respective free zones, with limited exceptions under certain memorandums of understanding between individual free zones and the Department of Economy and Tourism (DET). The Resolution lifts this restriction and introduces a standardized pathway for free zone entities to expand their presence into onshore Dubai, reducing the need for maintaining multiple entities across jurisdictions and simplifying operations for foreign investors.

Key Highlights of the Resolution

The Resolution sets out clear licensing pathways for free zone entities wishing to operate in onshore Dubai. These include:

1. Branch Establishment with a Physical Onshore Presence
   Free zone companies may continue to establish onshore branches with physical offices, a practice that was already permitted but is now formally codified within the new legislation.
2. Branch License without Physical Premises
   A new and notable addition allows free zone entities to establish a branch onshore Dubai without the need for a dedicated physical office. This license, granted by the DET, enables companies to operate onshore under certain conditions—significantly reducing overhead costs such as leasing and staffing. This regime is similar to the ‘dual licensing’ models previously seen in certain free zones like the Dubai International Financial Centre (DIFC).
3. Temporary Onshore Activity Permit
   Free zone companies may now apply for a temporary permit to carry out specific activities in onshore Dubai for up to six months. This flexible licensing option is ideal for companies involved in short-term projects, events, or other time-bound engagements, without the need to establish a permanent branch.

Implementation and Considerations

While the Resolution represents a progressive change, several practical aspects remain to be clarified:

• Scope of Permitted Activities:
  The DET, in coordination with other regulatory bodies, is expected to publish a list of approved economic activities that can be conducted under these new licensing options. The release of this list will be crucial in determining how widely the Resolution can be applied.
• Sector-Specific Guidance:
  Regulatory authorities may issue sector-specific guidance on how the Resolution impacts regulated industries. For instance, the Ministry of Health and Prevention is anticipated to clarify how the new rules will apply to pharmaceutical and medical device companies.
• Operational Readiness:
  As of the publication date, guidance on the practical implementation of the Resolution is still awaited from both the DET and various free zone authorities. Despite the Resolution coming into force on 3 March 2025, companies are advised to monitor for further updates in the coming weeks.
• Employment Benefits:
  The Resolution allows employees of free zone entities to work in onshore Dubai while retaining the benefits and employment structures of their free zone registration—another business-friendly measure that supports workforce mobility.
• Corporate Restructuring Opportunities:
  The Resolution is likely to prompt significant changes in how businesses are structured in the UAE. Companies may take advantage of:
  • Consolidating operations under fewer entities to reduce compliance costs;
  • Utilizing temporary permits for seasonal or event-based activities; and
  • Deregistering redundant entities that are no longer necessary.

Looking Ahead

The Resolution marks a turning point in Dubai’s regulatory evolution. By bridging the gap between free zone and onshore operations, the Emirate is laying the groundwork for a more integrated, flexible, and investor-friendly economic ecosystem. While practical implementation details are still unfolding, the Resolution is a clear signal of Dubai’s intent to lead as a global business hub where operational simplicity, cost efficiency, and growth potential go hand in hand.