Dubai has issued a new resolution regulating the operations of free zone companies aimed at making it easier for them to expand operations within the emirate.
The resolution was issued by Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, Deputy Prime Minister and Minister of Defence, in his role as chairman of the Executive Council of Dubai on Monday.
It states that any company or institution licensed by a free zone relevant authority may operate outside the free zone and within Dubai, as long as it obtains the necessary licenses or permits from the Dubai Department of Economy and Tourism (DET). The resolution does not apply to financial institutions licensed to operate within the Dubai International Financial Centre.
Establishments must observe the applicable federal and local regulations related to their activities and maintain separate financial records for their operations conducted outside the free zone, separate from those within the free zone, the Dubai Media Office said on Monday.
Also, if the companies wish to operate outside Dubai, they must secure the required licences and permits from the relevant authorities, it said.
“This latest resolution marks a significant advancement in enhancing the business landscape, by enabling free zone businesses to effortlessly expand their operations beyond the free zones into mainland Dubai,” it added.
According to the resolution, the DET is authorised to issue a licence to a company to establish a branch within the emirate or a licence for a branch with its headquarters in the free zone. These licences are valid for one year and can be renewed, the statement said. Permits may also be issued for specific activities within the emirate.
The DET, in co-ordination with the licensing authority, is required to issue a list of economic activities that companies can conduct in Dubai within six months.
The resolution also outlines the requirements for obtaining a licence, the procedures for issuing activity permits, and the conditions for employing the company's workforce.
Any company licensed to operate in Dubai under this resolution is subject to inspection, the statement added.
The initiative is in line with the city's ambitious D33 agenda, under which it aims to double the size of its economy to Dh32 trillion ($8.71 trillion) over the next decade and establish the emirate among the top three global cities. The plan aims to support 30 private companies in their push to become so-called unicorns – start-ups worth more than $1 billion.
The D33 agenda also aims to make Dubai a global digital economy leader, the fastest-growing and most attractive global business centre, and a hub for sustainability and economic diversification by 2033.
In the first nine months of last year, Dubai's economy grew by 3.1 per cent, reaching Dh339.4 billion, with growth largely driven by strides in several sectors including the wholesale and retail trade, transport and storage and financial and insurance activities.
Dubai was also ranked as the world’s top destination for greenfield foreign direct investment (FDI) projects for the fourth consecutive year, last year.
Dubai attracted 1,117 greenfield FDI projects worth more than Dh52.3 billion last year, a 33.2 per cent increase from 2023, the Dubai Media Office this month, quoting the Financial Times' fDi Markets data.
In terms of the greenfield FDI value, this was the highest recorded by the emirate in a single year since 2020, and in project numbers, it was the highest in its history.
"The new resolution is a significant step forward in making business operations more seamless in Dubai," said Paul Bryson, managing director of Virtuzone, which helps in company formation.
"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," he added.
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COMPANY%20PROFILE
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Favourite sport: soccer
Favourite team: Bayern Munich
Favourite player: Franz Beckenbauer
Favourite activity in Abu Dhabi: scuba diving in the Northern Emirates
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Known EU weapons transfers to Ukraine since the war began: Germany 1,000 anti-tank weapons and 500 Stinger surface-to-air missiles. Luxembourg 100 NLAW anti-tank weapons, jeeps and 15 military tents as well as air transport capacity. Belgium 2,000 machine guns, 3,800 tons of fuel. Netherlands 200 Stinger missiles. Poland 100 mortars, 8 drones, Javelin anti-tank weapons, Grot assault rifles, munitions. Slovakia 12,000 pieces of artillery ammunition, 10 million litres of fuel, 2.4 million litres of aviation fuel and 2 Bozena de-mining systems. Estonia Javelin anti-tank weapons. Latvia Stinger surface to air missiles. Czech Republic machine guns, assault rifles, other light weapons and ammunition worth $8.57 million.
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
