Finance

Fences come down for businesses in Dubai free zones

March 18, 2025, 7:05 PM

Dubai's Department of Economy and Tourism can now issue licences allowing businesses in free zones to expand into the wider city

Expansion to wider city to be allowed
Separate records must be kept
‘Likely to intensify competition’

Businesses operating in Dubai’s free trade zones will be able to expand their activities into the emirate’s mainland areas after a government ruling.

The new legislation will allow the Dubai Department of Economy and Tourism to issue licences or permits granting expansion into the wider city.

Dubai has more than 30 free trade zones covering sectors from finance and technology to media and healthcare. They provide incentives including corporate tax exemption and currency exchange freedom.

The free trade zones also allow 100 percent foreign ownership, unlike much of the rest of the UAE, where foreign ownership has historically been capped at 49 percent.

The new rules do not apply to financial institutions licensed to operate in the Dubai International Financial Centre.

Other businesses seeking to expand will be required to maintain separate financial records for operations inside and outside the zones, and adhere to relevant local and federal regulations.

“It encourages increased economic activity, job creation and innovation, positioning the city as a hub for business, investment and entrepreneurship,” the Dubai Media Office said in a statement.

Licences will be valid for one year and are renewable.

Scott Cairns, managing director of Dubai-based Creation Business Consultants, said: “This development will further blur the lines between mainland and free zone licences and is likely to intensify competition among regulators, giving businesses more options for where to establish their operations.”

Dubai ranked 24th in the Global Cities Index 2024, which evaluates cities based on factors including the attractiveness of the business environment. It was the top-placed city in the Middle East and North Africa in the index from management consultancy Kearney.

It is projected that by 2030, the contribution of free trade zones to Dubai’s gross domestic product will pass AED250 billion ($68 billion).