The Evolving UAE Business Landscape - Dual Licensing from UAE Free Zones
Dual licensing is the latest development offered by some UAE freezones providing freezone companies with the ability to extend into the mainland ‘onshore’ UAE.
Being a global hub for business, the UAE is consistently looking to improve the local business environment and is an extremely attractive business destination within the Middle East and MENA region and home to many key global business headquarters. The advent of dual licences addresses the issue where companies in a UAE Freezone are, strictly speaking, no allowed to work in ‘mainland’ UAE. Dual Licencing, whilst it does have its limitations, will help to drive diversification in the economy in this investment-friendly county.
What is a Dual Licence?
Dual Licensing enables free zone companies to extend their business to the UAE mainland market while operating from their freezone office, without the need to rent a second office in the mainland. In addition to their freezone licence, the company only needs to obtain a mainland licence to be eligible to do this, which significantly reduces costs and timeline to set up the company.
What are the benefits of a Dual License?
- Cost effective
- Time efficient
- Ensures better governance and regulations, through the Freezone Authority and the mainland government departments
- Allows 100% foreign owned companies to extend operations into the mainland without a local shareholder
How is a Dual Licence structured?
The mainland division of a dual licence is structured as a branch of the Freezone company rather than a subsidiary, which would require a 51% local shareholder. The appointment of a local sponsor (National Service Agent - NSA) is not required for a Dual Licence – the Freezone acts as the NSA / sponsor. A new NSA would need to be appointed if this was to be set up as a full Foreign Branch.
Is my freezone company eligible for a Dual Licence?
Dual licencing is only available in certain freezones who have adopted the allowance. Dual Licensing is possible when there is an agreement and Memorandum of Understanding between a freezone authority and the mainland Department of Economic Development (DED). All dual licence applications are subject to the rules and regulations of the specific freezone and the Department of Economic Development; specific inspections by both entities will be conducted to ensure customer protection.
Which UAE freezones offer Dual Licensing?
Dual Licensing has been offered by such free zones as Dubai Design District (D3), Dubai Airport Free Zone (DAFZA), Dubai International Financial Centre (DIFC) and all Abu Dhabi Free Zones ( ADAFZ, KIZAD, Twofour54 and Masdar) and the latest addition; Dubai Multi Commodities Centre (DMCC).
What are the restrictions on Dual Licences?
At the moment the Dual Licence Branch from the Freezone will not be able to register with the Ministry of Labour, therefore the mainland dual licence will not be able to hire staff or issues labour cards and work permits. That means that all staff will still be employed within the freezone company and hold freezone resident visas only. This also means that office space will have to be larger in the Freezone to accommodate these new staff members, in some Freezones this can increase cost significantly.
How can PRO Partner Group help?
For further information about setting up a dual licence company, please get in touch with us in Abu Dhabi +971 (0)2 448 5120, or Dubai +971 (0)4 456 1761, or send your email to email@example.com. Enquiries may also be submitted via our Contact Form below.