What are the key considerations of a UAE Dual Licence?
What are the key considerations of a UAE Dual Licence?
- Companies under certain activities in Abu Dhabi Freezone and select Dubai Freezones are able to avail a ‘Dual Licence’ onshore which in turn allows the company to have an onshore DED (Department of Economic Development – the UAE mainland Licencing Authority) Licence in conjunction with the Freezone Licence.
- This Dual Licence appears as a ‘branch’ of the Freezone entity on the DED Trade Licence – although it is not a true UAE Foreign Branch, and does not need Ministry of Economy Registration, and is not a true separate entity.
- The Dual Licence is just a permit it is not a true branch of the Freezone company. The Freezone company is still the only entity that can invoice, hire staff and undertake operations.
There are a number of considerations and drawbacks before deciding whether you should set up in a Freezone and then obtain a Mainland Dual Licence, or whether you should set up a full mainland LLC Company of Branch office.
Can I hire staff on the Dual Licence?
- No Ministry of Labour (MOL) Card is issued with the Dual licence, the Dual Licence cannot obtain MOL or eChannel registration. In turn all employees are registered and employed under the Freezone entity.
- All visas are attributed to the Freezone and therefore the employees only have an immigration file and no MOL work permit they are not strictly authorised to work onshore in UAE (can only work within the Freezone). Therefore if your company requires to place employees into other companies, for example in a clients place of work, on construction site, or secure areas / Oil and Gas then this will not be possible using these Freezone visas.
- Most Freezones require you to rent around 8-10 sqm per employee and the office space should be taken in the appropriate Freezone. Therefore Freezone office space can expensive with typical costings anywhere from AED 1500 per sqm, compared to mainland office space where staff who do not have job titles that require them to work in the office and are on site will not count against the office space – this allows mainland companies to keep office space to a minimum where staff are on site or working from outside the office.
Can I obtain SPC approval and CICPA passes with a Dual Licence?
- Some Freezones do have an MOU with SPC (Supreme Petroleum Council) and the Freezone will tell you that they can obtain SPC approval using the Freezone licence, however in practice special approval is needed from the Freezone, and this normally requires the Freezone company to rent substantive space in the zone and meet other criteria. In addition an NOC is required from SPC as well. In practice it is not straight forward for Freezone Companies to obtain SPC approval and activities are limited to basic consultancy activities and activities that match that Freezone.
- Regarding CICPA Passes - staff members hired under the Freezone (and therefore under the Dual Licence) only have an immigration file, they do not obtain a full Ministry of Labour work UAE permit, therefore they cannot gain CICPA passes.
- In practice it is much more prudent if you wish to obtain SPC approval and work with ADNOC and obtain ADNOC Vendor registration to set up a mainland UAE LLC Company or Foreign Branch.
Please speak to PRO Partner Group to understand how you can obtain the ADNOC & SPC approval and see our article on ADNOC, SPC and CICPA passes.
What activities can I undertake on the Dual Licence?
- Only certain activities can be obtained on the Dual Licence.
- The activities must match those of the parent Freezone company.
- Any activities that require special regulatory approvals can not be added to the Dual Licence – for example Oil & Gas, Ministry of Health, Training activities, Food Authority, Youth and Sports, Trading, Import & Export – these cannot be added to a Dual Licence.
- In practice that means that the Dual Licence can only contain general consultancy and similar general type, non-regulated activities.
Can I rent mainland UAE office space using a Dual Licence?
- The Freezone mother company of the Dual Licence is able to rent office space in a mainland UAE area, or from a UAE mainland business centre, provided the business centre is happy to rent out the space to a Freezone company.
- The Staff will still have a Freezone visa and will not have a Ministry of Labour work permit, therefore must obtain special permission to work in a Mainland office location.
- The Freezone company cannot obtain an onshore Tawtheeq (Abu Dhabi) or Ejari (Dubai) Municipality lease by renting the mainland office space. The Municipality lease would only be issued to a full mainland company.
- The Freezone authority will normally still require the company to rent larger space within the Freezone (at a normal rate of about 10 sqm per new visa) even if these new staff are working in another mainland office location or on site, therefore the costs of renting the office space in the Freezone will increase with staff numbers and can become considerable, effectively doubling up the rent required. Some Freezones may give special dispensation where you can show that some staff are not working in the Freezone office.
Whilst in practice going the route of setting up in a Freezone and then obtaining a Dual Licence in the mainland does sound like a good option to avoid having a local partner or sponsor, and a number of other costs and issue required when setting up a mainland entity. In reality the dual licence is very limited in its scope and growing the business from a Freezone when the majority of staff and work is done in the mainland is restrictive as well as potentially adding significant extra costs in the long term through restrictive office space costs.
PRO Partner Group can assist you to set up your company in the UAE, we can act as the secure Local Partner and provide professional PRO Services to support you and your staff. For more information on Dual Licence please get in touch with us below: