How do I set up a DMCC Dual Licence
How do I set up a DMCC Dual Licence - what are the steps, requirement and limitations?
What are the key considerations of a DMCC Dual Licence?
- Companies under certain activities (services) in DMCC Freezone 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 DMCC 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.
- Only DMCC Licenced companies holding service licence type that have one or more of the eligible service activities can apply for NOC to operate onshore subject to meeting the eligibility criteria. The NOC is valid for 90 days from the date of issuance.
- The company will need to approach DED with the provided NOC from DMCC and complete the Department of Economic Development (DED) requirements for obtaining the permit to operate onshore.
- When applying for the Dual Licence Permit with the DED, the General Manager will need to pass the consultancy exam held at the American University of Dubai.
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 DMCC Dual Licence?
- No Ministry of Labour (MOL) Card is issued with the Dual licence, the Dual Licence cannot obtain MOL. 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 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.
What activities can I undertake on the DMCC Dual Licence?
- Only certain activities can be obtained on the Dual Licence.
- The activities must match those of the parent Freezone company.
- Retail, Trading & Industrial Activities can not obtain a Dual Licence permit.
- Any activities that require special regulatory approvals can not be added to the Dual Licence – for example 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.
What are the Office Rental Considerations within DMCC & Mainland using a DMCC Dual Licence Permit?
- A minimum office size of 300sqft is mandatory within DMCC to be eligible for a Dual Licence. Companies with a shared office, Co working space or use of a Business Centre will not be eligible for a Dual Licence Permit.
- Even if these new staff are working in another mainland office location or on site, 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) 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.
- 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 Ejari (Dubai) Municipality lease by renting the mainland office space. The Municipality lease would only be issued to a full mainland company.
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 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.
If you have an existing company in DMCC and need assistance to obtain a DMCC Dual Licence or if you are considering the options between setting up in the mainland versus a freezone then please do reach out to us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at email@example.com or complete the contact form below and we will be delighted to assist with meeting your needs at this time.
James Elliot-Square is the Business Development Manager at PRO Partner Group. For further information on how to set up a DMCC Dual Licence or any other related company set up, local partner or PRO service matter in the UAE and wider Gulf, contact James on firstname.lastname@example.org or complete the contact form below.