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Dual Licenses for DAFZ-Companies
The Dubai Airport Free Zone (DAFZ) and the Department of Economic Development (DED) signed a Memorandum of Understanding enabling companies established in DAFZ to obtain an additional license and therefore operate legally in Dubai mainland.
In general, free zone companies and their employees are not allowed to work outside the territory of the respective free zone as the company’s license as well as the employees’ work permits are limited to the boundaries of the free zone. Nevertheless, companies operating out of free zones may face the need to directly serve clients in the mainland.
In order to legally operate in the mainland, free zone companies are required to set up a new entity in the mainland which includes the requirement to lease an office or a warehouse. Operationally, this means that two separate entities in different locations must be maintained and administered with personnel being transferred between the entities, which naturally also entails additional overhead costs.
In order to address this issue, in May 2017 the Dubai International Financial Center (DIFC) was the first free zone to sign a Memorandum of Understanding with Dubai Economy, allowing DIFC-companies to obtain a second license for Dubai mainland without the requirement of leasing additional office space in the mainland.
In September 2017 DAFZ also signed a Memorandum of Understanding with the Department of Economic Development in Dubai, allowing companies to obtain a DED license in addition to their DAFZ license and therefore enabling them to legally operate in the mainland of Dubai. “Companies intending to apply for a dual license shall approach DAFZA first in order to obtain a non-objection certificate (NOC); once the NOC has been obtained, the companies can apply with DED for the incorporation of a branch of the DAFZ-company” explains Mrs. Azza Al Muhairi, Manager of the Licensing Section at the Dubai Airport Free Zone Authority.
The dual license option is only available for legal entities established in DAFZ which can establish a branch in the mainland of Dubai. All other conditions for the establishment of a branch will remain the same, except the requirement to lease office space.
Mrs. Al Muhairi confirmed that DAFZ is ready to issue NOCs. Several Dubai Economy-representatives also confirmed that DED will process such requests in accordance with the Memorandum of Understanding signed by DAFZ and DED.
Companies established in DAFZ and wishing to legally operate in Dubai mainland should consider the new possibility offered by DAFZ as both entities (the legal entity in DAFZ and its Branch in Dubai mainland) can be managed and operated from the free zone. Furthermore, DAFZ-companies will be able to enhance their market reach and customer service by providing services in Dubai mainland for their products.