Business Scope Requirements of Dubai Company Registration: Regional Differences and Compliance Points

In Dubai, the definition of business scope directly determines the compliance boundary and business authority of the company, especially under the dual regulatory system of local and free zones, the requirements of different regions and industries vary significantly. After Dubai launched the new policy of "Free Zone Mainland Operation License" in 2025, the declaration and expansion of business scope need to accurately grasp the policy details.

1. Core Legal Framework and Industry Classification

federal Laws and Local Regulations

the scope of the Dubai company's business must comply with both the UAE Federal Business Companies Act and the Dubai Economic Development Department (DED) regulations. The core principles include:

prohibited industries: oil and gas exploration, arms manufacturing, gambling and other areas related to national security or public interest prohibit foreign direct participation.

Licensed industries: finance, health care, education, legal services and other fields need to apply for special licenses from federal or local authorities. For example, the establishment of a bank requires the approval of the UAE Central Bank, and foreign insurance companies need to meet localized capital requirements.

Foreign ownership restrictions: In non-free trade zone (Mainland) companies, retail, education, legal services and other industries require local partners to hold 51% of the shares, but free trade zones (e. g. DMCC, DIFC) can be exempted from this restriction and allow 100 percent foreign ownership.

2. Industry classification system

dubai divides its business scope into three categories: commercial, industrial, and professional services, and further subdivides it into more than 2000 specific activities:

commercial category: covering import and export trade, wholesale and retail, e-commerce, etc. If you are engaged in food trade, you need to apply for an additional food business license issued by the Ministry of Health.

Industrial category: including manufacturing, energy development, construction engineering, etc. Manufacturing companies need to meet environmental standards, and some high-polluting industries may be restricted from entering.

Professional services: involving information technology, consulting services, logistics management, etc. Technology companies that engage in data processing are required to comply with the data protection regulations of the Dubai International Financial Centre (DIFC).

2. registration type difference and permission comparison

1. Free Trade Zone Company

advantages: Allow 100% foreign ownership, enjoy zero corporate income tax (valid for 15-50 years), no personal income tax, and apply for multiple work visas.

Restrictions: Business activities are usually limited to within or outside the free trade zone, and access to the UAE's domestic market is required through a local distributor or agency agreement.

Exception: Some free trade zones (such as IFZA) allow companies to set up showrooms or customer experience centers in downtown Dubai, breaking geographical restrictions.

Local Company (Mainland LLC)

advantages: It can directly conduct business throughout the UAE without going through an agent, suitable for retail, manufacturing and other industries facing the local market.

Restrictions: At least 51% shareholding by UAE nationals as shareholders (some industries can be effectively controlled through special agreements), and entity offices must be leased and Ejari registered.

Data comparison:

registered capital: There is usually no minimum requirement for free trade zone companies (except for the financial industry), and local companies are recommended to have a registered capital of 100000 dirhams.

3. Compliance Risk and Dynamic Adjustment

1, out-of-scope business consequences.

The Dubai Department of Economy (DED) regularly verifies that the actual business of the enterprise is consistent with the scope of the license. If it is found to be operating outside the scope, the enterprise may face fines, license revocation or even legal proceedings. For example, a consulting firm that does not apply for a financial license would be considered illegal if it provides loan intermediation services.

2. Policy dynamic adjustment

new Deal 2025: Free Trade Zone companies can apply to conduct business in Dubai, subject to conditions such as a physical office or hiring local employees.

Industry access is relaxed: foreign investors can control 100 percent of companies in renewable energy and medical technology without the need for local partners.

3. Compliance recommendations

pre-planning: Check the latest list of restrictions through the Dubai Chamber of Commerce and Industry or professional institutions before registration to avoid choosing prohibited or high-risk industries.

Dynamic adjustment: if the business expansion needs to change the business scope, it is necessary to submit an application to the Ministry of Economy and update the articles of association, and some industries need additional approval.

Professional support: Entrust local lawyers or agencies to assist in document notarization, anti-money laundering review and economic substance statement (ESR) filing to ensure compliance throughout the process.

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