Free zone versus mainland: DHCC, JAFZA and the boundary of domestic sales

1. Key takeaways

Warehousing in free zones such as the Dubai Healthcare City (DHCC) or Jebel Ali Free Zone (JAFZA) solves storage and re-export convenience; it does not confer the qualification to sell into the mainland territory. Article 2 of Federal Decree-Law No. 38/2024 states expressly that the scope of the decree covers free zones, and Article 5 provides that without a marketing authorisation, import, distribution, possession, sale, display, re-marketing, use or manufacture of medical products is prohibited. Anything involving sale into the UAE territory still requires an EDE marketing authorisation first, followed by importation through licensed importers under the Article 22 framework; entry from a bonded free zone carries three additional cumulative conditions.

• Article 2 brings free zones within the scope of the decree; there is no route where a free zone substitutes for registration.
• Article 5 prohibits import, distribution, possession, sale, display, re-marketing, use and manufacture absent a marketing authorisation.
• The bonded free zone route requires a valid marketing office licence, an EDE-issued GSP certificate and shelf life of at least 12 months, cumulatively.
• Re-export and mainland sale must be kept in separate ledgers, documents and batch records.

2. Legal basis

The provisions below establish that free zones fall within the scope of the decree, that the marketing authorisation prohibition applies regardless of location, and the additional conditions attached to imports from bonded free zones.

3. Expert insights

Insight 1: the scope clause has already written free zones into the decree, and no path exists in which a special zone substitutes for registration. Article 2, building on the definitions in Article 1, makes the scope of application expressly include free zones, which means free zone entities are equally bound by the mandatory marketing authorisation rule of Article 5. Our understanding is that a free zone licence grants operational convenience in company formation, warehousing and re-export; whether a product may lawfully circulate in the mainland market is a separate and independent judgement, and the two cannot offset each other.

Insight 2: the three additional conditions of the bonded free zone route are cumulative, not alternatives. Import from a bonded free zone requires simultaneously a valid marketing office licence, a GSP certificate issued by EDE, and shelf life of at least 12 months; if any one is missing, the import permit application cannot stand. The pitfall encountered in practice is obtaining the GSP certificate and then no longer re-checking its validity and coverage, or applying the ordinary 2/3 shelf life position to the free zone route; the two numerical positions differ and cannot be substituted for one another.

Insight 3: re-export and mainland sale must run on two sets of books and two sets of documents. Where the same consignment transits a free zone and is then diverted to mainland sale, the customs treatment is entirely different: re-export does not trigger the taxable step into the territory, while entry into mainland sale gives rise to the corresponding taxes, levied at 5% of the CIF value (practical estimate). We recommend keeping, within the systems, the outbound documents, flow records and batch data of the two paths completely separate, so that the flow of goods cannot be reconstructed during a traceability check.

4. Practical recommendations

• Clarify the business model before establishing the free zone entity: mainly re-export or mainly mainland sale, since the licences and processes each require differ.
• For any product to be sold into the territory, obtain the EDE marketing authorisation first, then arrange customs declaration through licensed importers under the Article 22 framework.
• Before importing from a bonded free zone, verify item by item the three conditions of the marketing office licence, the EDE GSP certificate and the 12 month shelf life.
• Separate, within the warehousing system, the outbound paths for re-export and mainland sale, managing documents, flows and batch records apart and traceably.
• Estimate the tax cost of the mainland sale step at 5% of CIF value (practical estimate) and fold it into quotations and the unit cost model.
• Review periodically the consistency between the free zone entity licence and EDE registration status, so that changes in entity qualification do not propagate into the import stage.

5. Verification checklist

• □ It has been confirmed that Article 2 covers free zones, with no erroneous premise that a free zone substitutes for registration
• □ All products intended for mainland sale have obtained the EDE marketing authorisation
• □ The import stage is carried by licensed importers under the Article 22 framework
• □ The three additional conditions of the bonded free zone route have been verified item by item: marketing office licence, GSP certificate, 12 month shelf life
• □ Outbound documents, flow records and batch data for re-export and mainland sale are managed completely separately
• □ The tax cost of the mainland sale step is built into the cost model at 5% of CIF value (practical estimate)
• □ A periodic review mechanism exists for consistency between the free zone entity licence and EDE registration status

How GRZAN can help. GRZAN provides medical device and IVD registration, quality system, authorised representative and local testing support for the United Arab Emirates. Our team coordinates local authorised representative and importer arrangements, and supports post-market vigilance obligations. Business enquiries: info@grzanglobal.com