Key Highlights

• Dubai Executive Council Resolution No. 11 of 2025, signed by HH Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum on March 3, 2025, now permits free zone companies to operate in Dubai mainland for the first time.​
• Free zone companies can choose from three pathways: a temporary permit (AED 5,000 for 6 months), a dual license from free zone headquarters (AED 10,000 annually), or a full mainland branch license.​
• All applications are processed online through the official Invest in Dubai platform (investindubai.gov.ae), with companies requiring a Dubai Unified License to apply for mainland operating permits.​

You’ve built a thriving free zone company in Dubai. Your operations run smoothly, tax benefits are intact, and international business flows freely. But now you’re eyeing something bigger—the UAE mainland market.

For years, free zone companies hit a regulatory wall when trying to serve mainland customers. That barrier just came down.

In March 2025, Dubai issued a landmark resolution that changes how free zone companies access the mainland. You can now legally operate across jurisdictions without duplicating your entire setup.

This article walks you through everything you need to know about doing business in the mainland as a free zone company—from the new legal pathways to costs, taxes, and compliance requirements.

Keep reading to learn more. 

Disclaimer: Information in this article is for general guidance only. Fees, procedures, and requirements are subject to change without notice. This content does not constitute legal, tax, or professional advice—please consult with the Department of Economy and Tourism and qualified UAE professionals for personalized guidance on your specific situation.

Understanding the Traditional Restriction 

Before diving into the new opportunities, it helps to understand why this restriction existed in the first place.

1. Why Free Zone Companies Couldn’t Trade with Mainland

The UAE business landscape has always maintained a clear separation between free zones and the mainland. Each operates under different regulatory frameworks with distinct advantages.

Free zones offered you 100% foreign ownership, streamlined setup processes, and significant tax benefits. The mainland gave companies unrestricted access to the local market and government contracts.

But this separation came with a cost.

If your free zone company wanted to sell products or services to mainland customers, deliver physical services onshore, or bid for government contracts, you couldn’t do it directly.​

2. The Workarounds Businesses Used Before 2025

Before the regulatory change, you had three options—all expensive and complicated:

• Appoint a local distributor or commercial agent. This meant sharing revenue and losing direct control over your customer relationships.​
• Establish a separate mainland entity. You’d essentially run two companies with duplicate costs, separate licenses, and double the administrative burden.​
• Apply for limited dual licensing. Only certain free zones offered this, and availability was restricted.​

These workarounds limited growth opportunities and created significant operational headaches for businesses trying to scale across the UAE market.

Now, let’s look at what changed in 2025.

The 2025 Breakthrough: Dubai’s New Framework

The landscape shifted dramatically this year with a single resolution.

1. Executive Council Resolution No. 11 of 2025

On March 3, 2025, His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum signed Executive Council Resolution No. 11 of 2025.​

This resolution fundamentally changed the business landscape in Dubai.

Published in the Official Gazette on March 3, 2025, the resolution took immediate effect. It allows free zone establishments—except financial institutions in the Dubai International Financial Centre—to conduct business activities outside their designated zones within Dubai mainland.​

The initiative was launched in collaboration between the Dubai Business Registration and Licensing Corporation, the Department of Economy and Tourism, and the Dubai Free Zone Council.​

2. Part of Dubai’s Economic Agenda D33

This regulatory shift doesn’t exist in isolation. It supports the broader Dubai Economic Agenda D33, which aims to double Dubai’s economy by 2033 and position the emirate among the world’s top three global economic cities.​

The D33 agenda targets AED 32 trillion in cumulative economic activity over the decade. By removing barriers between free zones and the mainland, Dubai creates a more integrated and competitive business ecosystem.​

Projections suggest this integration will boost cross-jurisdictional activity by 15-20% in the first year alone. Over 10,000 active free zone firms in Dubai stand to benefit immediately.​

3. What This Means for Your Business

The practical benefits are substantial.

You gain access to a market of over 10 million UAE residents. You can bid for government contracts and tenders worth billions annually—opportunities previously reserved for mainland-licensed entities.​

The resolution eliminates the need for costly intermediaries or duplicate corporate structures. You maintain your free zone benefits while expanding your market reach.​

However, there’s an important limitation to keep in mind. The resolution does NOT apply to DIFC financial institutions, which continue to operate under a separate regulatory framework.​

Three Legal Pathways to Operate in Mainland Dubai

With the regulatory framework in place, you now have three distinct options for accessing the mainland market. Each serves different business needs and operational models.

1. Branch License: Mainland Physical Presence

This option allows you to establish a physical branch office in mainland Dubai.​

The branch operates as an extension of your free zone company—not a separate legal entity. Your parent company retains full legal responsibility.​

What you need:

• Valid free zone trade license
• Prior approval from your free zone authority
• DET approval
• Government entity approvals if your activity is regulated
• Physical office location in Dubai mainland
• Payment of prescribed fees​

The branch license is valid for one year and renewable annually.​

This pathway is best suited for companies planning long-term mainland expansion, serving regular mainland clients, or bidding on government contracts.​

2. Branch License Operating from Free Zone: The Dual Model

If you don’t need a physical mainland presence, this pathway offers a more flexible alternative.

It gives you mainland operating rights while keeping your headquarters in the free zone. You don’t need a physical mainland office.​

Cost: AED 10,000 per year.​

Requirements:

• Valid free zone trade license
• Copy of Memorandum of Association
• Manager’s passport and Emirates ID
• Free zone authority approval
• DET approval
• Government approvals for regulated sectors​

Valid for one year with annual renewal.​

This option is best suited for businesses wanting flexibility and cost-effectiveness while maintaining their free zone base.​

3. Temporary Permit: Activity-Specific Access

For companies wanting to test the waters before committing, the temporary permit offers a low-commitment entry point.​

Duration: Up to 6 months, renewable for the same fee.​

Cost: AED 5,000 initially, plus AED 5,000 for each renewal.​

Requirements:

• Application to DET with proper documentation
• Activities must be on DET-approved list
• Free zone authority approval
• Valid free zone license​

This pathway is best suited for testing the mainland market, project-based work, or pilot programs before committing to a full license.​

The good news is you can upgrade to a full branch license later if your mainland operations prove successful.​

Step-by-Step Application Process

Once you’ve chosen your pathway, here’s how to navigate the application process.

1. Digital Platform Access

All applications are processed through the Invest in Dubai platform, Dubai’s unified digital system for business licensing.​

Your free zone company must hold a Dubai Unified License—a unique identification number assigned to all businesses operating in Dubai mainland and free zones.​

The DUL system launched under Law No. 6 of 2023 to streamline business processes and create a centralized database of economic establishments.​

2. Required Documentation

Before you start your application, prepare these documents:

• Valid free zone trade license
• Memorandum of Association
• Manager’s passport and Emirates ID copies
• Business plan for certain activities
• Free zone authority approval letter​

For regulated activities in sectors like finance, healthcare, or education, you’ll need additional approvals from relevant government bodies.​

3. Processing and Timeline

The timeline varies depending on your chosen pathway and business activity.​

The temporary permit processes fastest—typically within 1-2 business days once documentation is complete.​

In contrast, branch licenses require more thorough review, especially if your activity requires regulatory approvals.​

Always verify current processing times directly with DET, as procedures may be updated.​

4. License Issuance

Once approved, you receive official documentation authorizing your mainland operations:

• No Objection Certificate from your free zone authority
• DET permit or branch license confirming your right to conduct specified activities onshore​

Keep these documents accessible, as you may need to present them during inspections or when dealing with government entities.​

Also Read: RAK DAO Complete Guide: World’s First Free Zone for Virtual Assets

Cost Breakdown: What You’ll Actually Pay

Understanding the full cost structure helps you budget accurately for mainland expansion. Let’s break down what you need to plan for.

5. Initial Setup Costs

Temporary Permit: AED 5,000 for 6 months​

This is the most affordable entry point. You can test mainland operations with minimal financial commitment.

Dual License (Branch from Free Zone): AED 10,000 per year​

This breaks down as:

• AED 2,500 for the No Objection Certificate from your free zone​
• AED 7,500 for DET licensing support​
• AED 20 for knowledge and innovation fees​

Mainland Branch License: Variable DET fees​

Costs depend on your specific activity and office requirements. Typical DET mainland license fees range from AED 10,000 to AED 15,000.​

Note: These are market estimates only. Always verify current fees directly with DET before applying.

6. Renewal Costs

Beyond initial setup, you need to factor in ongoing costs.

All permits and licenses require annual renewal.​

The temporary permit costs AED 5,000 for each 6-month renewal.​

The dual license costs AED 10,000 annually.​

Branch licenses follow the same renewal fee structure as initial setup.​

Keep in mind that government pricing may change, so always verify current fees before applying.​

6. Hidden and Additional Costs You Should Plan For

The official fees represent just part of the total investment.

Your free zone license must remain valid while operating on the mainland. Budget for annual free zone renewal fees.​

If you’re establishing a physical branch, factor in office space rental costs. Mainland office space in Dubai typically ranges from AED 15,000 to AED 50,000 annually, depending on location and size.​

You’ll also need separate accounting and bookkeeping systems to track mainland operations distinct from free zone activities. This may require additional professional services.​

Additionally, corporate tax compliance on mainland-derived income adds accounting costs. Consider professional tax advisory fees.​

If you’re hiring employees specifically for mainland operations, include visa and labor costs.​

7. Cost Comparison: The Value Proposition

When you step back and look at the bigger picture, these costs become more reasonable.

Compare these figures to establishing a completely separate mainland entity, which typically costs AED 25,000 to AED 75,000 or more for initial setup.​

The new permit structure eliminates the need for a local sponsor—historically a significant cost factor.​

You avoid duplicating corporate infrastructure, separate bank accounts, and parallel administrative systems.​

For most businesses, the permit route offers substantial savings while maintaining operational flexibility.

Tax Implications: What You Need to Know

Beyond licensing costs, tax implications deserve careful attention. The UAE introduced corporate tax in June 2023. Understanding how it applies to your mainland operations is critical for compliance and financial planning.​

1. Corporate Tax: 9% on Mainland Income

Free zone companies face a two-tier tax structure depending on where income originates.​

Qualifying Free Zone Person (QFZP) status allows you to maintain 0% corporate tax on qualifying income—transactions with other free zone persons and income from qualifying activities.​

However, income derived from mainland operations is taxed at 9%.​

Here’s what’s crucial to understand. You must maintain SEPARATE financial records for:

• Free zone operations (potentially 0% if you meet QFZP requirements)
• Mainland operations (9% tax)​

The threshold for corporate tax liability is taxable income above AED 375,000 annually.​

2. QFZP Requirements and Risks

Maintaining your preferential tax status requires meeting specific conditions.

To qualify for 0% tax on your free zone income while operating on the mainland, you must:

• Maintain adequate substance in your free zone
• Prepare audited IFRS financial statements
• Comply with all transfer pricing rules and documentation requirements
• Ensure non-qualifying revenue does not exceed de minimis thresholds​

There’s a critical warning here. If you fail to meet QFZP conditions, you lose eligibility for the 0% rate and face a 9% corporate tax on ALL income—not just mainland revenue—for the current year plus the next four tax periods.​

3. VAT: 5% on Mainland Transactions

Beyond corporate tax, VAT also comes into play. The UAE applies a standard 5% VAT rate on most goods and services.​

How it applies to your operations:

When you supply services from your free zone to mainland customers, you charge 5% VAT.​

For goods movement from designated zones to the mainland, the mainland buyer typically applies the reverse charge mechanism—they account for VAT as if importing the goods.​

You need a Tax Registration Number (TRN) if your annual taxable supplies or imports exceed AED 375,000 (mandatory threshold) or AED 187,500 (voluntary threshold).​

Eligible Business Activities and Current Restrictions

Not every business activity qualifies for immediate mainland access under the new framework. Understanding what’s covered—and what isn’t—helps you plan accordingly.

1. Currently Covered Non-Regulated Activities

The initial phase covers non-regulated activities including:​

• Technology and digital services
• Consultancy and professional services
• Design and creative services
• Trading and general commercial activities

These activities generally receive faster approval since they don’t require sector-specific regulatory clearances.​

2. Regulated Sectors Requiring Additional Approvals

On the other hand, if your business operates in a regulated sector, you need clearance from the relevant government authority in addition to DET approval.​

Regulated sectors include:

• Finance and banking
• Healthcare and medical services
• Education and training
• Media and publishing
• Legal services​

The approval process for these sectors takes longer and may involve additional documentation and compliance requirements.​

3. The DET Activity List: Coming Soon

If you’re uncertain whether your activity qualifies, clarity is coming. The Department of Economy and Tourism committed to publishing an official list of eligible economic activities within six months from the resolution’s effective date.​

This list will provide definitive guidance on which activities qualify for each permit type.​

Until the official list is published, check directly with DET and your free zone authority to confirm your specific activity is eligible.​

What About Other Emirates?

The Dubai resolution specifically applies to operations within the Emirate of Dubai. If you want to operate in other emirates, you need to understand their separate frameworks.​

1. Ras Al Khaimah: The Dual License Pioneer

Interestingly, RAKEZ introduced its dual license structure in January 2022—well before Dubai’s 2025 resolution.​

The RAKEZ dual license allows free zone companies to operate in Ras Al Khaimah mainland without establishing a physical mainland office.​

It combines a RAKEZ free zone license with a “Branch of a Free Zone Company” license issued by the RAK Department of Economic Development.​

Key features include 100% foreign ownership and eligibility to bid for government contracts in Ras Al Khaimah.​

2. Abu Dhabi: Mainland Access Available

Similarly, the Abu Dhabi Department of Economic Development has long offered dual licensing options.​

In 2025, Abu Dhabi further eased entry by allowing free zone companies from other emirates to open branches in Abu Dhabi, with favorable terms for qualifying businesses.​

Abu Dhabi free zones offer dual licensing that lets companies operate in both free zone and mainland environments.​

3. Sharjah: Separate Processes Apply

Sharjah takes a different approach. It maintains distinct regulations for free zone and mainland operations.​

Free zone companies wanting mainland access typically need to follow conversion or separate licensing processes through the Sharjah Economic Development Department.​

Sharjah has six free zones strategically located near transport hubs.​

4. Cross-Emirate Considerations

Here’s the bottom line for multi-emirate operations. Dubai’s 2025 resolution is emirate-specific. To operate across multiple emirates, you may need separate approvals or licenses from each emirate’s economic development department.​

Always verify current regulations with the relevant emirate authorities, as frameworks continue to evolve.​

Also Read: BioTech Company Setup in Dubai Free Zones: A Guide to Success in 2025

Employee and Visa Considerations

One of the significant advantages of the new framework is visa flexibility. This addresses a major pain point businesses previously faced.

1. Can Your Free Zone Employees Work on Mainland Projects?

Yes. Under the 2025 resolution, employees holding free zone visas can work on mainland projects under your new permit or branch license.​

Importantly, you do not need to transfer their visas or cancel and reissue them.​

This eliminates a major administrative burden and cost that businesses previously faced when expanding to the mainland.​

2. Important Operational Requirements

That said, while visa transfers aren’t required, you must comply with mainland labor regulations for work performed onshore.​

This includes:

• Following UAE Labor Law and Ministry of Human Resources and Emiratisation requirements
• Maintaining proper employment documentation
• Meeting any client-site or premises approvals required for your activity​

3. Adding New Mainland-Specific Employees

If you hire employees specifically for mainland operations after obtaining your permit, you can sponsor them under your free zone company.​

Work permits must align with your approved activities and comply with both free zone and mainland labor regulations.​

4. Compliance Period and Transition

For businesses already operating informally, there’s important timing to consider. Companies already operating in the mainland without proper authorization received a one-year grace period from March 2025 to regularize their status.​

This means businesses have until March 2026 to obtain the appropriate permits or licenses.​

In certain cases, authorities may grant extensions to this grace period.​

If you’re currently operating informally in the mainland, regularizing your status through the proper channels protects you from penalties and establishes a solid legal foundation for growth.​

Common Mistakes to Avoid

Understanding potential pitfalls helps you navigate mainland expansion successfully. Here are the mistakes that can derail your expansion plans.

1. Operating Without Proper Authorization

The biggest risk is conducting mainland business without obtaining the required DET permit or license.​

Even though the integration framework exists, you still need official approval before starting operations. Working without proper authorization exposes you to penalties, license suspension, and potential legal issues.​

2. Poor Financial Record-Keeping

Another critical mistake is failing to maintain separate, detailed financial records for mainland versus free zone operations.​

Tax authorities require clear documentation to verify your QFZP status and calculate mainland income subject to 9% corporate tax.​

Inadequate records can result in losing your QFZP status entirely—triggering a 9% tax on all income for up to five years.​

3. Neglecting Tax Registration and Filing

Related to record-keeping, not registering for corporate tax and VAT when required leads to penalties and back-tax assessments.​

Missing filing deadlines compounds the problem.​

Many businesses underestimate the complexity of UAE tax compliance, especially when operating across jurisdictions.​

4. Choosing the Wrong License Type

Selecting a temporary permit when your business needs a full branch license—or vice versa—creates operational limitations.​

Assess your actual business needs:

• How long will you operate in the mainland?
• What activities will you perform?
• Do you need to bid for government contracts?
• Will you establish a physical presence?

Match your license choice to your business model.​

5. Inadequate Application Documentation

Rushing through the application with incomplete or incorrect documentation delays approval and may result in rejection.​

Take time to gather all required documents properly. If you’re uncertain about requirements, consult with your free zone authority or professional business advisors before submitting.​

6. Not Planning for Scaling

Finally, many businesses start with a temporary permit but don’t plan their transition to a full license when operations expand.​

Think ahead about your growth trajectory. If you anticipate sustained mainland activity, factor in the transition to a branch license early in your planning.​

Frequently Asked Questions

1. Can a free zone company sell directly to mainland customers without a license?

Previously, no—free zone companies needed authorization to serve mainland customers.​

Under the 2025 framework, you can sell to mainland customers, but you must first obtain a DET permit or branch license.​

There is an exception for e-commerce sales in some cases, but physical delivery to mainland addresses and direct service provision typically require proper licensing.​

Always verify your specific activity with DET to ensure compliance.​

2. How much does it cost to get a free zone mainland operating permit in Dubai?

The temporary permit costs AED 5,000 for six months (renewable for another AED 5,000).​

The dual license costs AED 10,000 per year.​

A full mainland branch license with physical premises has variable costs typically ranging from AED 10,000 to AED 15,000 for licensing, plus office rental and setup expenses.​

Remember that fees are subject to change, so verify current pricing before applying.​

3. Do I need a local sponsor to operate a free zone company in the mainland?

No. Under the 2025 framework, you do not need a local sponsor or partner to obtain a mainland permit or branch license.​

This represents a major advantage over traditional mainland company formation, which previously required local sponsorship for many business types.​

4. What is the difference between a branch license and a temporary permit?

Duration: A branch license is valid for one year (renewable), while the temporary permit is valid for six months (renewable).​

Cost: A Branch license costs AED 10,000 annually; a temporary permit costs AED 5,000 per six months.​

Commitment level: A Branch license indicates a longer-term mainland presence; a temporary permit suits testing or project-based work.​

Use cases: Branch license is better for sustained operations and government contract bidding; temporary permit works for pilot programs and market testing.​

5. Will I pay corporate tax on my free zone income if I operate in the mainland?

Not necessarily—it depends on your QFZP status and income structure.​

If you maintain Qualifying Free Zone Person status, your free zone income from qualifying activities remains at 0% corporate tax.​

However, income derived from mainland operations is taxed at 9%.​

You must maintain separate financial records to distinguish between the two income streams.​

There’s an important warning here. Losing QFZP status means a 9% tax applies to all your income—not just mainland revenue—for five years.​

6. Can I use my free zone employees to work in mainland Dubai?

Yes. Under the 2025 resolution, your existing free zone employees can work on mainland projects without needing visa transfers.​

This eliminates previous administrative barriers and costs associated with cross-jurisdictional work.​

However, you must still comply with UAE labor law and maintain proper documentation for work performed in the mainland.​

7. Does the Dubai 2025 resolution apply to DIFC companies?

No. The resolution specifically excludes financial institutions licensed under the Dubai International Financial Centre.​

DIFC operates under its own independent legal framework with separate regulations.​

DIFC companies follow different rules for any mainland operations or cross-border activities.​

8. How long does it take to get approval for mainland operations?

Processing time varies by license type and business activity.​

The temporary permit typically processes within 1-2 business days once all documentation is complete.​

In comparison, branch licenses take longer, especially for regulated activities requiring additional government approvals.​

The digital Invest in Dubai platform streamlines the process, but always allow sufficient time for proper review.​

9. What happens if I’m already operating in mainland without a license?

The resolution provided a one-year grace period from March 2025 for businesses already operating in the mainland to obtain proper authorization.​

This grace period may be extended in certain cases.​

Businesses should regularize their status as soon as possible to avoid penalties and establish proper legal standing.​

If you haven’t yet obtained authorization, apply immediately through the Invest in Dubai platform.​

10. Can free zone companies bid on UAE government contracts now?

Yes, but only with the proper branch license.​

Government contracts and tenders typically require mainland licensing.​

The temporary permit may not provide eligibility for all government procurement opportunities, so verify requirements with the specific tendering authority.​

Full branch licenses offer the strongest positioning for government contract bidding.​

Your Path Forward

Free zone companies can now legally do business in Dubai mainland—but success requires careful planning and full compliance.

You have three clear pathways: a temporary permit for testing the market, a dual license for flexibility without physical expansion, or a full branch license for comprehensive mainland operations.​

Each option eliminates the need for costly intermediaries or duplicate corporate structures that previously blocked growth.​

Tax and compliance are critical. Maintain separate financial records for mainland and free zone activities. Understand your QFZP status and protect it. Register for corporate tax and VAT properly.​

Book your free consultation call today with the experts of JSB Incorporation for your business setup in the mainland UAE from a free zone.