Dubai Free Zone Companies Can Now Operate in Mainland Dubai
Dubai is no longer announcing a change — it is now operating under it in 2026.
Executive Council Resolution No. 11 of 2025 slashes the boundary between free zones and the mainland. Free zone companies excluding financial establishments licensed in the DIFC, can now operate onshore directly within mainland Dubai, after obtaining authorisation from the Dubai Department of Economy and Tourism (DET) and for activities approved under its official eligibility framework.
This is more than a tweak. It’s a major move under Dubai’s D33 agenda — not just expansion, but structural integration of the Free Zone and mainland commercial framework, with the mandate to double its economy by 2033.
Free zone businesses can now:
- Apply for a mainland branch license
- Get a hybrid license with headquarters kept in the free zone
- Or use a short‑term, activity‑specific permit (up to six months)
This opens the door to local clients, government contracts, and projects across the whole emirate — without duplicating structures.
(Important: this applies within the Emirate of Dubai only. Operating in other Emirates still requires separate local approvals.)
What Has Changed?
Until now, free zone companies lived in a bubble.
They could trade inside their zone. Or do business internationally. But the moment they looked toward the mainland, the door shut — unless they set up a separate mainland company or brought in a local partner.
That’s over.
Under Executive Council Resolution No. 11 of 2025, free zone companies — except those in the DIFC doing financial activities — can now operate directly in mainland Dubai subject to DET approval and activity eligibility requirements.
All they need is a permit from the Dubai Department of Economy and Tourism (DET) without requiring the formation of a separate mainland LLC purely to access mainland Dubai.
Just one legal framework, finally connecting the two worlds.
2026 Operational Reality:
- Activity eligibility is verified during the DET application process and is not automatic.
- Certain regulated sectors may require additional approvals from the relevant supervising authorities in addition to DET.
- Authorised establishments are subject to inspection and compliance review mechanisms, not just annual renewal formalities.
New Permit & License Options
So how exactly can a free zone company now enter the mainland space?
Dubai has introduced three flexible options, depending on what you want to do — open a full branch, run certain projects, or test the waters.
Branches issued under this framework do not have a separate legal personality from the parent free zone establishment.
The AED 10,000 and AED 5,000 fees apply only to the specific routes defined under the Resolution, while other branch licensing fees follow applicable DET schedules.
1. Mainland Branch License
This is for companies that are ready to commit.
You can set up a proper branch office in mainland Dubai — no need to create a new company or find a local partner. It’s still your business, just with a mainland presence.
This corresponds to a branch within the Emirate under the Resolution and may require physical premises depending on the approved activity and DET requirements.
You’ll use your original trade name and operate legally like any other mainland company.
Great for:
- Long-term expansion
- Serving local clients regularly
- Bidding on government contracts
2. Linked Mainland License
Think of this as a hybrid model.
You keep your main office inside the free zone but get permission to operate in the mainland too. It’s like having a foot in both worlds — you’re still based in the zone, but now legally connected to the mainland market.
Under the Resolution, this route corresponds to a licence to establish a branch operating out of the Free Zone. It is issued for one year and is renewable, with an official fee of AED 10,000 per year. Prior approval from the relevant Free Zone Licensing Authority is required before the licence can be granted.
Great for:
- Companies that want flexibility
- Managing operations without shifting base
This model also makes compliance easier. One legal structure, two markets.
3. Activity-Specific Permit
This one’s more temporary.
It lets you perform a specific task or project in the mainland, a one-off installation, a limited contract, or a short-term assignment. The permit is valid for up to six months.
It may be renewed, subject to DET approval, and carries an official fee of AED 5,000 per issuance or renewal. The authorisation applies strictly to the specific approved activity stated in the permit.
You don’t need to open a branch or commit long term, just apply, do the job, and move on.
And There’s More Coming
In 2026, permitted mainland activities are treated as an eligibility checkpoint. Businesses must verify their specific activity through the Invest in Dubai / Dubai Unified License (DUL) workflow before applying.
Application Process & Eligibility
Good news: most free zone companies are eligible.
If your business has a valid license from any Dubai free zone and you’re not a financial firm based in DIFC, you can apply.
Eligibility requires:
- a valid Dubai Free Zone licence,
- compliance with DET’s approved activity framework,
- and exclusion of financial establishments licensed in the DIFC.
These permits apply to operations within the Emirate of Dubai only.
What You Need to Submit:
- Your current free zone trade license
- Company incorporation documents
- Passport and Emirates ID of the manager or authorized signatory
Pretty straightforward.
If you’re in a regulated sector, like healthcare, education, or anything that needs government oversight — you might need extra approvals from the relevant authority. DET approval may not be sufficient where sector regulators supervise the activity.
For example, a clinic will need sign-off from Dubai Health Authority. A school might need KHDA clearance.
Once your documents are ready, you send them to the Dubai Department of Economy and Tourism (DET). They’re the ones reviewing the application, giving the green light, and issuing the permit or license.
Applications are processed through the Dubai Unified License (DUL) system on the Invest in Dubai platform, which links Free Zone records with the mainland registry under a unified digital identity.
No third parties. No agents. It’s all handled by DET directly.
Compliance Requirements
Getting a permit is just step one. You’ll need to play by the rules to keep it.
1. Keep Separate Financial Records
If you’re working in the mainland, you must track those operations separately.
That means clear books showing what you earned and spent onshore, not mixed in with your free zone accounts.
Why? Because mainland activities may trigger different taxes or regulatory obligations.
In 2026, this separation is also critical for evidencing which income qualifies as “Qualifying Income” versus “Non-Qualifying Income” under the Free Zone Corporate Tax framework.
It supports de minimis threshold monitoring and provides audit defence if QFZP status is reviewed. Proper segregation helps prevent accidental disqualification from the 0% regime.
Better to stay clean and clear from day one.
2. Follow UAE Laws
Once you’re in the mainland, you’re under both federal and local law.
This includes labor regulations, tax compliance (like Corporate Tax), and having a proper physical presence if your license demands it. No ghost offices allowed.
You’re now part of the onshore ecosystem, so your setup and conduct should reflect that.
Authorised establishments are subject to inspection and compliance review by DET and relevant authorities. Ongoing compliance with applicable legislation and Free Zone or DET procedures is required, not just annual renewal formalities.
3. Regularize If You Were Already Operating Onshore
Some companies were already dipping their toes in mainland waters, however unofficially. If that’s you, Dubai is offering a chance to fix things.
You have 1 year from the law’s start to regularize your status. The operational deadline for regularisation is March 21, 2026. While limited extension mechanisms may exist under the Resolution, businesses should not rely on them.
Failure to regularise may result in administrative measures, including restrictions, suspension, or cancellation of authorisation, depending on the breach.
DET may allow an extension if needed, but it’s smarter to get compliant early and avoid penalties later.
Taxation & Regulatory Impact
Let’s talk money and rules, because operating in the mainland comes with responsibilities.
1. Corporate Tax Still Applies
Even if you’re a free zone company with tax exemptions, mainland profits are taxable.
The 9% UAE corporate tax kicks in for anything you earn onshore. So, if you’re billing mainland clients, that revenue falls under the tax net. For Qualifying Free Zone Persons (QFZPs), mainland income can be treated as non-qualifying income, which may create exposure under the de minimis rules.
You’ll need to keep your accounting clean and report mainland income separately. If non-qualifying income exceeds the de minimis threshold (AED 5 million or 5% of total revenue, whichever is lower), QFZP status may be lost. That can expose a wider portion of your income to the standard 9% rate for a minimum period under the Free Zone tax framework.
Maintaining audited financial statements is also a core compliance requirement for preserving QFZP status.
2. VAT Still Counts
If your business hits the VAT threshold (AED 375,000), you need to register, no matter where you’re based.
If you’re already registered, make sure your mainland transactions are properly recorded. If not, and you cross the limit, it’s time to sign up.
Mainland expansion can change your VAT profile and reporting complexity, especially where supplies shift from Free Zone to onshore customers. If goods move from a Designated Zone into the mainland, import VAT obligations may arise depending on the structure and customs treatment.
3. Renewals and Inspections
All permits and licenses need to be renewed annually. That’s standard.
Also, expect regular inspections by the Dubai Department of Economy and Tourism (DET).
DET and relevant authorities may inspect compliance with authorised activities, premises requirements, documentation, and renewal conditions.
Moreover non-compliance can lead to administrative actions, including suspension or cancellation of authorisation, depending on the breach.
Benefits for Businesses
This change isn’t just regulatory noise. It’s real opportunity.
1. Direct Access to Mainland Customers
No more middlemen. You can now deal directly with mainland clients, sign contracts, and deliver services, all under your free zone entity.
2. Fewer Headaches, Lower Costs
You don’t need to open a separate mainland company anymore. That means no double licensing, no duplicate admin, and fewer compliance layers to juggle.
3. Keep Your Free Zone Perks
Even while operating in the mainland, your free zone status stays intact.
You still enjoy:
- 100% foreign ownership
- 0% corporate tax on eligible free zone income
- The flexibility that comes with being based in a zone
Free Zone status can remain intact, subject to maintaining QFZP conditions (including de minimis thresholds, substance requirements, audited financial statements, and proper record segregation).
4. Government Contracts Are Now In Play
Previously, free zone companies couldn’t bid for many public sector projects. That’s changed. With a DET-issued permit or branch, you can now join government tenders and contracts that require an onshore license.
Tender eligibility may still depend on the procuring entity’s vendor registration rules and the approved activity classification.
5. Growth, On Your Terms
Whether you want a full branch or just want to test the market with a short-term permit — you’ve got options.
This system is built for scalable growth, not forced expansion.
Market & Business Response
The reaction? Loud and positive.
Business leaders are calling it a “game changer” and a “gateway to growth.”
And for good reason, it’s the kind of reform people have been asking for.
The framework is positioned as pro-growth and designed to reduce structural barriers between Free Zones and mainland activity.
Official communications have projected a measurable economic impact as cross-jurisdictional activity expands under the new structure.
There’s already been a spike in inquiries and new business registrations since the announcement. Companies that were holding back are now moving fast to enter the mainland market without starting from scratch.
Analysts expect a strong ripple effect:
- More foreign investment
- New jobs
- Increased competition
- And a boost in innovation as companies expand their reach
It’s a big shift, not just in policy, but in mindset. Dubai isn’t just making it easier to do business. It’s making it hard not to.
Next Steps
So, what happens now?
DET’s permitted activity eligibility is now treated as a live compliance checkpoint. Before contracting or operating onshore, verify your exact activity through the Invest in Dubai / Dubai Unified License (DUL) workflow.
In the meantime, businesses should:
- Verify activity eligibility through the DUL system before signing mainland contracts
- Confirm whether the activity is regulated and secure any required sector approvals
- Decide the correct authorisation route — full branch, branch operating out of the Free Zone, or temporary permit
- Set up segregated accounting and monitor QFZP de minimis thresholds carefully
- Assess VAT and customs implications if goods or inventory will move into mainland Dubai
- Regularise before March 21, 2026, if previously operating unofficially — and do not rely on extension mechanisms
This reform opens up serious potential. But like any major shift, it rewards those who prepare, not just those who rush in.
Conclusion
This is more than a policy update, it’s a bold step in Dubai’s long game.
Letting free zone companies operate in the mainland brings the city closer to its vision of becoming one of the world’s top business hubs. It tears down walls, clears up red tape, and gives companies the flexibility to grow without losing the advantages they already have.
For businesses ready to expand, this reform formalises a regulated pathway for eligible Free Zone establishments to access the Dubai mainland, with clear licensing routes and enforceable compliance expectations.
FAQs:
The permit is for specific mainland activities and is valid for up to 6 months. A branch license is broader, valid for 1 year, and renewable.
No, not for the activity covered by the permit. But regulated goods or agency-based sales may still need separate approvals.
Yes. It applies to Dubai free-zone entities that want to operate outside the free zone and within Dubai. DIFC financial entities are excluded.
DIFC financial entities are excluded. ADGM companies are outside Dubai, so this Dubai resolution does not directly apply to them.
Yes, but not automatically. You must apply separately and meet DET and free-zone authority requirements.
Usually not for a temporary permit. A full mainland branch may require a mainland location, depending on the license type.
Yes. The resolution allows the existing free-zone workforce to support approved mainland activities.
Usually no, if they are already registered under the free-zone workforce. New staff may need normal visa and labor processing.
Possibly, but not automatically. Some tenders may require vendor registration, activity approval, or a full branch license.
No. It only covers mainland activity within Dubai. Other Emirates need separate approvals.
Yes, generally. Goods entering the mainland/local market usually require customs clearance and applicable duty.
Not automatically. But you must continue meeting QFZP conditions and keep separate records for mainland activities.
Usually, the mainland or domestic PE income is taxed at 9%. Qualifying free-zone income can still remain at 0% if all QFZP conditions are met.
Check total taxable supplies and imports, not only mainland sales. Mandatory VAT registration applies once the AED 375,000 threshold is exceeded.
Not necessarily. But you must maintain separate financial records for mainland activities.
It depends. An audit is mandatory if the entity is a QFZP or revenue exceeds AED 50 million.
Usually, the free-zone license and memorandum of association are required. DET may ask for additional documents.
Yes. Prior approval from the relevant free-zone licensing authority is required.
There is no fixed timeline. It depends on DET review, activity approval, and any external authority clearance.
The business may face penalties, inspection risk, and restrictions on mainland activity. Existing operators must regularize within the grace period set under the resolution.
References
- Authority, Dubai Health. DHA Home. https://www.dha.gov.ae/en. Accessed 22 Jul. 2025.
- Department of Economy and Tourism. https://www.dubaidet.gov.ae/en/.
- DET Licences and Permits. https://www.dubaidet.gov.ae/en/licences-and-permits.
- Dubai Economic Agenda ‘D33’. https://www.investindubai.gov.ae/en/why-dubai/d33-agenda.
- Executive Council Resolution No. (11) of 2025 Regulating the Conduct of Free Zone Establishments’ Activities within the Emirate of Dubai. https://dlp.dubai.gov.ae/Legislation%20Reference/2025/Executive%20Council%20Resolution%20No.%20(11)%20of%202025%20Regulating%20the%20Conduct%20of%20Free%20Zone%20Establishments%E2%80%99%20Activities.pdf.
- Federal Law. https://u.ae/en/about-the-uae/the-uae-government/the-federal-judiciary.
- KHDA. https://web.khda.gov.ae/en/.
- Mainland Companies. https://www.investindubai.gov.ae/en/business-setup/mainland-companies.
- United Arab Emirates Legislations. https://uaelegislation.gov.ae/en.
- Young, Ernst &. Dual Licence | ADRA. https://www.adra.gov.ae/en/establishing/dual-licence.
