Move of Freezone Companies to Mainland Dubai

The Dubai Department of Economy and Tourism (DET) is responsible and the main authority issuing licenses for all corporate entities with the aim to carry out business in the mainland Dubai (excluding the freezones) and for managing the licensing and regulatory aspects of the companies registered with DET.

In 2011, Dubai enacted a new framework allowing entities incorporated within free zones—whether as Free Zone Companies (FZCOs) or Free Zone Establishments (FZEs)—to establish branches within the Emirate. This development stemmed from the issuance of Law No. 13 of 2011 Regulating the Conduct of Economic Activities in the Emirate of Dubai, promulgated by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to govern the licensing and regulation of economic activities under the DET.

This article aims to shed light on doing business in the mainland in Dubai through an entity incorporated in one of the UAE’s free zones. Building on recent regulatory developments, Dubai has introduced the Free Zone Mainland Operating Permit, established under Executive Council Decision No. 11 of 2025, which allows free zone entities to operate in the mainland under a clearly defined permit system. This initiative represents a major evolution in Dubai’s economic landscape, aligning with the Emirate’s vision to enhance flexibility, attract investment, and strengthen integration between free zone and mainland business environments.

The main take away from the new law is that free zone entities will now be able to establish ‘branch offices’ of the main free zone entity. Accordingly, the established free zone entity shall be considered as the ‘Parent’ and the newly established mainland branch will have no separate legal identity¹. Despite the entities not sharing separate legal identities, there is a legal obligation to maintain separate financial records for all activities undertaken outside the free zone which must be distinct from any activities undertaken within the free zone². Companies will still incur 9% corporate tax, in accordance with the applicable law³.

An interesting take relates to employment relations, whereby an establishment authorised to conduct business under the mainland branch may use its existing free zone registered workforce and benefit from all free zone employment privileges. Whilst it is unclear at this stage, it would appear to suggest that branches of free zone entities established on the mainland under this law would not be subjected to Emiratisation requirements presently.

However, not all free zones are provided for under the new law, especially DIFC Financially regulated entities which are specifically excluded from the new law⁴.

Whilst this is a welcomed strategic move that eases the cross-jurisdictional operations and paves a pathway for business to engage in domestic trading, allowing companies to expand into local trading, integrate with domestic supply chains, and unlock access to government tenders and contracts it is currently untested and does carry some notable restrictions. The Mainland License for a free zone branch is valid for 12 months⁵ at a cost of AED 10,000, but a permit is required to conduct activities, known as the Free Zone Operating Permit. Presently, the DET is able to issue temporary permits, valid for a period of six (6) months at a cost of AED 5,000 renewable for the same fee every six months⁶.

This initiative cements Dubai’s position as a global benchmark for regulatory innovation and underscores its unwavering commitment to progressive, business-friendly policies that foster job creation, entrepreneurship, and sustained investor confidence.

¹ Art 5 (b) of Executive Council Resolution No. (11) of 2025 Regulating the Conduct of Free Zone Establishments’ Activities within the Emirate of Dubai

² Art 3 b. 2 of Executive Council Resolution No. (11) of 2025 Regulating the Conduct of Free Zone Establishments’ Activities within the Emirate of Dubai

³ Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses

⁴ Art 2 of Executive Council Resolution No. (11) of 2025 Regulating the Conduct of Free Zone Establishments’ Activities within the Emirate of Dubai

⁵ Art 4 of Executive Council Resolution No. (11) of 2025 Regulating the Conduct of Free Zone Establishments’ Activities within the Emirate of Dubai

⁶ Art 7 of Executive Council Resolution No. (11) of 2025 Regulating the Conduct of Free Zone Establishments’ Activities within the Emirate of Dubai