How Free Zone Companies Can Operate in UAE Mainland – New Rules (2025)

Starting a business in the UAE has always come with choices. One of the most common is choosing between a free zone and the mainland. Free zones are attractive. They offer fast setup, full foreign ownership, and tax benefits. But free zone companies in the UAE couldn’t operate freely in the mainland. That limited their growth.

Now things have changed. On March 3, 2025, Dubai issued a new law. It’s called Executive Council Resolution No. (11) of 2025. This law allows free zone companies to operate in the UAE mainland, under clear conditions. It’s a big step. Many business owners have waited for this.

Let’s break it down simply.

What This Law Means

If you have a company in a Dubai free zone, you can now do business directly in the mainland. That includes selling goods or offering services. You don’t need to set up a separate company. You don’t need to go through a local distributor. But you must follow the steps set by Dubai’s Department of Economy and Tourism (DET).

This means more freedom for businesses.

The law applies to all free zone establishments in Dubai. It does not apply to financial companies in the Dubai International Financial Centre (DIFC).

Who Can Benefit

This law is good for anyone who wants to grow. If you’re in a Dubai Airport Freezone, Hamriyah Free Zone, or any free zone in Dubai, you can now keep your free zone license and also apply to operate in the UAE mainland. This change benefits:

• Tech startups
  
• E-commerce companies
  
• Service providers
  
• Retailers
  
• Export/import firms

Any of these can now tap into the mainland market without giving up their free zone setup.

What You Need to Do for Your Free Zone Company to Operate in the Mainland 

To operate outside the free zone, companies need permission. This can be obtained in three ways:

1. License to set up a mainland branch
   
2. A license to open a branch that operates from within the free zone
   
3. Temporary permit for short-term work in the mainland
   

Each has its own conditions. All are issued by the DET.

For those just testing the waters, the permit is a good starting point. It’s valid for six months and can be followed by a license application if needed.

Documents and Approvals

Whether you are applying for a license or a permit, the process is similar. You must apply for the DET. You also need:

• A valid trade license from your free zone
  
• Company documents (like the Memorandum of Association)
  
• Approval from your free zone authority
  
• Approval from any other government body linked to your business activity
  

If you want to open a physical branch in the mainland, your office must be based in Dubai.

Legal Structure and Control

Even if you set up a branch in the mainland, your main company in the free zone stays in control. The branch has no separate legal identity. It operates under your main company.

This means you don’t need a local partner or sponsor, which is often required in traditional Dubai mainland company formation. That’s a major benefit.

But the branch must follow UAE mainland laws, including tax and compliance rules.

Separate Records Needed

If you do business both in the free zone and the mainland, you must keep separate financial records. The mainland operations must be clearly recorded. This helps with tax, audits, and legal matters.

List of Approved Business Activities

Not all business types are allowed right away. The DET will release a list of allowed activities. This will be done within six months of the law coming into effect.

So if you’re in a free zone, check if your business activity is on the list before applying. The list will also mention if you need a full license or just a permit.

This gives businesses a clear idea of what’s allowed and what’s not.

Employment Rules

If your company is licensed to operate in the mainland, you can continue to use your current staff. That includes employees under your free zone visa. You don’t need to transfer them or make new contracts.

You can also enjoy the usual free zone employment benefits, as long as you meet mainland rules too.

Fees and Costs

Here is what the law says about costs:

• AED 10,000 per year for a license to open a mainland branch
  
• AED 5,000 for a temporary permit (valid for six months)

This gives businesses an affordable way to test and expand into the mainland.

While this is an added cost to your business setup cost in UAE, it’s far less than starting from scratch.

Compliance Timeline

Already operating in the mainland without a proper license? You have one year from the date the law was issued to comply. That means by March 2026, all free zone companies trading in the mainland must have one of the approved licenses or permits.

In some cases, this grace period can be extended once.

This allows companies to adjust without pressure.

Enforcement and Inspections

Once licensed, your mainland operations can be inspected. The DET and other government bodies may check your records, licenses, and activity. This ensures you’re following UAE trade license types and legal standards.

But if you’re transparent and keep proper records, there’s no need to worry.

Why This Law Matters

This new rule is a big step. It narrows the gap between the mainland the free zone. It gives more options to companies. You no longer need to choose between staying limited in a free zone or fully switching to the mainland. Instead, you can do both.

What Business Owners Should Do

Now is a good time to plan. If you have a free zone license and want to reach new markets, this law helps.

Here’s what you can do:

• Review your current business activities
• Check if your services are in demand in the mainland
• Speak to a Dubai business consultant for free zone companies
• Get help applying for the right license or permit
• Make sure your records and team are ready for expansion

Also, ask yourself:

• Do I need to convert my free zone license to mainland?
• Can I test the market first with a temporary permit?
• What’s the right path for my business setup in Dubai long-term?

Planning ahead can save you time, money, and effort.

Final Thoughts

The Executive Council Resolution No. (11) of 2025 gives free zone businesses a real chance to grow. It allows them to operate in the UAE mainland without losing the benefits of being in a free zone.

You don’t have to choose anymore. You can stay where you are and still reach more customers.

If you’ve been thinking about growth, now is the time. With the right guidance, like experts at Bestax, you can apply for mainland access, stay compliant, and enjoy the benefits of both worlds.

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Disclaimer: The information provided in this blog is for general informational purposes only. For professional assistance and advice, please contact experts.