Dubai’s New Business Rules: Free Zone Companies Can Now Expand to Mainland
Dubai has introduced a major change that will benefit businesses operating in free zones. The new Dubai Executive Council Resolution No. (11) of 2025 (the "Resolution") allows free zone companies to expand their operations to mainland Dubai without setting up a separate mainland entity.
This move aligns with Dubai’s D33 agenda, which aims to double the city's economy and position it as a global business hub by 2033.
What Does This Mean for Businesses?
Under the new Resolution, free zone companies (excluding financial firms in the Dubai International Financial Centre) can now apply for mainland licenses and permits through the Dubai Department of Economy and Tourism (DET). Businesses have three options:
Full Branch License – Establish a mainland branch under existing branch setup rules.
Limited-Term Branch License – Open a branch while keeping headquarters in the free zone. This license is valid for one year and costs AED 10,000 to issue or renew.
Temporary Activity Permit – Allows free zone companies to operate onshore for up to six months at a cost of AED 5,000 per issuance or renewal.
To obtain a license or permit, businesses must secure approval from the DET and other relevant authorities. A list of permitted commercial activities under this rule will be announced within six months.
Key Benefits for Free Zone Businesses
This new framework opens doors for businesses looking to expand into the broader Dubai market, offering:
Access to a larger customer base
Lower operational costs
Greater business flexibility
Elimination of previous restrictions on free zone entities
Compliance and Regulatory Considerations
Businesses using this opportunity must follow certain rules:
Separate Financial Records: Mainland operations must maintain distinct financial records from free zone activities.
Corporate Tax Implications: While free zone companies enjoy a 0% corporate tax rate on qualifying income, mainland operations will be subject to the 9% corporate tax unless exempt.
Compliance with Regulations: Companies must adhere to federal and local laws governing business activities on the mainland.
One-Year Transition Period: Businesses already operating outside free zones have one year to comply with the new Resolution, with a possible one-year extension upon approval.
How Businesses Can Capitalise on This Opportunity
This change presents several strategic advantages for businesses:
Companies with both free zone and mainland entities can streamline operations and reduce costs.
Businesses that primarily operate onshore may consider moving some activities to a free zone to enjoy its benefits while maintaining a mainland presence.
Free zone businesses now have better access to Dubai’s entire customer base, including government contracts and non-free zone companies.
Dubai’s new Resolution marks a major shift in the business landscape, making it easier for companies to grow and operate more efficiently. With greater flexibility and fewer barriers, Dubai continues to strengthen its position as a global business hub.
If you're interested in exploring how this change can benefit your business, feel free to reach out to Zyla Accountants today.