For many businesses established in a Dubai Free Zone, expansion eventually raises an important question:

Can a Free Zone company conduct business in mainland Dubai without establishing a separate Mainland company?

The answer depends on the nature of the proposed activities, the applicable licensing requirements, and the regulatory framework governing the business. While Free Zone and Mainland operations remain distinct, Dubai’s legal framework provides mechanisms through which certain Free Zone entities may carry out activities within mainland Dubai under specified conditions.

Understanding the available options and their legal and commercial implications is an important part of determining the most appropriate structure for a business seeking to expand its operations.

Free Zone and Mainland Operations: Understanding the Distinction

Businesses in the UAE generally operate through either a Free Zone entity or a Mainland-licensed company.

Free Zone companies are licensed and regulated by their respective Free Zone Authorities and continue to attract investors due to advantages such as 100% foreign ownership, specialized business environments, and streamlined incorporation procedures. Traditionally, however, Free Zone entities have been primarily structured to operate within their designated zones or conduct business internationally.

Mainland companies, by contrast, are licensed by the competent economic authority and may generally conduct business throughout the UAE, subject to applicable regulatory requirements.

Historically, businesses wishing to access the domestic market often needed to establish a separate Mainland presence or rely on alternative arrangements depending on the nature of their activities.

The Current Framework

Dubai Executive Council Resolution No. 11 of 2025 established a framework governing how qualifying Free Zone entities may conduct certain activities within mainland Dubai.

The Resolution applies to most Dubai Free Zone entities, although financial institutions licensed within the Dubai International Financial Centre (DIFC) remain subject to their own regulatory framework.

The framework provides businesses with additional structuring options while preserving the distinction between Free Zone and Mainland regulatory regimes.

Branch Licenses and Temporary Permits

The framework provides different pathways depending on the nature and duration of the proposed activities.

Branch Arrangements

A qualifying Free Zone entity may be permitted to conduct activities in mainland Dubai through a branch arrangement, subject to the applicable licensing requirements and approvals.

Branch licenses are generally issued for a period of one year and may be renewed in accordance with the applicable regulations.

Depending on the circumstances, the branch may operate from mainland Dubai or under arrangements that allow the business to maintain its existing corporate presence within the Free Zone.

Temporary Permits

For certain projects or limited-duration activities, businesses may be eligible to obtain temporary permits.

These permits may be granted for specific activities and are generally issued for periods of up to six months.

For some businesses, temporary permits may provide a practical way to undertake a particular project or assess commercial opportunities before committing to a more permanent operational structure.

Is a Separate Mainland Company Still Necessary?

Not in every case.

The appropriate structure will depend on the nature of the activities, the scale of the proposed operations, applicable regulatory requirements, and the business’s long-term objectives.

While some businesses may find the available branch and permit arrangements sufficient for their needs, others may conclude that a separate Mainland entity remains the more appropriate option from an operational, regulatory, or commercial perspective.

Approval and Regulatory Requirements

Operating under the framework is not automatic.

Businesses generally need to obtain the necessary approvals from their relevant Free Zone Authority and, where applicable, from other competent authorities responsible for regulating the proposed activities.

Depending on the nature of the business, additional sector-specific approvals may also be required.

Licensing and regulatory requirements should therefore be assessed at an early stage of the expansion process to avoid delays or compliance issues.

Workforce Considerations

One practical consideration for businesses expanding beyond their Free Zone operations is the management of personnel.

Depending on the applicable structure and regulatory requirements, businesses may in certain circumstances be able to utilize personnel employed under their existing Free Zone arrangements when carrying out authorized activities in mainland Dubai.

Workforce arrangements should nevertheless be reviewed in light of the specific licensing requirements, immigration rules, and employment regulations applicable to the business.

Compliance and Tax Considerations

Expansion into mainland Dubai may also result in additional compliance obligations that should be evaluated carefully.

Considerations may include:

• Maintaining separate accounting and financial records where required;
• VAT registration and reporting obligations;
• Corporate tax implications;
• Activity-specific licensing requirements;
• Contracting arrangements with customers and suppliers; and
• Ongoing reporting and record-keeping obligations.

Businesses operating across multiple regulatory frameworks should ensure that their internal processes are capable of supporting these additional requirements.

Corporate Tax Considerations

Corporate tax implications should form part of any expansion assessment.

Under the UAE corporate tax regime, taxable profits exceeding the applicable threshold are generally subject to corporate tax at a rate of 9%.

For businesses benefiting from Free Zone tax incentives on qualifying income, undertaking activities outside the Free Zone may have implications that require careful evaluation. The tax treatment of those activities should therefore be assessed alongside the proposed operational structure to ensure that the business understands the potential impact on its overall tax position.

Given the importance of proper record-keeping and income allocation, legal and tax advice should be considered at an early stage of the planning process.

Transitional Considerations

The Resolution also contains transitional provisions for businesses that were already carrying out activities in mainland Dubai before the framework entered into force.

Businesses operating under pre-existing arrangements should review their licensing position, approvals, and operational structure to ensure continued compliance with applicable requirements and any relevant transitional obligations.

Early assessment can help identify whether any additional steps may be required to regularize existing operations.

Considerations Before Expanding

Before expanding beyond a Free Zone structure, businesses should consider a number of legal and commercial factors, including:

• The nature of the proposed activities;
• Whether a branch arrangement or separate Mainland entity is more appropriate;
• The regulatory approvals required;
• The potential tax implications of the chosen structure;
• Operational and workforce requirements; and
• The business’s long-term growth objectives.

The most suitable structure is often determined not only by current operations but also by how the business expects to develop in the future.

Conclusion

Expanding beyond a Free Zone structure requires more than obtaining the necessary approvals: Businesses should assess how the proposed activities will be conducted, the regulatory obligations that may arise, and the potential tax and operational implications of the chosen structure.

Whether expansion is pursued through a branch arrangement, a temporary permit, or a separate Mainland entity, early planning can help reduce compliance risks and ensure that the selected structure supports the business’s long-term commercial objectives.