Can a Free Zone Company Do Business in the Mainland UAE? 

The United Arab Emirates (UAE) has always topped the list of popular business destinations. However, when choosing an appropriate location, entrepreneurs often get confused between the Mainland and the Free Zone. While a free zone company setup offers foreign ownership, tax exemptions, and a streamlined setup process, the Mainland allows unrestricted trade across the country and internationally. 

However, one common question that arises is - Can a free zone company do business in the mainland? Let’s find out. 

Understanding Free Zone company setup vs Mainland company setup 

Before getting into the impact of expanding a free zone business into the Mainland UAE, let’s look at the functioning of these two entities. 

Free Zone: In this jurisdiction, companies operate within a specific economic zone and benefit from full foreign ownership, tax exemptions, and customs privileges. However, they are restricted from directly trading in the mainland or the local market. Some popular free zones are the International Freezone Authority (IFZA), Ajman Free Zone, Dubai Multi Commodities Centre (DMCC), and Dubai World Trade Centre (DWTC). 

Mainland: On the other hand, companies in the Mainland can operate anywhere in the UAE, and even work with government entities and mainland-based customers. They are licensed by the Department of Economic Development (DED) in the respective emirate. 

Benefits of Mainland business setup in Dubai 

Free zone company setup is a key to business growth and expansion. Here’s how expanding a free zone entity to the Mainland benefits business owners and companies in the UAE - 

• Easier Expansion: Easy to establish branches in mainland Dubai, without any restrictions. 
• Ample Business Opportunities: Easy to apply for permits to conduct specific activities outside the designated zones and access a broader market. 
• Simplified Licensing: Only requires a license issued by the Department of Economy and Tourism (DET) that needs to be renewed annually. 
• Boosting Foreign Investment: Offers seamless integration between free zones and the mainland. 
• Supporting Dubai’s D33 Agenda: Aims to grow the economy by 2033 and place Dubai among the top three global economic cities.  

Can a freezone company do business in the Mainland? 

Generally, a free zone company is restricted from conducting business in the Mainland. To do so, it needs to acquire a specific mainland license. 

However, in March 2025, Crown Prince Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Chairman of Dubai’s Executive Council, issued Executive Council Resolution No. 11 of 2025, allowing registered free zone companies to legally operate on the mainland with the right licenses and permits from the Department of Economic Development (DED). This simply means they can sell their products and services directly in the mainland without any third-party distributors or local service agents. 

Under the new resolution, Free Zone companies (excluding DIFC companies) can apply for: 

• A branch license in the mainland. 
• A mainland branch license, while keeping its centre of operations in the Free Zone. 
• A temporary permit to conduct specific operations onshore. 

The new policy aligns with Dubai’s Economic Agenda D33, which aims to enlarge Dubai’s economy by 2033 and strengthen its integrated and growth-focused business ecosystem, thereby positioning it among the top three commercial cities in the world. 

However, there is a key exception. The new policy excludes financial institutions operating in the Dubai International Financial Centre (DIFC), which has its own separate legal framework. 

Free zone company setup: How to trade in the Mainland? 

The Executive Council Resolution No. 11 of 2025 now allows Free Zone companies in Dubai to operate legally in the mainland. However, there are specific methods to do it. 

Establish a Mainland Branch 

Free zone companies must set up a branch office in the Mainland region, which will operate under the name and license of the parent Free Zone company. However, it must obtain a Mainland license from DED to carry out its full range of business activities in the mainland. Depending on the activity, a physical office space may also be required for the Mainland company setup. 

Apply for a Special Activity Permit 

Companies that do not want to set up a full branch can apply for a special activity permit from the DED, which will allow them to conduct limited or temporary operations in the mainland. This method is ideal for short-term projects or contracts, for companies that wish to provide services to mainland clients, and for studying the mainland market before full expansion. 

However, certain conditions may apply while applying for this permit. For instance, the free zone company owner must provide a clear description of the activity that needs to be performed in the Mainland. They must also specify the duration of the work or service and get approval from both DED and the Free Zone authority. 

Both the Mainland branch licenses and the special permit are valid for one year, and hence need to be renewed annually. In addition, companies must ensure compliance with the local regulations by maintaining proper accounting records and fulfilling their tax obligations accurately and timely. 

Compliance requirements for expanding to the Mainland UAE 

For a compliant mainland company setup, free zone entities must adhere to the requirements of DET (Department of Economy and Tourism), which include the following: 

Maintain Separate Financial Records – Business owners must keep separate books of accounts for their mainland operations and free zone operations to ensure transparency and help authorities evaluate tax, audit, and regulatory compliance for each jurisdiction clearly. 

Follow Federal & Local Regulations – Companies must comply with all UAE laws, labour regulations, and tax policies, including Anti-Money Laundering (AML) policies, Corporate governance standards, Consumer protection policies, and VAT laws. This also includes proper record-keeping, transparent reporting, and keeping internal controls in place. 

Undergo Regular Inspections – Businesses in both the Mainland and Free zones must undergo regular inspections by DET and other licensing authorities to ensure adherence to regulations. 

Dubai International Financial Centre (DIFC) operates under its own independent legal framework and financial regulations. Hence, companies licensed in this free zone will be exempt from the new rule. 

Mainland company setup: Procedure for expanding to the Mainland UAE 

Free zone companies aiming for a mainland company setup must follow these key steps:- 

Determine Business Eligibility: Confirm whether your business activity is permissible for operation under the new resolution. Check the DET’s list of approved economic activities or speak with a business consultant at Shuraa to determine the eligibility of your free zone business. 

Choose the type of license: Select the type of license you want to apply for - 

• Mainland branch of a freezone company 
• Mainland branch with headquarters in the free zone 
• Permit for specific business activities 

Apply for Mainland Business Licence: Submit an application for a trade license to the Department of Economy and Tourism (DET) in the Mainland. 

Secure Approvals from Relevant Authorities: Certain sectors, such as healthcare, education, and financial services, may require additional approvals from regulatory bodies. 

Maintain Separate Financial Records: Free zone companies expanding to the mainland must maintain separate financial records for both jurisdictions' activities. They must also ensure that the financial statements comply with UAE regulations and are well-prepared for audits. 

Lease a Physical Office: Depending on your business activity, secure an office space or commercial premises in the mainland. Once finalized, prepare a lease agreement. 

Register for VAT (if applicable): If your company meets the VAT threshold, register with the Federal Tax Authority (FTA). 

Apply for Employee Visas & Labour Permits: Comply with UAE labour laws for hiring employees and apply for relevant visas and work permits through the Ministry of Human Resources and Emiratisation (MOHRE). 

Meet the Compliance Deadline: Companies must comply with the new resolution within one year. If required, it can be extended to another year upon request. 

Industries that gain the most with expansion 

Several industries are likely to benefit the most under the new policy. 

• E-Commerce & Online Retail: Can now deliver products directly to customers in the mainland, without involving third-party agents. 
• IT & Tech Companies: Can offer solutions directly to mainland-based businesses. 
• Consulting & Professional Services: Can serve a wider market without opening a separate mainland entity. 
• Trading & Import-Export Businesses: Can now operate freely and cut down on intermediaries. 
• Health, Wellness & Education: Can now serve the growing demand in the mainland. 

Take your next step to the Mainland UAE 

Thus, the new resolution is a game-changer for businesses, especially those facing roadblocks in reaching customers or clients across the UAE. Free zone company owners can now grow, reach more customers, and level up their business without needing an intermediary. 

Shuraa Business Setup will make this business expansion journey easy for you. From applying for the right license to handling the paperwork, they will use their knowledge and years of experience to ensure your business follows all the rules and grows infinitely. 

Reach out to Shuraa experts today.