Table of Contents

12. Free Zone Company Doing Business in Mainland UAE

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

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

Yes, a free zone company can do business in the mainland UAE. But only if it gets the right permits and follows clear rules from the Department of Economy and Tourism (DET). This big change came in March 2025 with Dubai’s Executive Council Resolution No. 11. Now, free zone companies can sell directly to mainland customers without distributors or new companies.

What It Means for a Free Zone Company to Trade in the Mainland

Trading in the mainland means selling products, offering services, opening offices, or bidding on government contracts. For startups and big firms, this opens the huge local market that free zones couldn’t reach before. Dubai free zone company selling in mainland legal is now simple. With branch permits or temporary approvals, no local sponsor is needed. This follows the UAE’s D33 plan to double Dubai’s economy by 2033.

Understanding Free Zone vs. Mainland in the UAE

Free zones like DMCC, IFZA, or RAKEZ give 100% foreign ownership, 0% tax on qualifying income, and easy imports. It is perfect for export-focused or tech businesses. Mainland (DED/DET licensed) lets you operate anywhere in the UAE, deal with the government, and serve local customers freely. The gap closed in 2025, so a free zone company doing business in Dubai mainland became a reality through branches.

What are the Key Differences Between Free Zones and Mainland

Ownership

Free Zone = 100% foreign.
Mainland = 100% foreign OK in most activities.

Market Access

Free Zone = Zone + international only before 2025.
Mainland = Full UAE, including govt contracts.

Taxes

Free Zone = 0% on qualifying income.
Mainland = 9% corporate tax on mainland profits.

Licensing

Free Zone = Free zone authority.
Mainland = DET/DED branch/permit.

What are the Rules That Make Mainland Access Possible

Free zone companies can now sell to customers in mainland Dubai and the UAE.
This is because Dubai’s Department of Economy and Tourism (DET) made new simple rules in 2025.
So, can a free zone company do business in the mainland UAE? Yes, they can!
To do this, companies need a branch license, a branch operated by headquarters, or a short-term permit.
These choices help keep the free Zone’s tax benefits while opening bigger mainland business opportunities.

What is Dubai’s 2025 Resolution (Executive Council Resolution No. 11 of 2025)

In March 2025, Dubai’s Executive Council made a new law called Resolution No. 11.
This law allows free zone companies in Dubai to do business directly in the mainland.
Companies don’t need to create a new mainland company or use distributors anymore.
They can get a branch license or a permit from DET to sell and offer services.
Businesses already working unofficially in the mainland have until March 2026 to get official approval.
This law supports Dubai’s plan to grow its economy significantly by 2033.

What is Law No. 13 of 2011 (Opening Branches)

Before the 2025 law, Law No. 13 from 2011 allowed free zone companies to open mainland branches.
To follow this, a company must get a “No Objection Certificate” (NOC) from the free zone authority.
Without a proper license, companies may face fines up to AED 100,000.
This law created the first legal path for free zone companies to work in Dubai’s mainland.

What are the Legal and Regulatory Frameworks

Free zones like DMCC, IFZA, and RAKEZ have their own rules for 100% foreign ownership.
DET and the laws of the UAE government govern mainland Dubai.
When free zone companies operate in the mainland, they must keep separate bank records.
Only profits made in the mainland are taxed at 9%, while free zone income can be tax-free.
Companies must follow local laws, including labor, VAT, and safety regulations.

What are the Differences in Governing Laws

Authority

Free Zone = Free zone office (like RAKEZ or DMCC).
Mainland = DET and the UAE federal government

Ownership

Free Zone = 100% foreign-owned allowed.
Mainland = 100% foreign ownership allowed with licenses.

Tax

Free Zone = No corporate tax on qualifying income
Mainland = 9% corporate tax on mainland profits + VAT

Scope of Business

Free Zone = Limited to free zone activities.
Mainland = Broader business activities allowed.

What are the Business Regulations Related to Free Zone Companies

To operate in the mainland, free zone companies must apply for and get licenses from DET.
Required documents include a business plan, a free zone trade license, board resolutions, and an NOC.
Abu Dhabi has similar rules, with some relaxed office space requirements when applying for the Abu Dhabi branch licence for free zone company.
You will need to comply with the free zone companies in the mainland to keep your tax benefits.
The cost of mainland branch licence UAE is about AED 10,000 per year in Dubai.
These changes allow free zone companies to expand sales and services directly into mainland markets easily and legally.

Can a free zone company do business in the mainland UAE: Options for Mainland Access

Legal Ways a Free Zone Company Can Operate Onshore

Free zone companies now have 4 clear paths to do business in the mainland UAE legally:

Mainland Branch License (AED 10,000/year): Open a physical branch office in the mainland.
Branch Operated From Free Zone HQ: No new office – run everything from free zone location.
Temporary Permit (AED 5,000/6 months): Perfect for short projects, events, pilots.
Separate Mainland Entity: A Full new company for a government contract.

How can a free zone company do business in the mainland UAE? Steps to Follow

Follow these 3 simple steps for a free zone company to operate in mainland:

Get NOC from your free zone authority (DMCC, IFZA, RAKEZ).
Apply to DET with a trade license + board resolution.
Pay fees – cost of mainland branch licence UAE starts AED 10K/year.

How to Establish Mainland Presence

Mainland Branch of a Free Zone Company

100% owned by free zone parents.
Same company name and License.
Direct sales to mainland customers.

Establish a Mainland Branch License

DET approves activities matching the free zone license.
Annual renewal required.

Setting up a Mainland Branch or Subsidiary

Submit business plan + documents required for the Free Zone to mainland expansion.
Includes lease agreement, financial statements.

Branch Operated From Free Zone HQ

No mainland office space needed.
Existing staff can work onshore projects.

RAKEZ Dual Licence

One License covers both the free Zone + the RAK mainland branch.
Perfect for the Northern Emirates expansion.

What are the Temporary Permits or Free Zone Activities

Temporary permits let free zone companies work in the mainland for short jobs like events or tests.
They cost AED 5,000 and last 6 months, perfect before full branch setup.
Good for a Dubai free zone company selling on mainland legal on one-time projects.

How to Apply for a Special Activity Permit

Get a special activity permit from DET for limited mainland work, like services or pilots.
Submit activity description + duration – ideal for market testing without big commitment.
Follow the steps for free zone company to operate in mainland with a free Zone NOC first.

Why Use a Distributor or Agent

Use a distributor or agent in the mainland to sell your products without direct operations.
They handle local sales while you stay in the free Zone, simple but shares profits.
Still needs compliance for free zone companies in mainland, like VAT records.

Separate Mainland Entity

Create a separate mainland entity (new LLC) for full government contracts and big operations.
More paperwork, but it gives complete mainland freedom, good for long-term growth.
Protects free zone tax benefits if accounts stay separate.

What is the need for Partnership and Collaboration?

Partnerships let free zone + mainland companies team up to share risks and customers.
Local partners help navigate rules while you bring expertise.

Joint Ventures or Partnerships with Mainland Entities

Joint ventures combine free zone strengths with mainland market knowledge.
Share ownership and profits – great for a free zone company doing business in Dubai mainland.

What are the Compliance Steps Before Entering the Mainland

Step 1: Get a “No Objection Certificate” (NOC) from your free zone office, like DMCC or RAKEZ.

Step 2: Apply to the Dubai DET or local DED with your business papers and plan.

Step 3: Match your mainland work exactly to free zone license activities.

What is the Timeline?

2-4 weeks approval + 1 year to fully comply (by March 2026).

What are the Operational & Compliance Requirements?

Keep separate bank books, one for the free Zone, one for mainland money only.
Follow all UAE rules for tax, workers, and safety in mainland work.
Renew License every year or business stops, late fees apply.

What are the Legal and Regulatory Considerations

Compliance for free zone companies in the mainland includes VAT if sales are over AED 375,000.
No banks, insurance, or healthcare without extra special permission.
Free zone company corporate tax rules in mainland: 9% tax only on mainland sales, Free Zone stays 0%.
Documents required for Free Zone to mainland expansion: NOC, license copy, owner meeting paper, and money reports.

Which Licenses and Permits are Needed?

Approval from the Free Zone Authority

First, get a No Objection Certificate (NOC) from your free zone office, like DMCC, IFZA, or RAKEZ.
This paper says “Yes, you can expand to mainland” – takes 1-3 days usually.
Without an NOC, DET won’t accept your application.

Application to the DED or DET

Submit to the Dubai DET (Department of Economy and Tourism) or the local DED office.
Upload NOC, free zone trade license, company papers, and business plan online.
Cost: AED 10,000/year for the branch, AED 5,000 for a 6-month permit.

Licensing Requirements and Procedures

How to get a mainland licence for free zone company:

Free Zone NOC: Your zone authority approves.
DET Application: Submit docs online.
Activity Check: Match mainland work to free zone license.
Pay & Get License: 2-4 weeks processing.

Requirements for Mainland Business Licenses

Free Zone Trade License: Shows your business is real and legal.
NOC from Free Zone: Proves your Zone.
Board Resolution: Owners meet and vote “yes” for mainland work.
Lease Agreement: Shows office space (sometimes not needed first year).
Financial Statements: Prove your business makes money and is healthy.

Sector-Specific Approvals

Extra licenses needed for special industries:

Real Estate: RERA approval required.
Healthcare: MOHAP or DHA license mandatory.
Education: KHDA approval needed.
Finance: Central Bank or SCA permits.

Activity Alignment, Accounting & Compliance Rules

Activity Alignment

Your mainland work must match exactly what your free zone license allows.
Example: If a free Zone says “IT consulting,” the mainland can only do IT consulting too.
Wrong activities: License rejected or fines up to AED 100,000.

Separate Accounting/Financial Records

Keep 2 separate bank books. One for the Free Zone, one ONLY for mainland money.
This protects your free zone 0% tax, while the mainland pays 9% corporate tax.
Free Zone company corporate tax rules in the mainland require clear records, or lose tax benefits.

VAT Registration

Register for VAT if mainland sales; AED 375,000 per year.
Charge 5% VAT on mainland sales, file returns every 3 months.
Free zone sales stay VAT-free if properly separated.

Customs Compliance

Pay 5% customs duty when moving goods from the free Zone to the mainland.
Get the customs code for the mainland branch to clear goods legally.
No duty on services, only physical products.

HR and Employment Compliance

Free zone staff can work on mainland projects, but update contracts.
Mainland employees need MOHRE work visas + health insurance.
Follow a 48-hour work week + overtime rules for mainland staff.

How Tax Changes When a Free Zone Business Trades Onshore

Mainland work changes your taxes. But the Free Zone stays mostly tax-free if you follow the rules:

Corporate Tax

Mainland profits: Pay 9% corporate tax only on money made from UAE mainland sales
Free zone profits: Still 0% tax if you keep separate bank books and qualify
Free zone company corporate tax rules in mainland: Track onshore sales separately or lose 0% benefit

VAT

Register for VAT if mainland sales; AED 375,000 per year
Charge 5% VAT on all mainland sales (services + products)
Free zone sales to international customers stay VAT-free

Customs

Pay 5% customs duty when moving goods from the free Zone to mainland
Services have no customs fees – only physical products
Get the customs code for your mainland branch to clear goods fast

What are the Costs and Timelines for the License?

Government Fees

Mainland Branch License: AED 10,000/year. Renew every year
Temporary Permit: AED 5,000. Lasts 6 months
VAT Registration: Free to start + 5% on sales. Renew every 3 months.

Approval Timelines

Free Zone NOC: 1-3 days
DET/DED Approval: 2-4 weeks
VAT Registration: 20 working days
Total Setup: 3-6 weeks end-to-end

Which Documents are Required for the Free Zone to Mainland Business Operations?

Must-have papers for documents required for the Free Zone to mainland expansion:

Free zone trade license copy.
No Objection Certificate (NOC).
Board resolution approving mainland work.
Last 2 years’ financial statements.
Lease agreement (sometimes waived 1st year).
Business plan showing mainland activities.

Are there any Restrictions & Challenges?

Activities That Remain Restricted

No banks, insurance, healthcare, or real estate without special extra licenses.
DIFC free zones follow their own rules – no mainland expansion.
Mainland activities must exactly match your free zone license.

Restrictions on Free Zone Companies Operating in the Mainland

No direct sales without a DET branch license or permit.
Cannot bid on government contracts without a full mainland setup.
Goods from the Free Zone to the mainland pay 5% customs duty.

Opening a Branch with the DED Through a Free Zone Entity

Need a free Zone NOC first, then the DED/DET application.
The branch uses the parent free zone name, no new company needed.

Activities That a Free Zone Entity’s Branch Can Conduct

Same activities as free zone license (consulting, IT, trading).
No new activities allowed without a license change.

What are the Challenges and Risks for Free Zone Entities

Complex paperwork + multiple approvals slow expansion.
Tax confusion risks losing the free Zone 0% benefits.
Fines up to AED 100,000 for wrong operations.

Regulatory Compliance

Separate accounting mandatory – mix = tax trouble.
Annual license renewal or business stops.

What are the Potential Penalties for Non-Compliance

AED 100K fines + license suspension.
Business closure for repeated violations.
Lose free zone tax benefits permanently.

What are the Structural and Operational Changes

Update contracts, bank accounts, and staff visas.
New processes for mainland billing + reporting.

What to Avoid When Expanding into the Mainland

No NOC from the free zone authority.
Mixing free Zone + mainland money.
New activities without a license change.
Missing VAT registration (AED 375K sales).

What are the Top Benefits of Mainland Operations

Free zone companies gain massive growth by accessing the UAE’s 10M+ customers + AED billions in government deals.

Market Access

Sell anywhere in the UAE: Dubai malls, Abu Dhabi offices, Sharjah factories.
No distributor needed: direct sales to locals + expats.
International + local markets without restrictions.

Reach a Broader Customer Base and Markets

10M UAE residents as direct customers.
GCC + Africa/Asia through the UAE location.
B2B + B2C: shops, offices, homes, all open.

What are the Opportunities for Government Contracts and Projects

AED billions yearly in roads, schools, and hospitals.
IT/consulting services for smart city projects.
Trading/supply for government purchases.

What are the Operational Flexibilities of Doing Business?

Ability to Conduct Business Across the UAE Without Geographical Restrictions

Operate in Dubai, Abu Dhabi, Sharjah: no zone limits.
Open multiple branches anywhere in 7 emirates.
Unlimited visa quotas based on office space.

Potential for Greater Visibility and Networking

Attend UAE trade shows + business events freely.
Build local brand reputation through mainland presence.
Network with the government + big corporates directly.

Which Industries Set to Gain the Most?

Top winners from mainland access:

IT/Consulting: Direct corporate clients.
Trading/Retail: UAE shops + consumers.
Construction: Government mega-projects.
E-commerce: Local warehouses + fast delivery.

What are the Business Operations?

Free Zone vs Mainland Activities:

Activities

Free Zone = 200-500 per Zone.
Mainland = 2,000+ nationwide.

Locations

Free Zone = Zone only.
Mainland = All UAE emirates.

Tax and Ownership:

Ownership

Free Zone = 100% foreign.
Mainland Branch = 100% parent-owned

Tax

Free Zone = 0% qualifying income.
Mainland = 9% mainland profits only

What are the Strategies Impacting Different Kinds of Businesses

Consulting and Service Providers

Buy a temporary license as a test for the first 6 months (cost is 5,000 AED)
Targeting clients directly (bypassing distributors) in IT and Legal is 40 percent more transactional.
Use a branch of your HQ, do not set up a new office, and legally service mainland clients.

E-Commerce Sellers

Possesses a local warehouse plus a Dubai freezone company and can legally sell in the mainland.
Delivering in the UAE is faster than your international competition (TechBridge saw 60 percent sales growth).
Get your VAT registered early, 375,000 AED sales threshold is the limit for making the application.

Trading Businesses

Having a mainland branch as a license (10,000 AED/year) lets you sell directly in the UAE.
Customs Clearance is straightforward for a 5 percent duty.
Collaboration with surplus shops – eBay surplus marketplace became “Future 100 UAE.”

Event and Project Businesses

Special activity permits are a fantastic match for temporary events/projects.
Access to government tenders (Construction and IT are the ones worth the most).
Networking opportunities were expanded, QYUBIC launched and scaled in 48 hours.

Where is Mainland Access Going Next: Future Outlook

Middle Abu Dhabi and the Northern Emirates are set to follow Dubai’s 2025 model by 2026.
A dual licensing explosion is happening; a freezone and a mainland in one package is available everywhere.
There is a focus on AI/Tech; for government tenders, there’s a preference for mainland companies.
There is a surge in eCommerce, and the local warehouse with fast UAE delivery is not a “nice to have,” it’s a requirement.

What the Experts Advice for Free Zone to Mainland Grounded Success

NOC is First: Free Zone Approval takes 1 to 3 Days.
Testing the Market: AED 5000 Temporary Permit Good For 6 Months.
Opening Separate Banks on Day 1: It is Necessary to Protect Yourself From 0% Free Zone Tax.
Must Match Activities Exactly: Obtaining New Mainland Jobs is Not Allowed.
VAT is 375K AED: You Must Register Before You Get Fined.

Our business setup experts in Dubai, with over 12+ years of experience, always help individuals in their business setup in Dubai. They are licensed Business setup consultants in Dubai, always ready to help you.

Frequently Asked Questions

Q1: Can a free zone company do business in the mainland UAE without creating a new company?

Yes. Get a mainland branch license (AED 10K/year) or temporary permit (AED 5K/6 months) from DET. Your free zone company name stays the same.

Q2: What Will Happen If I Mix Free Zone With Mainland Bank Accounts?

You will lose 0% tax from the Free Zone. Mainland profit is taxed with 9% corporate tax only if bank accounts are inseparated.

Q3: How Fast Can I Achieve Starting The Dubai Free Zone Selling To The Mainland Legally?

Total 3 to 6 week period. NOC takes 1 to 3 days, and DET approval takes 2 to 4 weeks. Afterward, you can test the market with a 6-month permit.

Q4: Is There A Customs Duty For Services To the Mainland From the Free Zone?

No, service is duty-free. Only for goods, there is a 5% customs duty when leaving the free Zone.

Q5: Can one License cover Dubai and Abu Dhabi mainland operations?

No – each emirate needs separate DET/DED approval. RAKEZ Dual License covers the RAK free zone + mainland only.

Conclusion

Good news! Free zone companies can now do business in the mainland UAE easily. Dubai’s big new rule (Resolution No. 11 of 2025) opened doors in March 2025. Sheikh Hamdan signed it to help businesses grow fast and support Dubai’s plan to double its economy by 2033.

You keep your free zone tax perks (0% on exports) while selling to 10 million UAE people. Get NOC from DMCC/RAKEZ/IFZA (1-3 days), apply to DET, pay AED 10K for branch license – ready in 3-6 weeks! Test market first with an AED 5K temporary permit.

Contact our Business setup experts in Dubai for a smooth process!

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