Operating Onshore: Pathways For Free Zone Companies To Conduct Business In The Mainland, United Arab Emirates

The regulatory environment governing business activities in Dubai continues to evolve to reflect commercial realities and support an increasingly integrated economic landscape. The issuance of Dubai Executive Council Resolution No. (11) of 2025 represents a notable shift, as it formally sets out the legal mechanisms through which companies established in Dubai's Free Zones may conduct business in the mainland, without the need to fully re-domicile or establish a new onshore legal entity. 

Historically, Free Zone companies were permitted to operate only within the geographical limits of their respective zones, unless they appointed commercial agents or established local branches. While workarounds were developed in practice, the legal framework was often fragmented and varied across sectors and Free Zones. The new Resolution brings clarity and standardisation by establishing three structured pathways that allow a Free Zone establishment to legally perform activities in the mainland under the supervision of the Dubai Department of Economy and Tourism (DET). The Resolution applies to all Free Zone entities in Dubai, with the exception of financial institutions licensed in the Dubai International Financial Centre. This initiative also complements Dubai's wider regulatory modernisation drive, particularly the Unified Digital Window established under Decree No. 13 of 2024, which is designed to streamline business licensing processes and enhance coordination between Free Zone authorities and the Department of Economy and Tourism.

Under the new system, a Free Zone company may either establish a branch in the mainland, establish a branch that remains physically located in the Free Zone but is authorised to operate onshore, or obtain a temporary permit to conduct limited activities in the mainland for a period not exceeding six months. Each route requires coordination between the DET and the Free Zone licensing authority, and, where relevant, pre-approvals from sector regulators overseeing the intended activity. Notably, branches established under these pathways do not constitute separate legal entities; they remain legally connected to the Free Zone parent company. This approach allows businesses to expand their operational reach while maintaining their existing corporate identity and regulatory setup. 

One of the most practical advantages introduced by the Resolution is the treatment of workforce arrangements. Free Zone establishments operating under these licenses may continue to employ personnel under their existing Free Zone sponsorship, while deploying those employees to carry out work in the mainland. This element significantly reduces administrative complexity and prevents duplication in immigration and HR compliance, which has historically been a barrier to operational expansion. 

Financial and regulatory accountability, however, is reinforced through the requirement that companies maintain separate financial records distinguishing income and expenses related to mainland operations from those related to Free Zone operations. This requirement aligns with the UAE's broader corporate tax and regulatory compliance environment, where the delineation of business activity and revenue streams has become increasingly important. It also ensures that income derived from mainland activities is properly segregated from Free Zone income for corporate tax purposes, in line with the 0% regime available to qualifying Free Zone persons under Federal Decree-Law No. 47 of 2022 and its implementing decisions. 

The Resolution also introduces standard fees for the newly permitted activities. Establishing or renewing a branch authorised to operate onshore while located within a Free Zone is subject to a fee of AED 10,000 per year, while the temporary activity permit is subject to a fee of AED 5,000.

Companies already conducting mainland activities must regularize their status within one year of the Resolution's effective date, with the possibility of a one-time extension granted by the DET. 

In essence, the Resolution recognises the economic reality that many Free Zone companies today service clients and markets across the emirate and the wider UAE. By providing a clear legal mechanism for such engagement, Dubai has reduced operational friction, enhanced transparency, and aligned regulatory practice with commercial demand. For businesses, the reforms offer the ability to expand into the mainland market in a structured manner, without sacrificing the strategic, ownership, or administrative advantages of a Free Zone presence. 

As companies evaluate growth strategies for 2025 and beyond, those operating in consulting, technology, logistics, media, and project-based sectors in particular may benefit from reassessing their operating models in light of these new pathways. The ability to maintain Free Zone status while lawfully and efficiently conducting mainland business represents a significant step in Dubai's continued role as a leading destination for investment, entrepreneurship, and cross-border commercial activity. 

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