For years, one of the biggest questions for UAE free zone businesses was whether they could directly expand into the mainland market without establishing a completely separate mainland company.
Dubai has now introduced a clearer regulatory framework for free zone businesses that want to conduct activities outside their free zone and within Dubai. Executive Council Resolution No. 11 of 2025 allows eligible free zone establishments to conduct activities in mainland Dubai by obtaining the required licence or permit from the Dubai Department of Economy and Tourism (DET).
This creates new opportunities for businesses that have already established themselves in a Dubai free zone but want to reach mainland customers, take on local projects or expand their physical operations.
However, the change does not mean that every free zone company can automatically operate anywhere in the UAE using its existing free zone licence. The company still needs the appropriate authorisation, and requirements can differ depending on the activity and location.
If you are planning to expand your free zone business into the mainland market, Raes Associates can help you understand the appropriate licensing route, prepare the required documents and manage the expansion process.
Raes Associates can help you assess the right licensing route, prepare all required documents, and manage the full expansion process smoothly.
Can Free Zone Companies Operate in Mainland UAE?
Yes, but the answer depends on where the mainland activity will take place and what business activity is being conducted.
Dubai's Resolution No. 11 of 2025 specifically creates a framework for free zone establishments in Dubai to conduct activities outside their free zones but within the Emirate of Dubai. The resolution does not automatically give a Dubai free zone company permission to operate in Abu Dhabi, Sharjah or another emirate. For activities outside Dubai, the business must obtain the licences and permits required by the competent authority in that jurisdiction.
Previous Restrictions
Traditionally, free zone companies had a more restricted operating scope outside their designated free zone. Businesses wanting to establish a permanent mainland presence often considered setting up a separate mainland company or branch. This could mean additional licensing, office, administration and compliance costs.
The new Dubai framework provides another route for eligible businesses that want to expand while maintaining their existing free zone structure.
New Opportunities for Free Zone Businesses
The new framework can make it easier for eligible free zone companies to:
- Reach mainland customers
- Take on mainland projects
- Establish a mainland branch
- Conduct approved activities outside the free zone
- Expand their market presence
- Use their existing workforce under the permitted framework
The resolution also allows an establishment authorised to operate within Dubai to continue using its existing free zone workforce and employment privileges.
Free Zone vs Mainland Operations
A free zone licence and a mainland licence are still different regulatory arrangements.
A free zone company remains licensed by its relevant free zone authority. If it wants to conduct approved activities outside the free zone in Dubai, it must obtain the relevant DET licence or permit under the new framework.
Therefore, businesses should not interpret the change as meaning that a free zone licence has simply become a mainland licence.
What Does Operating Onshore Mean for Free Zone Companies?
Operating onshore means conducting approved business activities outside the company's designated free zone but within the relevant mainland jurisdiction.
For Dubai free zone businesses, Resolution No. 11 of 2025 provides a legal framework for this type of expansion within the Emirate of Dubai.
Mainland Customer Access
One of the biggest advantages is the potential to work more directly with customers located in mainland Dubai, subject to the applicable licence, permit and activity requirements.
This can be particularly useful for companies providing professional services, technology solutions, consulting, trading or other approved activities.
Physical Business Activities
A company that wants to establish a physical presence outside its free zone may need a specific branch licence rather than simply relying on its existing free zone trade licence.
The correct structure depends on the company's intended activity and operating model.
Dubai Executive Council Resolution No. 11 of 2025 Explained
Dubai Executive Council Resolution No. 11 of 2025 was issued on 3 March 2025 and is currently in force. It regulates how free zone establishments can conduct activities outside their free zones within Dubai. Financial establishments licensed in the Dubai International Financial Centre (DIFC) are excluded from its scope.
Purpose of the Resolution
The resolution provides a formal licensing framework instead of leaving free zone businesses to rely on separate arrangements when expanding outside their zones.
It allows the DET to issue different types of licences and permits depending on how the free zone business intends to operate.
Impact on Free Zone Companies
Under the resolution, eligible establishments can obtain:
- A licence to establish a branch within Dubai.
- A licence for a branch operating out of the free zone.
- A temporary permit to conduct specific activities within Dubai.
Branch licences are valid for one year and renewable, while a temporary permit can be valid for up to six months.
Business Opportunities
This framework can be particularly useful for established free zone businesses that have reached a point where they need access to a wider customer base.
Instead of immediately abandoning their free zone structure, businesses can assess whether a branch or permit under the new framework is more suitable.
What is a Free Zone Mainland Operating Permit?
A free zone mainland operating permit is an authorisation allowing an eligible free zone establishment to conduct specified activities outside its free zone and within Dubai.
It is important to note that this is not a blanket permit for every type of mainland business activity.
Permit Purpose
The temporary permit route is designed for establishments that need to conduct specific approved activities within Dubai for a limited period.
Under Article 7 of the resolution, the temporary permit can be issued for a period of up to six months. The applicable activity must be included in the economic activity list established under the resolution.
Issuing Authority
The Dubai Department of Economy and Tourism (DET) is responsible for issuing the relevant licences and permits under the resolution.
The free zone company's own licensing authority must also provide the required approval.
When Do Companies Need It?
A company may need a permit or branch licence when it wants to conduct business activities outside its free zone and within Dubai.
The correct route depends on factors such as:
- Nature of the activity
- Duration of the project
- Whether a permanent mainland presence is required
- Location of operations
- Required government approvals
Approval Requirements
The company must have a valid free zone licence and obtain the necessary approval from its free zone licensing authority.
Additional approval from the government entity responsible for regulating the particular activity may also be required.
Requirements for Free Zone Companies to Operate in Mainland UAE
Businesses should not begin mainland operations simply because they hold a valid free zone licence.
Valid Trade Licence
The existing free zone licence must remain valid.
Free Zone Approval
Prior approval from the relevant free zone licensing authority is required for the applicable Dubai expansion routes.
Mainland Approval
The company must apply to DET for the relevant branch licence or permit where required.
Activity Requirements
The proposed mainland activity must be permitted under the applicable framework.
Some activities can also require approval from another government or regulatory authority.
Additional Permits
Depending on the industry, additional permits may be required for areas such as construction, healthcare, food, education, transportation or other regulated activities.
Businesses should therefore confirm all approvals before starting operations.
Benefits of Expanding a Free Zone Company to Mainland UAE
The new framework can provide several advantages for businesses that have outgrown a purely free zone-focused operating model.
Access to Mainland Customers
Businesses can potentially serve mainland customers through the appropriate licensing structure rather than restructuring their entire business.
More Business Opportunities
Mainland access can help companies pursue projects that require a presence or authorisation within Dubai.
Government and Private Contracts
For businesses seeking government or larger private-sector contracts, having the appropriate mainland authorisation can make it easier to meet contractual and regulatory requirements.
Local Market Expansion
A mainland branch or permit can provide a structured way to expand an existing free zone business into Dubai's wider commercial market.
Businesses should still review the individual tender, contract and regulatory requirements before bidding.
Free Zone vs Mainland Company: Which is Better?
Neither structure is automatically better for every business. The right choice depends on the company's activities, customers, office requirements and growth plans.
| Factor | Free Zone Company | Mainland Company |
|---|---|---|
| Ownership | 100% foreign ownership generally available | 100% foreign ownership available for many activities, subject to applicable rules |
| Operating Scope | Based on free zone framework | Mainland jurisdiction |
| Market Access | Can expand through applicable licences/permits | Direct mainland operating structure |
| Office Options | Depends on free zone | Mainland premises requirements may apply |
| Expansion | May require additional authorisation | Existing mainland structure supports mainland activities |
Businesses should assess the total cost and compliance requirements rather than choosing solely based on licence price.
For a broader comparison, you can refer to Raes Associates' UAE Business Setup: Free Zone vs Mainland guide.
Can Free Zone Companies Operate in Dubai and Sharjah Mainland?
This is where businesses need to be particularly careful.
Can Free Zone Companies Now Operate Onshore in Dubai?
Yes, eligible free zone establishments can conduct approved activities outside their free zone and within Dubai under the framework introduced by Resolution No. 11 of 2025, provided they obtain the required DET licence or permit.
The resolution provides three routes: a mainland branch, a branch operating out of the free zone and a temporary permit for specified activities.
The fees stated in the resolution are AED 10,000 per year for a branch licence operating out of the free zone and AED 5,000 for a temporary permit. The relevant licence for establishing a branch within Dubai is also subject to prescribed fees under the applicable legislation.
Can Sharjah Free Zone Companies Operate Onshore in Sharjah?
Dubai's Resolution No. 11 of 2025 does not apply to Sharjah. Sharjah has its own licensing authorities and procedures. For example, the Sharjah Economic Development Department provides a process for issuing a foreign branch licence for branches of companies established in free zones across the UAE.
If your business is currently operating from SPC Free Zone, understanding the available licensing structure is important before expanding into Sharjah mainland.
You can read more about SPC Free Zone company formation in UAE to understand the setup options and requirements for businesses operating from this free zone.
How RAES Associates Helps Free Zone Companies Expand in UAE
Moving from a free zone-only structure into mainland operations involves more than obtaining another licence. Businesses need to choose the appropriate structure, understand activity restrictions and coordinate with the relevant authorities.
Raes Associates can assist with:
- Mainland expansion consultation
- Free zone licence review
- Branch licence assistance
- Mainland permit applications
- Licence amendments
- Business activity assessment
- Document preparation
- Government approval coordination
- Visa and immigration support
- Accounting and Corporate Tax compliance
Whether you operate from a Dubai or Sharjah free zone, the appropriate expansion route depends on your specific activity and intended location.
If you are considering expanding your existing free zone business, contact Raes Associates for professional guidance on the appropriate mainland licensing structure.
Expand Your Free Zone Business with the Right Mainland Structure
The new Dubai framework gives eligible free zone businesses more flexibility to explore mainland opportunities, but it does not eliminate the need for proper licensing and regulatory compliance.
Before expanding, businesses should assess their activity, target customers, location, required approvals and long-term operating plans. The right structure can help you access new markets without making unnecessary changes to your existing business setup.
Raes Associates can help you assess your options, obtain the required approvals and manage your mainland expansion process. Contact us today for professional UAE business setup assistance.
