Dubai issues resolution enabling free zone companies to operate on mainland

The Dubai Executive Council has issued Resolution No. (11) of 2025 (‘the Resolution’), introducing a regulatory framework that permits Free Zone companies to conduct business activities outside their specific Free Zone, i.e. on the mainland, within the Emirate of Dubai. This Resolution applies to non-financial entities and aims to enhance operational flexibility while maintaining compliance with existing laws.

Under the new framework, Free Zone companies can operate on the mainland by obtaining either a branch license or a temporary permit. Branch licenses—whether for establishing a branch within the Emirate or operating from the Free Zone—are valid for one year and renewable. Temporary permits allow specific activities for up to six months. The Department of Economy and Tourism (DET) will oversee the licensing process and is expected to issue a list of eligible economic activities in due course. 

The Resolution represents a significant shift in Dubai’s business landscape, creating new opportunities for Free Zone companies to expand their reach without losing Free Zone benefits.

Previously, companies were permitted to operate only within their respective Free Zones. Businesses requiring a mainland presence had to engage a third-party agent, register a branch, or establish a separate mainland entity.

With the introduction of this Resolution, businesses can now access mainland markets, serve local customers directly, and diversify revenue streams while retaining customs and employment advantages. For many companies, this offers a cost-effective way to test mainland operations through temporary permits before committing to a full branch license.

However, the change also introduces compliance obligations, including maintaining separate financial records and preparing for DET audits. Companies should carefully evaluate licensing requirements, operational costs, and strategic fit to ensure a smooth transition and avoid penalties.

The DET will issue a comprehensive list of permitted economic activities, specifying which activities require a branch license and which can be conducted under a temporary permit. This list will be critical for businesses planning to expand operations under the new framework.

Licenses and permits will require prior approval from the Free Zone Licensing Authority and, where applicable, other government entities supervising the activity. Companies must submit supporting documentation, including trade licenses and corporate details, and pay the prescribed fees for branch licenses and temporary permits. These steps ensure regulatory alignment between Free Zone authorities and the DET.

Additionally, Free Zone companies can continue using their existing workforce for mainland operations and retain Free Zone employment privileges.

All businesses currently operating outside Free Zones must comply with the Resolution within one year of its effective date, with a possible extension for another year. Failure to comply may result in penalties under applicable legislation.

Key considerations for investors and business owners

• Expand market reach without changing corporate structure.
• Use temporary permits for short-term projects or market testing.
• Continue leveraging Free Zone employment and customs benefits.
• Plan for compliance and financial segregation in advance to avoid penalties.

Eligibility restrictions for the initiative

• Applies only to Free Zone companies licensed under relevant Free Zone authorities in the Emirate of Dubai.
• If a Free Zone company intends to conduct business outside the emirate of Dubai, it must obtain required licenses and permits from the competent authorities in the relevant jurisdiction.
• Excludes financial entities operating in the Dubai International Financial Centre.
• A list of permitted activities will be defined and released by the DET in coordination with Free Zone authorities.

We will monitor developments and keep you informed as they occur.

Organizations wishing to expand into the Dubai mainland with related questions or procedural concerns are encouraged to reach out to the relevant free zone authority or a member of KPMG’s Regulatory Services team.

_{1 Executive Council Resolution No. (11) of 2025 Regulating the Conduct of Free Zone Establishments’ Activities within the Emirate of Dubai, issued by the Supreme Legislation Committee, published in the Official Gazette on 3 March 2025.}