Dubai Free Zone companies now empowered to expand into the mainland: A game-changer for businesses in Dubai

In a landmark development, Free Zone companies in Dubai are now permitted to operate in the mainland, presenting new opportunities for business expansion and market access. This groundbreaking change follows the issuance of Dubai Executive Council Decision No. 11/2025, which allows companies registered in Dubai’s Free Zones to expand their operations beyond the designated zones by obtaining the necessary permits and licenses from the Department of Economy & Tourism (DET). This regulatory shift is a significant move for businesses, creating opportunities for growth and deeper integration within the Dubai economy.

What the new decision means
The key element of this new development is the ability for Free Zone companies to establish a physical presence in the mainland Dubai market. Specifically, the decision allows companies that are licensed and registered in any of Dubai’s Free Zones to operate outside the free zone by securing approval from the DET. The initiative will make it easier for Free Zone companies to expand their operations into the broader Dubai market and collaborate with local businesses, government entities, and other stakeholders.

How the process works
To take advantage of this change, Free Zone companies must meet specific requirements to obtain the necessary permits or licenses from the DET. There are three main routes for companies seeking to operate in mainland Dubai:

1. Branch establishment license: Free Zone companies can apply for a license to establish a branch in mainland Dubai.
2. Branch with headquarters license: Companies can also opt to establish a branch with its headquarters remaining in the Free Zone, with fees set at AED 10,000.
3. Temporary activity permit: For businesses looking to temporarily operate in mainland Dubai, they can apply for a permit to practice specific activities, with fees starting at AED 5,000.

In all cases, the Free Zone company must ensure that its license is valid and comply with all prescribed fees and regulatory requirements. This includes submitting necessary documentation and obtaining approvals from both the DET and any relevant government authorities overseeing the proposed business activity.

Key considerations for businesses
While this change offers substantial benefits, companies looking to expand into mainland Dubai should consider the following:

1. Legal and operational requirements: The branch established under this decision will not have a separate legal personality from the parent Free Zone company. This means it will remain tied to the Free Zone entity.
2. Headquarters and financial records: Businesses will need to establish a physical headquarters for their branch in mainland Dubai and maintain separate financial records for their mainland operations.
3. Workforce flexibility: A significant advantage of this decision is that Free Zone companies can utilise their existing workforce for operations in mainland Dubai, continuing to benefit from the free zone's employment advantages.

Opportunities for growth
The ability to operate in mainland Dubai opens up numerous business opportunities, including:

1. Expanded market reach: Operating in the mainland enables Free Zone companies to access a broader client base, including government contracts and local enterprises that were previously off-limits.
2. Collaborations with local businesses: Free Zone companies can now form joint ventures, partnerships and collaborations with mainland businesses, creating new avenues for innovation and market entry.
3. Improved flexibility and cost efficiency: Companies can avoid the higher operational costs associated with Free Zone areas and explore more cost-effective ways to grow their businesses in the mainland.
4. Access to more competitive opportunities: This move allows companies to engage in more competitive bidding processes and benefit from the larger scale of operations available in mainland Dubai.

Navigating the challenges
While the benefits are clear, companies must also consider the challenges associated with expanding into the mainland:

1. Compliance with local regulations: Businesses must ensure that they comply with mainland regulations, which may differ from those in the Free Zones. This includes understanding local labour laws, tax structures, and business practices.
2. Potential costs of expansion: Expanding into the mainland requires investment in infrastructure, operational expenses and compliance-related costs. Companies should carefully assess the financial viability of their expansion plans.
3. Market and cultural dynamics: As with any new market, businesses must understand the dynamics of the mainland market, including the competitive landscape and cultural differences that may influence their success.

Conclusion
Dubai’s recent regulatory shift allowing Free Zone companies to operate in the mainland represents a transformative change for businesses across the emirate. By securing the necessary permits and complying with regulatory guidelines, Free Zone companies can now tap into a broader market, collaborate with local entities, and expand their operations into mainland Dubai. While there are challenges to navigate, the potential for growth and increased market access presents an exciting opportunity for businesses looking to scale and diversify their operations.

With the UAE’s continued focus on economic diversification and business-friendly regulations, companies that embrace this change will find themselves better positioned to capitalize on the opportunities in both the Free Zones and the mainland, driving long-term success and contributing to the growth of Dubai’s economy.