In a landmark policy move that signals a new phase in Dubai’s business landscape, the Emirate has officially launched the Free Zone Mainland Operating Permit (FZMOP), a transformative initiative that allows free zone companies to conduct commercial activities directly within the Dubai mainland without needing to form a separate mainland entity. This reform, introduced under Dubai Executive Council Decision No. (11) of 2025, was issued by His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council, and implemented jointly by the Dubai Business Registration and Licensing Corporation (DBLC) and the Dubai Free Zone Council (DFZC).
The Decision marks a pivotal milestone in Dubai’s long-standing ambition to build a unified, flexible, and innovation-driven business environment. For the first time, companies established in Dubai’s many free zones, which have long been engines of foreign investment and economic diversification, can now extend their operations seamlessly into the mainland market under a structured and legally recognized permit. The move effectively bridges the gap between two previously distinct regulatory spheres: the free zone ecosystem and the onshore (mainland) commercial framework.
The Vision Behind the Reform
Dubai’s leadership has consistently pursued policies that enhance the city’s attractiveness as a global hub for entrepreneurship and investment. Over the past three decades, the establishment of specialized free zones across the Emirate, including those dedicated to technology, media, finance, logistics, and innovation, has positioned Dubai as one of the most dynamic business environments in the world. These free zones offer 100% foreign ownership, customs advantages, and simplified administrative procedures, drawing thousands of international companies.
However, while free zones have flourished, they have traditionally operated under restrictions when engaging with the mainland market. A company incorporated in a free zone was generally limited to trading within that zone or internationally, unless it established a separate mainland entity or appointed a local commercial agent. This separation created operational barriers, duplicated costs, and limited the ability of free zone firms to participate in local projects or government contracts.
Recognizing the need for greater integration and efficiency, the Government of Dubai introduced the Free Zone Mainland Operating Permit as part of its broader economic modernization agenda. By enabling free zone entities to extend their operations into the mainland under a clear regulatory framework, the Emirate aims to create a seamless business ecosystem, one that supports growth, encourages cross-sector collaboration, and attracts a new wave of investors seeking flexibility and scale.
Legal Foundation: Dubai Executive Council Decision No. (11) of 2025
The legal foundation of this initiative is the Dubai Executive Council Decision No. (11) of 2025 Regulating the Conduct of Free Zone Establishments’ Activities within the Emirate of Dubai, issued by H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council. The Decision provides the statutory authority for free zone establishments to carry out their activities outside their zones under specific licensing conditions.
The Resolution clearly defines the roles of the Department of Economy and Tourism (DET), through its licensing arm DBLC, and the Dubai Free Zone Council (DFZC). Together, these entities are responsible for implementing and supervising the permit framework, ensuring compliance, and coordinating with the various free zone authorities operating across the Emirate.
Under the Decision, free zone companies are allowed to conduct specific activities in the mainland through one of the following mechanisms:
The Free Zone Mainland Operating Permit falls within the third category, a flexible, temporary operating authorization distinct from establishing a formal mainland branch, allowing approved free zone companies to carry out specific activities in the mainland for a defined period, subject to renewal.
How the Free Zone Mainland Operating Permit Works
The permit is designed to be simple, transparent, and accessible. Eligible free zone companies can apply for the permit through the DBLC in coordination with their respective free zone authority. Once approved, the company is allowed to perform its licensed activities within the mainland for up to six months, after which the permit can be renewed.
The permit currently targets non-regulated sectors such as technology, consultancy, design, marketing, and general services, areas where Dubai seeks to encourage innovation and collaboration between free zone and mainland enterprises. Over time, the list of eligible activities may expand as the framework matures, subject to future regulatory approvals and DFZC–DET evaluations.
Importantly, the Decision requires companies holding the permit to maintain separate financial records for their mainland and free zone operations. This ensures transparency, simplifies taxation, and allows for proper auditing and regulatory oversight. Revenue generated under the permit from mainland activities will be subject to the 9% federal corporate income tax, while income derived from free zone operations may continue to enjoy preferential treatment, subject to the entity qualifying as a ‘Qualifying Free Zone Person’ under FTA regulations and to the rules applicable within each free zone.
The Free Zone Mainland Operating Permit also allows companies to use their existing workforce registered in the free zone. This means businesses can, in principle, deploy their existing free zone workforce for permitted mainland operations, a major practical benefit that reduces both cost and administrative complexity; however, certain activities may still require compliance with specific free zone or sectoral HR and immigration rules.
A Strategic Step Toward Economic Unification
The introduction of this permit represents more than just a procedural change; it is a strategic step toward unifying Dubai’s dual economic systems. For years, the Emirate has operated two parallel frameworks: the free zone model, built to attract foreign investment and specialized industries, and the mainland model, which governs domestic trade and local commercial activities. While both have succeeded independently, their coexistence sometimes led to fragmentation and inefficiencies.
By allowing controlled interaction between these two systems, Dubai is now creating an integrated economic ecosystem. Free zone companies can serve domestic clients, form partnerships with mainland entities, and participate in public sector projects, all while maintaining their free zone advantages. This integration strengthens the overall competitiveness of Dubai’s economy and aligns with its long-term vision of becoming the world’s most business-friendly city.
The Decision also enhances Dubai’s reputation as a jurisdiction that continuously adapts to global economic realities. In an era when investors seek flexibility, cost efficiency, and simplified compliance, the ability to operate across jurisdictions without redundancy is a major advantage.
Administrative Framework and Oversight
Under Executive Council Decision No. (11) of 2025, the Department of Economy and Tourism and its licensing division, DBLC, are responsible for issuing the permits and overseeing compliance. The DFZC, which represents the collective interests of Dubai’s various free zones, coordinates with DBLC to ensure alignment between the rules of the free zone authorities and the requirements for mainland operations.
Companies applying for the permit must obtain approvals from their respective free zone authority, provide a valid trade license, and submit supporting documents as required by DBLC. Approvals from sector-specific regulators may also be needed, depending on the nature of the activity. Once granted, the permit is valid for six months and can be renewed for the same period.
The fee structure for the permit is straightforward. As stipulated in the Decision, the cost of issuing or renewing a temporary permit is AED 5,000. Meanwhile, establishing a branch operating out of a free zone is subject to an annual fee of AED 10,000. These fees are modest in comparison to the cost of establishing a separate mainland company, making the permit an attractive option for free zone firms seeking market expansion; however, additional sector-specific or regulatory authority fees may still apply depending on the nature of activities.
To maintain regulatory integrity, the Decision requires all permit holders to comply with applicable federal and local legislation. Establishments will also be subject to audit and inspection procedures in coordination between the DET and the relevant licensing authorities. Non-compliance may result in suspension or revocation of the permit, along with applicable penalties.
Economic and Strategic Impact
The Free Zone Mainland Operating Permit is expected to have a transformative impact on Dubai’s economy. It offers a pragmatic solution to long-standing structural barriers, creating a more fluid and integrated business environment that benefits investors, regulators, and consumers alike.
For free zone companies, the permit opens new revenue streams by enabling access to the domestic market without the expense or complexity of forming a separate mainland entity. They can now engage directly with clients, participate in public tenders, and form local partnerships, opportunities that were previously out of reach.
For the government, the policy enhances transparency and ensures fair taxation on mainland-derived revenues. It also encourages the regularization of informal business practices, as companies that previously operated indirectly through agents or intermediaries can now do so legally and transparently under the permit.
From a macroeconomic perspective, the permit supports Dubai’s objectives of diversifying its economy, encouraging innovation, and attracting global talent. It allows startups and small businesses in free zones to test the mainland market with minimal risk, fostering entrepreneurship and growth. At the same time, larger enterprises can use the permit as a stepping stone to establish a more permanent presence in the mainland should they choose to scale further.
Compliance and Corporate Tax Considerations
One of the key provisions under the new framework is the requirement for financial separation between free zone and mainland activities. This distinction is crucial, particularly in the context of the UAE’s federal corporate tax regime. Under the current rules, income earned from operations in the mainland is subject to a standard 9% corporate income tax, while qualifying income earned in free zones may benefit from tax exemptions or reduced rates.
To ensure compliance, companies must maintain accurate accounting records for both streams of activity. This includes separate invoicing, bookkeeping, and financial reporting. In cases where the same company conducts transactions that span both jurisdictions, careful transfer pricing documentation will be essential to demonstrate that profits are allocated fairly and transparently.
While this may introduce some additional administrative responsibility, it also offers clarity and predictability, qualities that international investors value highly. By formalizing the rules for cross-jurisdiction operations, Dubai provides a stable and well-regulated environment that minimizes risk and uncertainty.
Workforce and Operational Flexibility
Another key advantage of the permit is the ability for free zone companies to utilize their existing workforce for mainland operations. Traditionally, a company wishing to operate in both jurisdictions would need to maintain separate sponsorship arrangements and visa quotas for employees under each license. The new framework eliminates this redundancy. Employees registered in the free zone can carry out permitted activities in the mainland under the company’s existing sponsorship, preserving the employment privileges provided by their free zone status.
This provision greatly simplifies human resources management and reduces administrative costs. It also promotes greater mobility and collaboration, allowing businesses to allocate talent more efficiently and respond faster to client demands across the Emirate.
A Milestone in Policy Evolution
The introduction of the Free Zone Mainland Operating Permit is not an isolated development; it is the culmination of years of policy evolution aimed at harmonizing Dubai’s economic framework. Earlier initiatives, such as the creation of the Dubai Unified License (DUL) and the establishment of a Unified Digital Window for Company Registration, laid the groundwork for this integrated model. Together, these reforms reflect Dubai’s commitment to streamlining business procedures, enhancing transparency, and creating a cohesive regulatory environment that meets the needs of a rapidly changing global economy.
The Free Zone Mainland Operating Permit can be seen as a bridge between flexibility and accountability, allowing companies to expand their commercial reach while remaining within the boundaries of a robust legal system. It is also an acknowledgment of the changing nature of business itself, where digital platforms, remote service delivery, and cross-border operations demand more adaptive regulatory approaches.
Challenges and Implementation Considerations
While the permit offers clear advantages, its success will depend on careful implementation and ongoing coordination between authorities. The initial rollout focuses on non-regulated sectors, which means some industries, particularly those under strict oversight such as healthcare, finance, and education, may not yet be eligible. Expanding the framework to these sectors will require further regulatory alignment and possibly new inter-agency protocols.
Another consideration is the permit’s short validity period. A six-month term, while suitable for pilot operations, may be too brief for companies seeking long-term contracts or projects. Over time, the authorities may consider extending the duration or introducing multi-year permits to provide greater continuity and planning certainty.
Businesses must also invest in robust compliance systems. Separate accounting, tax filing, and reporting obligations require sound internal controls and clear governance. Firms should ensure they have the right professional support, from auditors, legal advisors, and tax consultants, to navigate these requirements effectively.
Despite these challenges, the overall direction of the policy is unmistakably positive. Dubai is signalling its readiness to adapt and innovate, providing practical pathways for businesses to grow within a regulated, transparent, and business-friendly ecosystem.
Integration with Dubai’s Long-Term Economic Vision
The launch of the Free Zone Mainland Operating Permit aligns closely with Dubai’s long-term economic agenda, which emphasizes diversification, innovation, and sustainability. The Emirate’s strategy aims to create a global model of economic resilience by unifying systems, digitizing government services, and encouraging private sector participation.
By connecting free zone and mainland economies, Dubai strengthens its position as a cohesive and diversified business hub. This integration supports job creation, fosters competition, and encourages the transfer of knowledge and technology between sectors. It also positions Dubai as a preferred base for regional headquarters, as companies can now operate flexibly across different market segments from a single corporate platform.
Moreover, the initiative enhances transparency and governance, both of which are central to Dubai’s reputation as a trusted international financial and commercial center. By codifying the rules of engagement between free zones and the mainland, the government ensures that all stakeholders, businesses, regulators, and investors, operate with clarity and confidence.
The Future Outlook
The Free Zone Mainland Operating Permit represents just the first phase of a broader economic integration strategy. As authorities gather data from the initial rollout, future enhancements are expected. These may include longer permit durations, expanded eligibility to regulated sectors, and digital automation of the application and renewal process through the Unified Digital Window.
The policy also has the potential to inspire similar frameworks across other Emirates, fostering a more consistent national approach to investment and company regulation. In time, this could lead to a unified UAE-wide business environment that balances the unique advantages of each Emirate with shared national objectives.
For businesses, the message is clear: Dubai continues to evolve in step with global economic trends. Companies that position themselves early to take advantage of the Free Zone Mainland Operating Permit will likely gain a competitive edge, benefiting from increased market access, streamlined operations, and reduced structural costs.
Conclusion
The issuance of Dubai Executive Council Decision No. (11) of 2025, signed by H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council, marks a defining moment in the evolution of Dubai’s business environment. By authorizing free zone establishments to conduct activities within the mainland through the Free Zone Mainland Operating Permit, Dubai has effectively bridged a decades-old regulatory divide.
Administered by the Dubai Business Registration and Licensing Corporation (DBLC) in collaboration with the Dubai Free Zone Council (DFZC), the permit represents a forward-looking approach to governance, one that balances economic openness with regulatory discipline. It empowers companies to grow beyond their traditional boundaries while maintaining compliance with Dubai’s high standards of transparency and accountability.
In practical terms, the Free Zone Mainland Operating Permit simplifies operations, reduces duplication, and creates unprecedented flexibility for investors. In strategic terms, it strengthens Dubai’s standing as a world leader in business innovation and regulatory modernization. And in visionary terms, it brings the Emirate one step closer to realizing its goal of becoming the most integrated, efficient, and globally competitive economy in the world.
As Dubai continues to advance its pro-growth economic agenda, the Free Zone Mainland Operating Permit stands as a model of regulatory innovation, combining flexibility, accountability, and forward-thinking governance. It exemplifies the Emirate’s ability to evolve its regulatory framework in step with global best practices, ensuring that growth remains both inclusive and sustainable.
© 2025 Business Consultant & Law Firm - Legacy Partners. All Rights Reserved.
Designed by Nuewelle Digital Solutions LLP
Legacy Partners
We typically reply in a few minutes
