Dubai Free Zone Businesses Can Now Expand to Mainland – Key Benefits & Regulations

Dubai has once again reinforced its reputation as a global business hub with a progressive new resolution allowing free zone businesses to expand into the mainland. The recently issued Executive Council Resolution No. (11) of 2025 aims to encourage investments and foster greater economic integration. This policy shift opens up a wealth of opportunities for companies operating in Dubai’s free zones, granting them the ability to establish branches in the mainland while complying with specific regulations set by the Department of Economy and Tourism (DET).

Key Provisions of the Resolution

The resolution outlines a structured approach for free zone businesses looking to extend their operations into the mainland. Some of the notable provisions include:

• Mainland Expansion: Free zone entities can now establish branches in mainland Dubai by acquiring a license from the DET. This marks a significant change, as businesses previously faced restrictions when attempting to operate beyond their designated free zones.
• Annual License Renewal: Establishments expanding to the mainland must renew their branch licenses annually, ensuring continued compliance with regulatory requirements.
• Permits for Specific Activities: Companies can apply for permits to conduct specific activities outside their free zone jurisdiction while remaining compliant with Dubai’s economic framework.
• Exemptions: The resolution does not apply to financial institutions licensed under the Dubai International Financial Centre (DIFC), maintaining DIFC’s distinct regulatory framework.
• Financial Transparency: Companies operating in both free zones and the mainland must maintain separate financial records for their respective operations to ensure financial clarity and regulatory compliance.
• Regulatory Compliance: All free zone entities expanding into Dubai’s mainland must adhere to the resolution’s provisions within one year of its implementation. The DET’s Director General (His Excellency Helal Saeed Almarri) holds the authority to extend this compliance period by an additional year if necessary.

Implications for Businesses and Investors

This resolution marks a pivotal moment for businesses operating in Dubai’s free zones. The ability to expand into the mainland offers several advantages, including:

1. Increased Market Access

Previously, free zone businesses were largely restricted to international markets or specific business-to-business (B2B) transactions. By allowing these companies to establish a mainland presence, Dubai is facilitating broader market access, enabling businesses to serve local customers directly.

2. Enhanced Business Flexibility

The introduction of activity permits provides companies with the flexibility to operate across different economic sectors without necessarily establishing a full-fledged branch. This is particularly beneficial for businesses that require a physical presence only for select operations.

3. Strengthened Regulatory Framework

With clear guidelines on licensing, financial transparency, and compliance, businesses can operate with greater confidence. The structured approach to expansion ensures that companies align with Dubai’s overall economic vision while maintaining transparency and accountability.

4. Competitive Edge for Free Zone Companies

This resolution creates a level playing field for free zone companies, allowing them to compete directly with mainland businesses. It enhances Dubai’s attractiveness as a destination for entrepreneurs looking for a business-friendly environment with minimal restrictions.

5. Attracting Foreign Investment

Dubai’s continued efforts to facilitate business operations will likely attract increased foreign direct investment (FDI). Investors and multinational corporations seeking a strategic entry point into the Middle East will find this new policy particularly advantageous.

Compliance and Regulatory Considerations

Businesses looking to expand into the mainland under this resolution must adhere to certain regulatory conditions, including:

• Separate Financial Records: Establishments must maintain distinct financial accounts for their mainland and free zone operations, ensuring compliance with local tax and financial regulations.
• Adherence to Inspection Standards: Any business licensed under this resolution will be subject to inspection as per Dubai’s federal and local laws.
• Listing of Economic Activities: Within six months, DET and the relevant licensing authorities will issue a list of permissible economic activities for free zone businesses operating in the mainland.

Strategic Considerations for Businesses

For businesses looking to capitalize on this resolution, the following strategic considerations should be taken into account:

1. Evaluate Expansion Readiness: Companies should assess their operational capacity and financial feasibility before committing to a mainland expansion.
2. Understand Licensing and Permits: Businesses must carefully review the DET’s list of permitted activities and ensure compliance with licensing requirements.
3. Engage with Regulatory Authorities: Establishing a clear line of communication with DET and free zone authorities will facilitate a smooth transition into the mainland market.
4. Leverage Advisory Services: Consulting with experts such as AB Capital Services can provide businesses with valuable insights on compliance, taxation, and strategic expansion planning.

Conclusion

Dubai’s Executive Council Resolution No. (11) of 2025 is a game-changer for free zone businesses, offering them the unprecedented opportunity to tap into the mainland market. This move aligns with Dubai’s broader vision of fostering economic diversification and investment growth. Businesses looking to seize this opportunity must navigate the regulatory landscape with careful planning and strategic decision-making.

At AB Capital Services, we are committed to helping businesses transition seamlessly under the new framework. Whether you require guidance on licensing, compliance, or strategic planning, our expert team is here to support your growth ambitions in Dubai’s dynamic economic landscape.

For more insetup on how AB Capital Services can assist you in expanding your business, reach out to our expert advisors today.