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Entrepreneurs often ask: Can a free zone company do business in the mainland UAE? In 2026, the answer is a resounding yes – thanks to ground-breaking regulatory changes that bridge the historic gap between free zones and mainland operations.
Dubai’s Executive Council Resolution No. 11 of 2025, along with the new Free Zone Mainland Operating Permit launched in October 2025, has transformed UAE free zone mainland trading. Thousands of Dubai free zone company mainland expansions are now possible without setting up a separate entity, preserving tax benefits while unlocking local market access.
This comprehensive guide covers the latest rules for business setup Dubai free zone 2026, requirements for a free zone branch license Dubai, costs, compliance, and practical steps to start business Dubai free zone mainland.
Traditional Restrictions on Free Zone Companies
Historically, Dubai free zone company setup offered unbeatable advantages: 100% foreign ownership, 0% corporate tax on qualifying income, and simplified customs. However, free zone licenses restricted direct trading or operations in the mainland UAE.
To sell goods/services locally or bid on government contracts, companies needed:
- A mainland distributor/agent
- A separate mainland LLC
- Or limited branch arrangements (often activity-restricted)
This created barriers for growth-oriented businesses wanting UAE free zone mainland trading.
Major 2026 Updates: Dubai’s Executive Council Resolution No. 11
Dubai’s Executive Council issued Resolution No. 11, allowing licensed free zone establishments to operate in mainland Dubai after obtaining necessary licenses/permits from the Department of Economy and Tourism (DET).
Key highlights:
- Applies to most Dubai free zones (excludes DIFC financial institutions)
- Digital application via Invest in Dubai platform
- Existing free zone workforce can handle mainland activities (no new visas needed initially)
- Grace period until March 2026 for regularization
In October 2025, DET launched the Free Zone Mainland Operating Permit — a fully online, cost-effective solution starting at AED 5,000 for 6 months.
Similar frameworks exist in Abu Dhabi (dual licensing via ADDED) and northern emirates.
Option | Best For | Requirements | Validity & Cost (2025) |
Full Branch License | Long-term mainland presence | Physical office/Ejari, DET approval | Annual, ~AED 10,000+ |
Branch from Free Zone HQ | Hybrid operations | No new office needed | Annual, AED 10,000 |
Temporary Operating Permit | Testing market/short-term projects | Digital application only | 6 months, AED 5,000 (renewable) |
Distributor/Agent Partnership | Goods trading without direct ops | Mainland partner handles local sales | Ongoing commission |
These pathways make Dubai free zone company mainland expansion faster and more affordable than ever.
Step-by-Step: How to Obtain a Free Zone Branch License Dubai
Follow these steps for how to setup free zone company Dubai with mainland access:
- Confirm Eligibility — Check if your activity is permitted (DET published expanded list post-Resolution 11).
- Get Free Zone Approval — Submit board resolution and documents to your free zone authority.
- Apply via DET Portal — Use Invest in Dubai (IID) platform — upload free zone license, MOA, passports.
- Pay Fees & Submit Supporting Docs — Including business plan if required.
- Receive Approval — Typically 1–4 weeks (faster for permits).
- Maintain Separate Records — For mainland activities (mandatory for tax/VAT compliance).
The process is now 100% digital for most non-regulated activities.
Costs Involved in 2026
Item | Estimated Cost (AED) |
Temporary Mainland Operating Permit | 5,000 (6 months) |
Branch License (from Free Zone HQ) | 10,000 annual |
Full Branch with Mainland Office | 15,000–30,000+ (incl. Ejari) |
Dubai Free Zone Company Setup (base) | 12,999–35,000 |
Free Zone License Dubai Cost (renewal) | 10,000–20,000 |
Additional costs: Compliance audits, VAT registration if applicable.
Tax and Compliance Implications
- Corporate Tax: Mainland income taxed at 9% (above AED 375,000 threshold); free zone qualifying income remains 0%.
- VAT: 5% on mainland supplies.
- Separate Accounting: Mandatory for mainland vs free zone operations.
- Inspections: DET/MOHRE oversight applies to mainland activities.
Non-compliance risks fines up to AED 100,000+.
Benefits of Expanding to Mainland from Free Zone
- Direct access to UAE’s 10M+ consumer market
- Eligibility for government tenders
- Enhanced credibility with local clients
- No need for intermediaries (reduced costs)
- Retain free zone perks (ownership, repatriation)
Ideal for e-commerce, consulting, trading, and services firms planning business setup Dubai free zone 2026.
Real Examples & Case Studies
- A DMCC trading company obtained a temporary permit in 2025, securing mainland retail contracts worth AED 2M+ in months.
- An IFZA tech startup used the branch-from-HQ license to serve Dubai government clients without relocating.
- Logistics firms in JAFZA now bid directly on mainland projects post-permit.
Ready to Expand Your Free Zone Company to Mainland UAE?
The 2025 reforms have made free zone–mainland UAE integration more seamless than ever. However, navigating permits, regulatory compliance, and evolving tax rules still requires expert guidance to avoid delays or penalties. Peak Group’s licensed consultants have helped hundreds of free zone businesses secure mainland access faster and compliantly — from operating permit and free zone branch license applications to separate accounting and tax setup.
Get your free zone branch license Dubai or mainland operating permit processed in weeks. Call +971 50 707 8555 or email dursamin@peakconsultancy.com to book your FREE 2025 consultation with Peak Group today.
Frequently Asked Questions
Can a free zone company trade directly in mainland UAE in 2026?
Yes — Also with a DET issued permit or branch license.
Do I need a physical office for mainland access?
Not for temporary permits or HQ-based branches.
What is the free zone license Dubai cost for mainland expansion?
Starts at AED 5,000 for permits; AED 10,000+ for branches.
Does this apply to all free zones?
Primarily Dubai free zones; Abu Dhabi has dual licensing.
Will mainland activities affect my free zone tax benefits?
Only mainland income is taxable; separate records preserve qualifying status.