Dubai Announces Landmark Permit for Free Zone Firms to Access Mainland Market

Dubai has redrawn the map for how companies operate within the city. The long-standing divide between its specialised free zones and the broader local market, a fundamental choice every foreign investor faced, is now softening. A newly launched permit allows free zone businesses to enter the mainland economy directly, without the need to build a separate company from the ground up.

Enacted by His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, this move connects two core parts of Dubai’s commercial ecosystem.

Free zones have long been engines for growth as they offer foreign owners full control, tax efficiencies, and smooth administration in sectors like technology, finance, and media. Yet their scope was largely confined to their own territories or international trade. Engaging with Dubai itself meant dealing with a duplicate setup: a mainland entity or a local agent.

That hurdle has now been lowered.

Introducing the Free Zone Mainland Permit

The Free Zone Mainland Operating Permit (FZMOP) acts as a temporary access bridge. It lets eligible free zone firms conduct specific commercial projects across Dubai for up to six months, with the option to renew. This is meant for market testing and project-based work, offering flexibility without immediate long-term commitment.

How It Works

The process prioritises ease. A company applies through Dubai’s business licensing authority, in agreement with its home free zone. Two key rules keep operations clear:

• Separate Books: Companies must maintain distinct financial records for their mainland activities. This ensures transparency and simplifies tax compliance.

• One Team: Businesses can use their existing free zone-registered employees for the permitted mainland work, removing administrative complexity.

Legal Foundation of the Reform

The reform rests on a strong legal basis established by the Dubai Executive Council Decision No. (11) of 2025. This decision grants free zone companies the ability to operate outside their designated zones under specific conditions.

The framework assigns clear responsibilities to the Department of Economy and Tourism (DET), through its licensing division DBLC, and the Dubai Free Zone Council (DFZC). These entities collaborate to oversee the permitting process, ensure compliance, and work with individual free zone authorities to implement the rules effectively.

Under this resolution, free zone companies can engage with the mainland through three options: creating an official mainland branch, operating a free zone branch with mainland access, or securing a temporary permit for limited activities. The FZMOP falls under the third option with a flexible and temporary solution for businesses to explore the market or undertake specific projects.

The Financial Picture

The cost structure is very simple:

• The temporary FZMOP costs AED 5,000 to issue or renew.

• A more permanent branch license from a free zone base carries an annual fee of AED 10,000.

These figures are significantly lower than the expense of establishing and maintaining a full mainland company.

On taxation, the separate accounting provides clarity. Revenue generated from permitted mainland activities will be subject to the federal corporate tax. Income from operations inside the free zone may continue to benefit from existing incentives, provided the company meets the relevant criteria.

Why This Change Matters

This strategic shift is set to create ripple effects across Dubai’s economy:

• For Free Zone Companies: New local revenue streams become possible. Businesses can pitch directly to Dubai-based clients, compete for public sector contracts, and form partnerships with mainland entities, all while retaining their free zone advantages.

• For the Broader Market: The entire business environment becomes more fluid and connected. Startups and SMEs can test local demand with minimal risk, fostering greater innovation and collaboration.

In short, Dubai hasn’t erased the line between free zone and mainland. Instead, it has installed a smart, regulated gate, offering the best of both worlds and building a more unified, dynamic commercial future.

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