A free zone licence is not automatically a “UAE-wide” trading licence. In general, a free zone company is not permitted to carry out business on the mainland without taking additional steps, starting with permission from its free zone authority and then meeting the relevant emirate’s licensing requirements.
For corporate teams, the real question is not whether you can access mainland clients. The question is which legal route fits your operating model, and how you reduce contract and compliance risk once you do.
Dubai has introduced a clearer framework through Executive Council Resolution No. (11) of 2025, which sets out specific licences and permits for Dubai free zone establishments to conduct activities on the mainland within Dubai, subject to conditions.
Start With the Two Details That Decide the Legal Route
Your route depends on where the company is licensed and where you want to operate. Free zones are regulated at the emirate level, and each free zone has its own procedures and restrictions.
As a baseline, if a free zone company wants to extend its business to the mainland, it must obtain initial permission from the free zone authority and then approach the local economic department in the relevant emirate for licensing requirements.
Before you draft a single mainland-facing contract, confirm:
- The licensing authority (which free zone issued your licence).
- The geography (mainland Dubai only, another emirate, or multiple emirates).
- The activity scope (what you will actually sell or deliver on the mainland).
If the operation is in Dubai, Resolution No. (11) of 2025 is the starting framework. It applies to establishments wishing to conduct activities outside free zones within Dubai, and it expressly excludes financial establishments licensed to operate in the Dubai International Financial Centre.
Understand the Three Dubai Options Under Resolution No. (11) of 2025
Dubai’s framework provides three ways for a Dubai free zone establishment to operate on the mainland within Dubai, and each route changes your contracting and compliance posture.
Under the Resolution, the Department of Economy and Tourism may authorise mainland activity by issuing: a licence to establish a branch within Dubai, a licence to establish a branch operating out of the free zone, or a permit to conduct specific activities within Dubai.
Option 1: Branch Within Dubai Mainland
This is the “physical branch” model, where the branch is located in Dubai mainland. The Resolution sets conditions, including applying to the Department of Economy and Tourism, obtaining prior approval from the free zone licensing authority, obtaining any required approvals from supervising government entities, keeping the free zone licence valid, and paying prescribed fees.
A practical point that matters in contracts: the Resolution states that the branch has no separate legal personality and is not independent of its parent company.
In plain terms, your parent free zone entity typically remains on the hook for the branch’s obligations.
This is the “dual model” where you are authorised to conduct activities in mainland Dubai while operating out of the free zone. The Resolution again requires an application, free zone authority approval, any required government approvals, a valid free zone licence, and submission of documents such as the memorandum of association, trade licence, and manager identification documents.
This is often attractive for companies that want mainland access without committing to a mainland premises footprint, but it still requires discipline in contract execution and recordkeeping.
Option 3: Temporary Permit for Specific Activities
This is the lowest-commitment route and is time-limited. The Resolution allows a temporary permit for some activities outside the free zone within Dubai for a period not exceeding six months, subject to conditions including free zone authority approval and that the activities are on the list that the Department of Economy and Tourism will issue.
Dubai later launched a “Free Zone Mainland Operating Permit” initiative under this framework, stating it is valid for six months at a cost of AED 5,000 and renewable for the same fee.
Two compliance points in the Resolution are easy to miss and often drive disputes later:
- Separate books: The Resolution requires separate financial records for activities conducted outside the free zone within Dubai, distinct from records for activities conducted within the free zone.
- Fees: The Resolution sets fees of AED 10,000 per year for the branch operating out of the free zone licence, and AED 5,000 for issuing or renewing the temporary permit.
It also includes a compliance period for establishments already conducting activities outside the free zone within Dubai by the effective date, with a one-year grace period, extendable once.
The best structure is the one that matches how you sell, deliver, and invoice, not the one with the lowest fee. A quick decision guide for corporate teams:
- Use a temporary permit if mainland activity is project-based, time-limited, or a market test, and your activity fits the eligible list.
- Use a branch operating out of the free zone if you need ongoing Dubai mainland access but want to keep operations and premises in the free zone.
- Use a mainland branch if you need a physical onshore footprint, frequent onshore client delivery, or operational presence that counterparties expect.
If you operate across emirates, do not assume Dubai’s framework automatically covers you. The Resolution itself states that if an establishment intends to conduct activities outside Dubai, it must obtain the required licences and permits from the competent entities in the jurisdiction where the activities will be conducted.
Most disputes in this area are not about “whether the work was done.” They are about authority, licensing scope, invoicing, and who is actually contracting. Your contract pack should anticipate the questions that procurement, finance teams, and later dispute counsel will ask.
If you are contracting through a branch model, ensure the agreement clearly states:
- The exact legal name of the parent entity.
- The branch description and any licence or permit identifiers, where appropriate.
- The signatory’s authority (board resolution, power of attorney, or authorised signatory listing, depending on the structure).
This matters because counterparties sometimes challenge enforceability or payment on the basis of “wrong entity” or “unauthorised signatory,” especially when the relationship breaks.
In Dubai’s framework, the Department of Economy and Tourism is expected to issue a list of economic activities and specify whether they require a branch licence or a permit.
If your contract scope exceeds the permitted activity scope, you can face regulatory issues and commercial disputes, particularly around invoicing and deliverables.
Dubai’s framework explicitly requires separate financial records for mainland Dubai activities.
Dubai also announced that free zone companies using the Free Zone Mainland Operating Permit will be subject to corporate tax on related revenues and must maintain separate financial records in line with Federal Tax Authority requirements.
You do not need a tax essay in your contracts, but you do need:
- Clear invoicing terms.
- Clear deliverables and acceptance criteria.
- A recordkeeping approach that survives audit or dispute review.
The Resolution allows an establishment authorised under the framework to engage its existing workforce registered on the free zone portal and continue to benefit from free zone employment privileges applicable to that workforce.
Dubai’s announcement similarly noted that businesses using the permit can use existing staff in mainland operations.
Operationally, this can reduce friction, but you still need to ensure site access, client onboarding, and delivery processes align with your chosen structure.
Can a free zone company legally trade with mainland clients in the UAE?
In general, a free zone company is not permitted to conduct business on the mainland without additional steps. The baseline approach is obtaining initial permission from the free zone authority and then fulfilling licensing requirements with the relevant emirate’s economic department.
Do Dubai’s new rules apply to Dubai International Financial Centre firms?
No. Executive Council Resolution No. (11) of 2025 states it does not apply to financial establishments licensed to operate in the Dubai International Financial Centre.
Do I need a physical mainland office to operate in the Dubai mainland under this framework?
Not always. The Dubai framework includes a licence to establish a branch within Dubai (which requires the branch to be located in Dubai) and a licence to establish a branch operating out of the free zone, plus a temporary permit for specific activities.
Do we need separate accounting for mainland activity?
Yes, in Dubai under the Resolution. It requires separate financial records for activities conducted outside the free zone within Dubai, distinct from records kept for activities conducted within the free zone.
What is the most common contract mistake when a free zone entity operates on the mainland?
Using the wrong contracting party or an unauthorised signatory. It creates payment risk and gives counterparties room to challenge enforceability. Tight entity naming, signatory proof, and scope alignment reduce that risk early.
Final Words
Operating on the UAE mainland from a free zone can be commercially smart, but it is rarely a “plug and play” option. The safest outcomes come from selecting the right authorisation route, tightening your contracting entity and signatory controls, and keeping clean, separate records for mainland activity.
A UAE law firm can review the structure, draft mainland-ready contract packs, and align approvals and compliance steps so growth does not create avoidable payment disputes or regulatory exposure.
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