Dubai’s government has officially announced a new resolution allowing free zone companies to expand into the mainland. The resolution was issued in March 2025 by His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of The Executive Council. In his capacity as Executive Council Chairman, Sheikh Hamdan enacted Executive Council Resolution No. (11) of 2025, which permits and regulates the operation of free zone establishments outside their designated free zones and in mainland Dubai. This announcement is authentic and comes directly from Dubai authorities – it was publicized through official channels such as the Dubai Government Media Office and the Emirates News Agency (WAM), confirming that the policy has the full backing of the Dubai leadership. Under the new resolution, free zone businesses can now establish a presence in mainland Dubai but must obtain a license from the Dubai Department of Economy and Tourism (DET) beforehand.
The DET (Dubai’s licensing authority for mainland businesses) is explicitly authorized to grant permits or licenses to free zone companies for operating outside the free zone and within the emirate. In practice, this means a free zone company can apply to DET to open a branch in Dubai’s mainland – either as an ordinary branch in the emirate or a branch linked to its free zone headquarters – once it secures the necessary DET license or permit. DET-Issued Mainland Licenses: The DET will issue the required licenses that allow a free zone establishment to operate in the mainland. These can take the form of a branch license in Dubai (for the free zone company) or a license for a branch whose parent company remains in the free zone, depending on the company’s structure. Each license is valid for one year and is renewable annually. DET may also issue special permits for specific activities if a full branch license is not needed – for example, for one-off projects or certain regulated services. List of Permitted Activities: DET, in coordination with each free zone’s authority, will publish a list of allowed economic activities within six months of the resolution’s implementation. This forthcoming list will clarify which business activities and sectors free zone companies may engage in when operating in Dubai under this scheme. Companies must ensure their intended mainland activities appear on this approved list, depending on whether they hold a branch license or an activity-specific permit.
Exemptions: The new rules apply to all free zones in Dubai except for the Dubai International Financial Centre (DIFC) for financial institutions. Financial companies regulated in the DIFC (a separate jurisdiction) are not covered by this resolution and remain governed by DIFC’s own laws and regulations. All other free zone entities (commercial, professional, industrial, etc.) in Dubai’s numerous free zones can benefit from the new policy, subject to the licensing conditions. Free zone businesses taking advantage of this resolution must adhere to a clear compliance timeline and a set of regulations designed to integrate them smoothly into the mainland economy.
Effective Date and Transition Period: The resolution came into effect upon its publication in the Official Gazette, making it legally binding in Dubai from that date. Businesses that were already operating outside their free zones under previous workarounds or interim permits have a grace period of one year to comply fully with the new rules. If necessary, the Director General of DET has the discretion to extend this compliance deadline by an additional year on a case-by-case basis.
Ongoing Regulatory Compliance: Free zone companies expanding to the mainland must follow all applicable UAE federal and Dubai local laws related to their activities, including regulations in areas such as consumer protection, environment, and professional licensing standards. The company’s mainland branch will be subject to inspections and oversight by relevant authorities to ensure compliance. • Separate Financial Records: Businesses must maintain separate financial accounts for their mainland operations apart from their free zone operations. This ensures transparency and makes it easier for Dubai authorities to audit the mainland activities under local jurisdiction. Keeping separate financial records helps account for any taxes, fees, or legal obligations that may apply to the mainland operation.
Cross-Border Operations: If a Dubai free zone company wishes to operate outside the Emirate of Dubai (e.g., in another Emirate or internationally), it must secure the necessary licenses from the relevant local authorities. The Dubai resolution does not automatically grant permission to operate across the UAE or internationally; companies must comply with regulations in other jurisdictions.
Employment and Permitting Conditions: The resolution outlines procedures for obtaining the necessary permits and sets conditions on employing staff for the mainland operations. Employees working in the mainland branch may need to be sponsored under that branch’s license or comply with UAE labor laws. Businesses should be prepared for visa transfers or new visa sponsorships as required by UAE labor and immigration regulations. This resolution aligns strategically with the Dubai Economic Agenda, known as D33. D33 is the emirate’s economic roadmap aimed at doubling the size of Dubai’s economy by 2033 and positioning it among the world’s top three economic cities. By allowing free zone businesses to operate in the mainland, Dubai is fostering a more dynamic and integrated business ecosystem, which supports the D33 objectives of growth and investment. Sheikh Hamdan emphasized that the free zone expansion initiative directly aligns with D33, ensuring that businesses can scale up more freely. This policy supports Dubai’s ambition to be a global hub for trade and finance by integrating free zone companies into the mainland economy, reducing barriers, and promoting operational efficiencies.
The resolution is seen as a major reform that will bring multiple benefits to businesses and Dubai’s economy:
Easier Expansion and Market Access: Free zone companies will now be able to serve the Dubai mainland market directly, expanding their customer base and business opportunities. Previously, such access was restricted or required complex arrangements. Now, companies based in free zones can open sales offices, retail stores, or service centers in mainland locations without needing a local partner. • Cost Savings and Efficiency: By operating under a unified licensing framework, businesses can save on operational costs and avoid duplication. Previously, free zone firms needing a mainland presence had to set up separate mainland subsidiaries or work through distributors. Now, they can operate as one entity, simplifying their corporate structures and reducing licensing fees.
Job Creation and Innovation: The expansion of free zone businesses into the mainland is expected to generate new employment opportunities and drive innovation. As companies establish new branches or retail outlets, they will require additional staff, contributing to job creation in Dubai. Additionally, the integration of cutting-edge industries from free zones into the local market may lead to knowledge transfer and new business solutions.
Competitive and Integrated Business Environment: The new policy enhances Dubai’s business competitiveness by leveling the playing field between free zone and mainland companies. Increased competition is expected to benefit consumers through better pricing, improved services, and a wider range of product offerings.
Alignment with Diversification Goals: Free zones have historically been a key driver of Dubai’s non-oil trade and foreign direct investment. By allowing free zone companies to operate across Dubai, the government is leveraging its economic strengths to boost the wider economy. This initiative is expected to increase the contribution of free zone businesses to Dubai’s GDP and support economic diversification efforts.
The resolution enabling free zone companies to expand into the Dubai mainland is a significant policy change. Issued by Sheikh Hamdan bin Mohammed, it forms part of Dubai’s broader economic strategy. Companies must obtain DET licenses and comply with all regulations within a defined timeline. This policy aligns with Dubai’s long-term vision for economic growth and competitiveness and is expected to provide new growth opportunities for businesses while strengthening Dubai’s position as a global business hub.
