For years Dubai’s free zones have acted as gateways for foreign investment and international trade, yet the boundary between free zone and mainland business has always been tightly managed. That line has now moved. Under Executive Council Resolution No. (11) of 2025, free zone companies other than financial institutions in the DIFC can operate in the mainland under a licence or permit from Dubai’s Department of Economy and Tourism.
The change gives existing companies new scope to expand, restructure or serve domestic clients without setting up a separate mainland entity. It also brings Dubai’s regulatory framework closer to the way international firms already trade across jurisdictions where efficiency and compliance are expected to work side by side.
The sections below outline what the Resolution allows, how the new licensing works in practice and what it means for free zone businesses reviewing their structure.
What Dubai’s new Resolution allows in practice
The new resolution has been one of the most talked-about regulatory changes of 2025 since it opens a long-closed door between Dubai’s free zones and the mainland. For the first time, companies licensed in a free zone can apply to the Department of Economy and Tourism for a mainland licence or permit that covers approved activities.
Previously, free zone companies couldn’t operate directly in Dubai’s mainland market. If they wanted to trade or deliver services there, they typically had to set up a separate mainland entity or appoint a local service agent under a different licence.
The new Resolution No. (11) of 2025 removes that barrier. It lets eligible free zone firms gain approval from the Department of Economy and Tourism to carry out certain activities in the mainland while keeping their existing free zone registration. This creates a cleaner route for companies to expansion or restructuring without adding new layers of ownership or representation.
Why restructuring has become relevant
The ability to hold both free zone and mainland licences has come at a time when many companies have already been reassessing their setup. Corporate tax registration under the Federal Tax Authority has pushed firms to review where they have substance, where income is generated and how their structures meet reporting rules. At the same time, banks have been asking for clearer proof of active operations in the UAE, especially for cross-border or holding entities.
For many businesses, those pressures overlap with a need for wider customer access inside Dubai. Having a mainland licence makes it easier to trade with local clients or tender for onshore contracts without creating new layers of ownership. That combination of regulatory and commercial drivers is why Resolution No. (11) has prompted so much attention.
Restructuring pathways under the new model
Free zone companies now have several routes to bring mainland operations within reach. Some are applying for a new DET licence that sits alongside their existing free zone one, while others are setting up a mainland branch under the same ownership. The choice depends on how the business is structured, where it holds assets, and which activities it plans to carry out.
A branch is generally simpler for firms with one core line of business since it operates as an extension of the free zone entity and uses the same trade name. A dual-licence model, by contrast, gives more scope to conduct different activities or hold separate contracts but involves added administrative coordination between the free zone authority and the DET. Each route carries distinct compliance and reporting obligations, so it’s important to weighing which setup best fits your specific growth plans and banking requirements.
Practical implications for tax, substance, and compliance
If your company holds a free zone licence and starts operating in the mainland, the first thing to look at is how that affects your tax position. Income from mainland activity now falls under the 9 percent corporate tax rate, so it’s worth separating those earnings from your free zone revenue and keeping the records clean. That makes it easier when filing and avoids confusion during audits.
Substance is the other point to watch. The Federal Tax Authority pays close attention to where management decisions are made and where people actually work. If your operations span both jurisdictions, the setup needs to match what’s happening on the ground. VAT treatment follows the same logic, based on where goods or services are supplied. Most firms are tightening internal reporting to make sure tax, licensing and daily management all line up.
What to review before changing structure
Before making any structural change, it’s worth stepping back to review the basics. Start with shareholder and partnership agreements, since adding a mainland licence can alter control terms or profit allocation. Lease contracts also need checking, as some free zone offices can’t be used to carry out mainland activity under new permits.
Visa quotas and employee records come next. If staff will be working across both jurisdictions, you’ll need clarity on sponsorship and where work permits sit. Contracts with clients or suppliers may also need updates to reflect the new operating entity, especially for invoicing and VAT.
Some free zones require a no-objection certificate before applying for a DET permit, while others coordinate directly with the department so it’s important to confirm the exact process early, since timelines and conditions differ from zone to zone and can affect the order in which filings are made.
Restructuring under the new rules isn’t only about applying for another licence. It needs coordination across tax, licensing, and governance so that each element supports the other.
Advisers who understand both free zone and mainland systems can map out how to move from one model to another without disrupting daily operations. They can also flag where approvals overlap or where substance may need to be demonstrated differently.
How can The Knightsbridge Group help?
The Knightsbridge Group has more than a decade of experience advising international businesses and investors on UAE structuring, licensing, and compliance. Our team can help you review your current setup, assess eligibility for a DET licence, and manage coordination between free zone and mainland authorities. We also work alongside tax and governance specialists to keep filings, substance, and ownership records aligned across all entities.
If you’d like expert support with restructuring under the new rules or any other corporate planning matter, contact us at info@kbgroup.ae.
