Dubai Launches Free Zone Mainland Operating Permit: What It Means
Dubai has unveiled a new regulatory initiative: the Free Zone Mainland Operating Permit. This permit allows certain free zone companies to legally carry out business operations within Dubai’s mainland, bridging what was once a strict divide between free zones and the mainland.
Previously, free zone entities were restricted from direct operations on the mainland (unless through a local agent or franchise arrangement). This step signals a shift towards a more integrated and flexible regulatory framework, intended to attract investment, simplify cross‑jurisdiction operations, and unlock new opportunities for businesses of all sizes.
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Key Features of the New Permit
Here are the main features and terms of the new permit:
- Initially, the permit covers non‑regulated activities such as technology, consultancy, design, professional services, and general trading.
- The permit has a validity of 6 months, and it can be renewed at the same fee of AED 5,000 every six months.
- Free zone companies using this permit must pay 9% corporate tax on their mainland‑related revenues.
- Such companies must maintain separate financial records in accordance with the Federal Tax Authority (FTA) requirements.
- Importantly, businesses can use their existing staff for mainland operations — there is *no requirement to hire additional personnel solely for mainland business.
Who Gets Helped? Targeted Beneficiaries
This permit is particularly helpful for:
- Small and medium enterprises (SMEs) in free zones that wish to expand their market access into the mainland without the overhead of establishing a full mainland‑licensed entity.
- Startups and service providers in sectors like consulting, technology, design, or professional services that already operate within free zones.
- Companies aiming to win government contracts or tenders, which often require mainland licensing and participation in the local economy.
- Existing free zone firms wanting to deepen integration with domestic supply chains, domestic trading, or local distribution.
Dubai officials estimate this permit could benefit over 10,000 active free zone companies and increase cross‑jurisdictional activity by 15–20% in the first year.
Benefits & Impacts
Lower Barriers, Lower Risk
By enabling free zone companies to operate on the mainland via a permit (rather than forcing them to open a full-fledged mainland company), Dubai significantly lowers the barrier to entry. This is especially helpful for smaller firms that lack capital or resources to set up a full mainland entity.
Enhanced Access to Government Contracts
Many government tenders and contracts demand mainland‑licensed status. This permit allows free zone companies to compete for those opportunities — unlocking new revenue streams.
Boost to Local Trade & Supply Chains
Free zone companies can integrate more closely with the domestic economy, supplying locally or collaborating with mainland-based firms or suppliers.
Regulatory and Tax Clarity
The requirement of separate accounting for revenues tied to mainland operations and corporate tax application ensures transparency and alignment with federal frameworks.
Strengthening Dubai’s Business Ecosystem
This change reinforces Dubai’s positioning as a progressive, competitive, business‑friendly jurisdiction. The flexibility and openness may attract more investment, encourage new business registrations, and stimulate economic growth.
Limitations, Considerations & Challenges
While this is a bold reform, a few limitations and considerations apply:
- The permit does not immediately cover regulated sectors (e.g. certain healthcare, legal, financial services, or sectors needing special licensing). It is currently limited to non‑regulated activities.
- The 6‑month renewable tenure may introduce administrative overhead, especially for firms scaling rapidly.
- Corporate tax implications and requirements for separate financial records mean companies must carefully manage accounting, compliance, and reporting.
- The scheme’s success depends on how well the authorities execute digital application, approvals, enforcement, and clarity in jurisdictional overlaps.
How to Stay Compliant with UAE Tax Law
How to Apply
Eligible free zone companies that hold a Dubai Unified Licence (DUL) can apply for the permit digitally via the Invest in Dubai (IID) platform. The application process is designed to be fully online, streamlining the bureaucracy for startups, SMEs, and incorporation agents.
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More details, criteria, and procedural guidance are expected to be published on the Invest in Dubai website and via Dubai’s Department of Economy and Tourism (DET).
Strategic Implications for Businesses
Expansion Strategy
Businesses in free zones should reevaluate their growth strategy. If their services align with the non‑regulated list (consulting, design, tech, etc.), they can now operate more freely on the mainland without forming a separate legal entity.
Cost-Benefit & Compliance
Firms should analyze whether the AED 5,000 permit cost (renewed twice a year) plus tax and compliance burden is outweighed by expected new revenue opportunities from mainland operations — especially government contracts or local clients.
Organizational Structure
Companies may need to set up internal accounting “walls” — tracking revenue and operations tied to mainland activity separately from free zone operations, in compliance with FTA rules.
Risk Mitigation
Because this is a new regulatory regime, firms should monitor updates, legal clarifications, and potential policy shifts. Consulting local legal / business advisory firms will be prudent.
Why This Move Matters for Dubai & UAE
- Economic integration: Easing segmentation between free zones and the mainland makes the business ecosystem more fluid and dynamic.
- Competitive positioning: Dubai can attract more global and regional firms seeking flexibility, making it more attractive than jurisdictions with rigid separation.
- Job creation & entrepreneurship: As more firms expand and bid for local contracts, local hiring and entrepreneurial activity could see a boost.
- Regulatory modernization: The permit reflects a forward‑thinking policy approach — blending flexibility, oversight, and growth orientation.
What to Watch Next
- Whether the permit scheme will be extended to regulated sectors (e.g. healthcare, finance, legal) and under what conditions.
- Uptake rates — how many free zone firms actually adopt this permit.
- Administrative efficiency — speed, clarity, appeals, digital platform robustness.
- Clarifications from FTA and DET on taxation, audits, compliance, and revenue apportionment.
- Possible changes to schedule, fees, or regulatory scope after pilot phases.
Dubai’s new Free Zone Mainland Operating Permit marks a significant shift in the UAE’s business landscape. By enabling free zone companies to carry out mainland operations — with clarity on taxes, accounting, and staff deployment — Dubai is reducing barriers, unlocking new markets, and encouraging more integrated growth.
For free zone businesses in sectors like technology, consultancy, design, and trading, this is an opportunity to expand without the full burden of establishing a mainland entity from scratch. However, understanding compliance, tax impact, and strategic fit will be key to making the most of this new permit.
If this policy is successfully executed and evolves to cover more sectors, it could become a model for business regulatory reform in the region.
FAQs
What is a Free Zone Mainland Operating Permit?
It’s a license that allows a free zone company to legally conduct business activities within Dubai’s mainland under a structured permit system, while remaining a free zone entity otherwise.
Which activities are initially eligible?
At first, non‑regulated activities like technology, consultancy, design, professional services, and general trading. Regulated sectors are not included initially.
How long is the permit valid?
It is valid for 6 months and may be renewed for the same 6‑month period at the same fee (AED 5,000).
Will I have to pay corporate tax for mainland revenue?
Yes. Free zone companies using the permit must pay a 9% corporate tax on revenues attributed to mainland operations.
Can I use my current staff in mainland operations?
Yes. There is no requirement to hire separate/external staff purely for mainland work — your existing staff can be used.
How do I apply for the permit?
Eligible companies holding a Dubai Unified Licence can apply online via the Invest in Dubai (IID) platform.
Source: Khaleej Times – Dubai launches Free Zone Mainland Operating Permit, published October 2025.
*Note: This blog article summarizes and analyzes the original news for informational purposes only. For official updates, please refer to government websites or the original news publication.