I. Dubai Facilitates Freezone Companies‘ Expansion to the Mainland
With the enactment of Executive Council Resolution No. (11) of 2025, Dubai has introduced a significant regulatory milestone aimed at facilitating the expansion of Freezone companies within the emirate. This new regulation aligns with the Dubai Economic Agenda (D33), which, among other objectives, seeks to double Dubai’s economy by 2033 and establish the city as one of the world’s top three economic hubs. The resolution establishes clear legal frameworks for companies registered in Freezones that wish to operate beyond their geographically restricted zones.
II. Expanded Opportunities for Freezone Companies
Until now, companies registered in one of Dubai’s numerous Freezones were generally restricted to operating within these designated areas. Although there were previously limited options to conduct activities outside the Freezone with specific permits, the process was often complex and involved significant administrative hurdles. The new resolution removes many of these obstacles by explicitly allowing Freezone companies to offer their services and products on Dubai’s mainland. However, this is subject to specific regulatory requirements, particularly the need to obtain the relevant licenses or approvals from the Dubai Department of Economy and Tourism (DET).
III. Licensing and Approval Requirements
Freezone companies seeking to expand their operations to Dubai’s mainland under the new resolution have several options:
- Establishing a Branch (Branch License): Companies may set up a branch on Dubai’s mainland, which will act as a legally dependent entity of the Freezone-registered parent company.
- Using a Headquarters with Extended Mainland Presence (Headquarters Branch License): This option allows companies to maintain their headquarters in the Freezone while simultaneously operating an approved branch on the mainland.
- Obtaining an Activity-Specific Permit: If a company does not wish to establish a full-fledged mainland branch but intends to provide specific services there, it can apply for a special permit for designated activities.
All licenses and permits granted under this framework are valid for one year and can be renewed annually. Furthermore, companies must maintain their Freezone license to remain eligible for operations outside their registered zone.
IV. Regulatory and Tax Implications
Companies operating under the new resolution must comply with the regulatory requirements of both the Freezone authorities and the Dubai Department of Economy and Tourism (DET). Notably, they must consider the following tax regulations:
- Value Added Tax (VAT): Companies supplying goods or services to mainland customers may be subject to the 5% VAT, unless an exemption applies.
- Corporate Tax: Businesses expanding to the mainland may fall within the scope of corporate tax, particularly if they establish a physical presence in the form of a branch.
- Accounting Obligations: Freezone companies operating on the mainland must maintain separate financial records to clearly differentiate between Freezone and mainland activities.
V. Restrictions and Exceptions
Not all Freezone companies are covered by the new regulation. Financial institutions registered within the Dubai International Financial Centre (DIFC) are excluded from the option to establish a mainland branch under this resolution. Instead, they remain subject to DIFC’s specific regulatory framework.
VI. Deadlines and Implementation Period
Existing Freezone companies already operating outside their designated zones must align their business practices with the new regulations within one year from the resolution’s effective date. If necessary, the DET’s Director General may extend this period by an additional year.
VII. Strategic Significance for Dubai’s Economic Landscape
The implementation of this resolution represents another significant step in Dubai’s economic transformation. Allowing Freezone companies to operate on the mainland is expected to enhance the city’s competitiveness, attract new investors, and contribute to job creation. This development directly aligns with Dubai’s long-term economic objectives and reinforces its status as a leading global business hub.
