Converting Free Zone Company to Mainland: Process, Costs, Timeline

A complete breakdown of the regulatory pathways, costs, documents, and compliance requirements for free zone businesses expanding to mainland Dubai under the 2025 framework.

Free zone companies in Dubai face a strategic decision point when their business model requires access to the local UAE market, government contracts, or physical retail presence outside designated zone boundaries. Until recently, this expansion meant either establishing a separate mainland entity or engaging third-party distributors—both carrying significant cost and complexity. Executive Council Resolution No. 11 of 2025 changed this landscape fundamentally, introducing structured pathways for free zone establishments to conduct business in mainland Dubai while preserving their existing corporate structure.

This guide covers every aspect of free zone to mainland expansion: the new branch license and temporary permit system under the 2025 resolution, the traditional full conversion process for those requiring complete restructuring, corporate tax implications that affect qualifying free zone person status, employee visa considerations, and the practical compliance requirements that determine success or rejection. Whether you operate from DMCC, JAFZA, Dubai Internet City, or any other Dubai free zone (excluding DIFC financial entities), understanding these options is essential for informed decision-making.

Understanding the Difference: Expansion vs. Full Conversion

Before examining specific procedures, it is critical to distinguish between two fundamentally different approaches to accessing the mainland market. The choice between them depends on your business objectives, existing obligations, and long-term strategy.

The first approach involves maintaining your existing free zone company while obtaining authorization to conduct specific activities in mainland Dubai. This became formally regulated under Executive Council Resolution No. 11 of 2025, issued by H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum. Under this framework, your free zone entity remains the parent company, and any mainland operations function as a branch or permitted activity extension—not as a separate legal entity. You retain your free zone license, your existing employee visas remain valid, and you continue benefiting from free zone advantages for qualifying activities.

The second approach involves dissolving your free zone company entirely and establishing a new mainland entity through the Department of Economy and Tourism (DET). This full conversion terminates your free zone corporate existence, requires cancellation and reissuance of all employee visas, and subjects your entire operation to mainland regulatory frameworks. This path makes sense when you are exiting free zone operations completely or when your primary business activity cannot be conducted under a branch or permit arrangement.

Executive Council Resolution No. 11 of 2025: The New Framework

Published in the Official Gazette on 3 March 2025 and taking immediate effect, Resolution No. 11 establishes the first comprehensive legal framework for free zone establishments to operate in mainland Dubai. The resolution applies to all Dubai free zone companies except financial entities licensed to operate in the Dubai International Financial Centre (DIFC). It forms part of the Dubai Economic Agenda (D33), which aims to double Dubai’s economy by 2033 and position the emirate among the world’s top three economic cities.

Three Authorization Pathways Under the Resolution

The Department of Economy and Tourism may issue three types of authorization for free zone companies seeking mainland access:

A license to establish a branch operating within the Emirate requires the branch to be physically located within Dubai. The branch has no separate legal personality and remains part of the parent free zone company. This license is valid for one year and renewable annually. The DET fee is AED 10,000 per year for issuance or renewal.

A license to establish a branch operating out of the free zone (often called a dual license) enables the free zone entity to conduct mainland activities while maintaining its registered office within the free zone. Like the first option, this branch has no independent legal status. The annual DET fee is also AED 10,000.

A temporary permit to conduct specific activities is valid for a maximum of six months and allows limited mainland operations without establishing a formal branch. This option suits project-based work, market testing, or temporary engagements. The DET fee is AED 5,000 for issuance or renewal.

Eligibility Requirements

To qualify for any of these authorizations, your free zone establishment must satisfy several conditions. Your license issued by the free zone licensing authority must be valid throughout the application process and the period of mainland operations. You must submit applications through the DET using prescribed forms and procedures, providing supporting documents including your memorandum of association, free zone trade license, and passport copies and Emirates ID of the company’s manager.

Prior approval from your free zone licensing authority is mandatory—you cannot apply directly to DET without this clearance. Additionally, if your business activity falls under regulatory oversight (such as healthcare, legal services, or financial activities), you must obtain approval from the relevant government entity supervising that activity. All prescribed fees must be paid to the DET, and you must meet any additional conditions specified by resolution of the Director General.

List of Permitted Activities

Article 9 of the resolution requires the DET, in coordination with relevant licensing authorities, to publish a comprehensive list of economic activities that free zone establishments may conduct in mainland Dubai. This list was due for publication by 3 September 2025 (within six months of the resolution’s effective date) and specifies which activities require a branch license versus which can be conducted under a temporary permit. Businesses should confirm their specific activity eligibility with the DET or their free zone authority before proceeding with applications.

Costs of Free Zone to Mainland Expansion

Understanding the complete cost structure helps you budget accurately and avoid unexpected expenses during the expansion process.

Cost Component	Branch License (Annual)	Temporary Permit
DET License/Permit Fee	AED 10,000	AED 5,000
Free Zone NOC Processing	AED 2,500 – 5,000 (varies by zone)	AED 2,500 – 5,000 (varies by zone)
External Regulatory Approvals	AED 1,000 – 20,000 (if applicable)	AED 1,000 – 20,000 (if applicable)
Office Space (if required)	AED 15,000 – 50,000+ annually	May use free zone address
Validity Period	One year (renewable)	Up to six months

Several free zones have published specific fee schedules for their NOC and liaison services. Meydan Free Zone, for example, charges AED 2,500 for the NOC and offers AED 7,500 for full DET branch licensing support, totaling AED 10,000 as a package. Other zones may have different arrangements, and fees are subject to change—confirm current rates directly with your free zone authority.

Step-by-Step Process for Branch License Application

The branch license application follows a structured sequence involving your free zone authority and the DET. Processing times vary but typically range from a few business days to several weeks depending on activity type, document completeness, and any required external approvals.

Begin by confirming your eligibility with your free zone authority. Discuss your intended mainland activities and verify they align with the DET’s published list of permitted activities. Request clarification on any restrictions or conditions specific to your zone.

Next, apply for a No Objection Certificate (NOC) from your free zone authority. This formal clearance confirms your free zone has no objection to you conducting specified activities in mainland Dubai. Required documents typically include your current trade license, memorandum and articles of association, board resolution authorizing the expansion, and manager passport and Emirates ID copies.

Once you have the NOC, submit your DET application through the department’s prescribed process. Provide all required documentation including the NOC, your free zone license, memorandum of association, manager identification, and any sector-specific approvals. Pay the prescribed AED 10,000 fee.

The DET reviews your application and, if approved, issues your branch license authorizing mainland operations. The license specifies your permitted activities and remains valid for one year from issuance. Renewal requires submitting a fresh application before expiry, paying the annual fee, and maintaining valid free zone licensing throughout.

Workforce and Visa Considerations

One of the most significant advantages of the 2025 resolution is Article 8, which permits free zone establishments to use their existing workforce—registered in the free zone—for mainland operations. Employees retain all free zone employment privileges while conducting authorized mainland activities. This eliminates the need for visa cancellations and reissuances that a full conversion would require.

However, if you need to hire new employees specifically for mainland-based roles or open a MOHRE labour file, you must obtain a full DET branch license rather than a temporary permit. The branch license enables you to sponsor employees under mainland employment arrangements, though this requires compliance with MOHRE regulations and the standard visa application process through GDRFA Dubai.

For temporary permits, your existing free zone employees can perform onshore work under the company’s permit, provided the activity is licensed and documentation (such as permit copy or company letter) is available to verify authorization.

Corporate Tax Implications

Expanding to mainland Dubai has direct consequences for your corporate tax position, particularly if you currently benefit from the 0% rate available to Qualifying Free Zone Persons (QFZPs) under the UAE Corporate Tax Law (Federal Decree-Law No. 47 of 2022).

Impact on Qualifying Free Zone Person Status

A mainland branch of a QFZP constitutes a “domestic permanent establishment” under UAE tax rules. Income attributable to this domestic permanent establishment is subject to corporate tax at 9%—not the 0% rate available for qualifying free zone income. Critically, the domestic PE income does not count toward the de minimis threshold that could disqualify your entire free zone entity from QFZP status.

This means you must maintain separate financial records for mainland activities, distinguishing them from free zone operations. The resolution explicitly requires this separation under Article 3, and it becomes essential for accurate corporate tax filing. If you fail to maintain proper segregation, you risk having your entire income subjected to 9% corporate tax rather than just the mainland portion.

The De Minimis Requirements

For QFZPs, non-qualifying revenue must not exceed the lower of 5% of total revenue or AED 5,000,000 to maintain the 0% rate on qualifying income. Revenue from your domestic permanent establishment (mainland branch) does not count toward this threshold—it is simply taxed at 9% separately. However, if you earn other non-qualifying income that does count toward the threshold and you breach it, you lose QFZP status for a minimum of five years.

Practical Tax Planning

Before expanding to mainland, consult with a tax professional to assess your exposure. Key questions include whether your planned mainland activities will generate sufficient revenue to justify the 9% tax on that portion, whether maintaining QFZP status for your core free zone operations remains valuable, and how your financial reporting and accounting systems can accommodate the required segregation.

Full Conversion: Dissolving Free Zone and Establishing Mainland Entity

If your business strategy requires complete transition from free zone to mainland—rather than maintaining both through a branch arrangement—you must undertake a full conversion. This is a more complex, time-consuming, and costly process, but necessary when your entire operation needs mainland licensing or when you are exiting the free zone completely.

Pre-Conversion Requirements

Before initiating conversion, your free zone company must be in good standing. This means holding a valid trade license with no outstanding legal issues or fines, having no pending regulatory violations, and being current on all fees and obligations to your free zone authority. You must also resolve any contractual commitments tied to your free zone status, such as lease agreements or service contracts.

Step 1: Cancel the Free Zone Company

File an application for license cancellation with your free zone authority. This typically requires submitting a board resolution authorizing dissolution, obtaining clearance certificates confirming no outstanding liabilities, closing any corporate bank accounts linked to the free zone entity, and canceling all employee visas sponsored by the company. Your free zone will issue a No Objection Certificate once all obligations are cleared.

Step 2: Establish the New Mainland Entity

With the free zone entity dissolved, proceed to establish your mainland company through DET. The process involves determining your business activity and selecting the appropriate license type (commercial, professional, industrial, or tourism), choosing a legal structure such as LLC, sole proprietorship, or civil company, registering your trade name with DET and ensuring it meets UAE naming requirements, submitting your licensing application with all required documents, securing physical office space with a valid tenancy contract registered through Ejari, and obtaining any activity-specific approvals from relevant authorities.

Step 3: Obtain the DET Trade License

After DET approves your application and you pay all prescribed fees, your mainland trade license is issued. You can then register with MOHRE for labour cards, apply for employee visas under the new company, and commence operations.

Full Conversion Costs

Full conversion is substantially more expensive than the branch license route. Estimated total costs range from AED 25,000 to AED 45,000 or higher, depending on business type and size. This includes DET license fees (AED 10,000 – 15,000 depending on activity), trade name registration (AED 620 – 2,000), initial approval fees (AED 150 – 300), office rental (AED 15,000 – 50,000+ annually), Ejari registration, visa cancellation and reissuance fees (AED 2,700 – 5,400 per employee), and any free zone exit fees or penalties.

Timeline

Complete migration typically takes 15 to 25 working days if all documents are ready and no complications arise. Delays commonly result from incomplete documentation, outstanding free zone obligations, or pending regulatory approvals.

Foreign Ownership in Mainland Companies

A common concern for free zone companies considering mainland expansion is whether they will need a local Emirati partner or sponsor. Since the amendments to the Commercial Companies Law under Federal Decree-Law No. 26 of 2020 (which took full effect from 1 June 2021), foreign investors can own 100% of most mainland company types without requiring a UAE national shareholder.

Both Abu Dhabi and Dubai have published lists of over 1,000 commercial and industrial activities eligible for full foreign ownership. The main exceptions are activities with “strategic impact,” which include security and defence, oil and gas exploration and production, banking and financing (subject to Central Bank oversight), and certain telecommunications and utility sectors.

For the vast majority of free zone businesses expanding to mainland—consulting, trading, technology, professional services, and similar activities—100% foreign ownership is available without a local sponsor or service agent.

Compliance Requirements and Ongoing Obligations

Obtaining your branch license or permit is only the beginning. Ongoing compliance is essential to maintain your authorization and avoid penalties.

Audits and Inspections

Under Article 11 of Resolution No. 11 of 2025, establishments licensed to conduct mainland activities are subject to audit and inspection in accordance with applicable federal and local legislation. Oversight is conducted jointly by DET and your relevant free zone licensing authority. This means you must maintain compliance with both regulatory frameworks simultaneously.

Record-Keeping

Separate financial records for mainland activities are mandatory. This includes tracking revenue, expenses, contracts, and transactions attributable to mainland operations distinctly from your free zone business. Proper records support corporate tax compliance, facilitate audits, and demonstrate adherence to resolution requirements.

License Renewal

Branch licenses require annual renewal. Begin the renewal process before your current license expires to avoid gaps in authorization. Temporary permits expire after six months maximum and must be renewed if you wish to continue operations.

Grace Period for Existing Operations

Free zone companies that were already conducting activities in mainland Dubai before the resolution’s effective date (3 March 2025) must regularize their status within one year—by March 2026. The DET Director General may grant a one-time extension of another year if necessary. Non-compliance may result in penalties under applicable legislation.

Choosing the Right Path: Decision Framework

Selecting between branch license, temporary permit, and full conversion depends on your specific circumstances:

Choose a temporary permit if you are testing the mainland market before committing to permanent expansion, have a specific short-term project requiring mainland presence (six months or less), want minimal cost and administrative burden, or need to deliver a single contract or engagement outside the free zone.

Choose a branch license if you require ongoing mainland operations while maintaining your free zone entity, want to access government contracts that require mainland licensing, need to hire mainland-based employees under MOHRE, or plan to operate both in the free zone (for qualifying activities) and mainland (for local market access).

Choose full conversion if your business model no longer requires free zone benefits, your entire operation needs to relocate to mainland, you are exiting the free zone completely, or you need a completely fresh corporate structure.

Common Pitfalls and How to Avoid Them

Inadequate planning around legal structure leads many businesses into complications. If you do not choose the right approach—branch versus full conversion, permit versus license—you may face higher taxes, loss of control, or operational restrictions. Consult with business setup professionals and tax advisors before committing.

Ignoring compliance obligations after obtaining authorization is a frequent mistake. Mainland operations trigger stricter tax, audit, and reporting requirements than most free zones. Budget for accounting support, understand VAT implications, and maintain the required financial segregation.

Assuming lower costs is another trap. Mainland operations often carry added expenses—tenancy contracts, potential sponsor fees for restricted activities, government approvals, and compliance overheads. Build a realistic budget before proceeding.

Skipping DET-specific requirements causes delays and rejections. Every business activity has specific documentation requirements. Missing even one document can result in application rejection. Work with your free zone authority or a licensed business consultant to ensure complete submissions.

FAQ

Can a Dubai Free Zone Company Operate in Mainland Without a Separate Entity?

Yes. Under Executive Council Resolution No. 11 of 2025, Dubai free zone companies (except those in DIFC) can obtain a branch license or temporary permit from DET to conduct activities in mainland Dubai. This does not require establishing a separate legal entity—the branch operates under the parent free zone company and has no independent legal personality.

How Much Does a Mainland Branch License Cost for a Free Zone Company?

The DET charges AED 10,000 annually for issuing or renewing a branch license under the 2025 resolution. Additional costs include your free zone’s NOC processing fee (typically AED 2,500 – 5,000), any external regulatory approvals if required for your activity, and potentially office rental if a mainland physical presence is necessary.

What Is the Difference Between a Branch License and a Temporary Permit?

A branch license enables ongoing mainland operations for one year (renewable annually) and allows hiring mainland employees. The DET fee is AED 10,000. A temporary permit is valid for up to six months, suits short-term projects or market testing, and costs AED 5,000. Temporary permits do not support MOHRE labour file establishment.

Does Expanding to Mainland Affect My Free Zone Corporate Tax Benefits?

Yes. Income from mainland operations (your domestic permanent establishment) is subject to 9% corporate tax, not the 0% rate available for Qualifying Free Zone Persons. You must maintain separate financial records for mainland activities. However, the mainland income does not count toward the de minimis threshold that could disqualify your entire entity from QFZP status.

Do I Need a Local Sponsor or Emirati Partner for Mainland Operations?

For most activities, no. Following the 2020 amendments to the Commercial Companies Law, foreign investors can own 100% of mainland companies in over 1,000 commercial and industrial activities. Exceptions apply to activities of “strategic impact” such as banking, oil and gas, and certain security sectors.

Can My Free Zone Employees Work in Mainland Dubai Under the Branch License?

Yes. Article 8 of Resolution No. 11 of 2025 permits licensed establishments to use their existing free zone-registered workforce for mainland operations. Employees retain all free zone employment privileges. However, hiring new employees specifically for mainland roles requires a full branch license (not temporary permit) and MOHRE registration.

What Happens If My Free Zone Company Already Operates in Mainland Without Authorization?

You have until March 2026 (one year from the resolution’s effective date of 3 March 2025) to regularize your status by obtaining the required license or permit. The DET Director General may grant an additional one-year extension if needed. Failure to comply may result in penalties under applicable legislation.

How Long Does the Branch License Application Process Take?

Processing times vary by free zone, activity type, and document completeness. Some free zones report completion within a few business days for straightforward applications. Complex cases requiring external regulatory approvals may take several weeks. Starting with complete documentation significantly reduces processing time.

Information in this guide reflects regulations and procedures as of late 2025. UAE government policies, fees, and requirements may change. Verify current requirements with the Department of Economy and Tourism, your free zone authority, or a licensed business setup consultant before proceeding with any application.