Free Zone Companies in Mainland Dubai: Operating Permits, Fees and Tax Under Resolution 11 of 2025

Until 2025, a Dubai free zone company that wanted to sell directly to customers on the mainland usually needed a separate mainland licence or a local distributor. Dubai Executive Council Resolution No. 11 of 2025 changed that: free zone companies can now operate in mainland Dubai through a branch licence or a temporary permit issued with the Department of Economy and Tourism (DET).

This guide explains the options, fees and conditions, and the corporate tax and VAT points that are easy to miss.

What Does Resolution No. 11 of 2025 Allow?

The resolution, effective from 3 March 2025, allows companies licensed in Dubai free zones to carry out business activities in mainland Dubai, subject to approval by DET and the relevant free zone authority. It covers free zone entities across Dubai, with one main exclusion: financial institutions licensed in the DIFC.

It applies to mainland Dubai only. Operating in other emirates still requires a licence from that emirate’s authority.

What Are the Options for Operating on the Mainland?

Route	What it is	Fee	Validity
Mainland branch licence	A branch of the free zone company licensed on the mainland under the usual requirements	Standard DET fees	Annual
Mainland branch run from the free zone	A licence for a mainland branch that operates from the company’s free zone premises	AED 10,000 a year	One year, renewable
Temporary permit	A permit to carry out specific activities on the mainland for a limited period	AED 5,000	Up to six months, renewable

The temporary permit suits companies testing the mainland market or delivering a specific contract. A branch suits companies that expect regular mainland business.

What Are the Conditions?

• Approval from DET and from the company’s free zone authority, plus any sector regulator for regulated activities.
• The activity must be on DET’s list of eligible activities for the route you choose. Regulated activities need the relevant regulator’s approval.
• The company must keep separate financial records for its mainland operations.
• The company is subject to inspections by federal and local authorities and must follow both free zone and mainland rules.
• Companies already operating on the mainland had one year from the effective date to comply, which DET can extend by a further year.

How Does Mainland Business Affect Corporate Tax?

This is where many free zone companies get caught out. Mainland access is a licensing change; it does not change the corporate tax rules.

• A free zone company that is a Qualifying Free Zone Person (QFZP) pays 0% only on qualifying income. Revenue from mainland customers is generally non-qualifying unless it falls within specific qualifying activities.
• Income attributable to a mainland branch (a domestic permanent establishment) is taxed at 9% and is not qualifying income.
• If non-qualifying revenue exceeds the de minimis limit (5% of total revenue or AED 5 million, whichever is lower), the company can lose QFZP status for that year and the next four years.

Expert tip: before applying for a permit, model how much mainland revenue you expect and test it against the QFZP de minimis rule. In some cases, a separate mainland company is more tax-efficient than a branch or permit. See our QFZP guide.

What About VAT?

Mainland operations do not need a separate VAT registration for the same legal entity: the free zone company’s VAT registration covers its mainland supplies, and 5% VAT applies to mainland sales as normal. Designated zone rules on goods do not extend to supplies made on the mainland, so check your VAT treatment for each type of sale.

Why Keep Separate Accounts?

The resolution requires separate financial records for mainland operations, and corporate tax makes them essential:

• they show mainland revenue for the QFZP de minimis test;
• they support the income attributed to a mainland branch;
• they make DET inspections and your annual audit straightforward.

Set up separate revenue accounts, cost centres or a branch ledger in your accounting system before the first mainland sale.

Is a Mainland Permit Right for Your Company?

Situation	Likely best option
Occasional mainland project or market test	Temporary permit
Regular mainland customers, few staff on the mainland	Mainland branch run from the free zone
Large mainland business, QFZP status important	Separate mainland company, reviewed for tax
Activity not on DET’s eligible list	Separate mainland licence or distributor

How SGA World Can Help

SGA World reviews the corporate tax effect of mainland business on your QFZP status, sets up separate accounting for mainland operations, and prepares your corporate tax and VAT returns. Licence applications are made with DET and your free zone authority.