New Era for Free Zone-Mainland Integration: Dubai’s Executive Council Resolution No. (11) of 2025

By Adela Mues, Marie Borye and Mira Bagaeen – Reed Smith LLP

Dubai has taken a notable step toward commercial licensing modernization with the publication of Executive Council Resolution No. (11) of 2025, which allows free zone entities (except those based in the Dubai International Financial Centre) to conduct business activities in mainland Dubai, under a structured licensing regime. This development is a significant milestone in Dubai’s ongoing efforts to enhance its commercial ecosystem and attract global investment.

Previously, most free zone entities were limited to operating within their designated geographic zones and were required to establish a physical presence in mainland Dubai, typically through branch or subsidiaries, to conduct business there. This resolution formalizes that practice, clarifies the required procedures, enhances policy transparency and offers greater certainty for international and free zone businesses seeking to expand within the UAE. 

Three Pathways to Dubai Mainland Access

Under the new resolution, it is now confirmed that free zone companies can operate in the mainland by obtaining either a licence or a newly introduced type of temporary permit, both subject to approval by the Dubai Department of Economy and Tourism (DET) and the relevant free zone authority. The permit offers a separate and simplified route for enabling such activities. The different options are: 

1. Licence to establish a branch or subsidiary outside of the free zone, within the Emirate.
2. Licence to establish a branch operating in the mainland but from a registered office located in a free zone (referred to as a dual licence).
3. Temporary permit to conduct specific activities.

If the free zone entity’s business is regulated, additional approval from the relevant regulator may be required. Branch licences are valid for one year, renewable annually, while temporary permits are valid for up to six months.

These developments do not affect the need for businesses operating across multiple Emirates to comply with the licensing requirements applicable in each relevant Emirate. None of the above mentioned-categories of licences and permits authorizes its holder to carry on business in any of the other Emirates.

DET to Publish Activity List by 3 September 2025

A key implementation milestone is the DET’s obligation to publish, by 3 September 2025, a list of eligible economic activities. This list will specify which activities require a branch licence and which may be conducted under a temporary permit. Until then, businesses should prepare by reviewing their current operations and aligning them with the anticipated categories.

Compliance and Financial Segregation

Companies operating under this resolution must:

• Maintain separate financial records for mainland activities
• Comply with all applicable federal and local laws
• Undergo audits and inspections as per DET and relevant free zone licensing authority procedures

This separation is particularly relevant for UAE corporate tax purposes, as mainland activities may affect the free zone’s tax treatment. Businesses are advised to consult tax professionals to assess exposure and ensure compliance. 

Workforce Flexibility

A notable benefit is the ability for free zone companies to utilize their existing workforce for mainland operations. Employees registered in the free zone may continue to enjoy free zone employment privileges while supporting mainland activities. This allows operational continuity and cost efficiency. 

Pending Procedural Details

While the resolution is comprehensive in scope, several procedural elements remain pending:

• Application forms and processes are yet to be published by the DET and free zone authorities
• Sector-specific licensing guidance is expected to follow the DET’s activity list
• Additional conditions may be introduced by the DET Director General 

Fee Structure and Transition Period

The resolution sets out a clear fee structure:

• AED 10,000/year for a branch licence operating out of the free zone
• AED 5,000 for a temporary permit

Free zone companies currently conducting mainland activities must regularize their status within one year of the resolution’s effective date (3 March 2025), with a possible one-time extension.

Strategic Implications for Investors

This resolution is more than a regulatory update, it is a strategic enabler of market integration, legal clarity, and investor confidence. It aligns with Dubai’s broader vision of becoming a globally competitive, innovation-driven economy. It is anticipated to boost collaborations and opportunities both within Dubai and the UAE as a whole and offers greater attraction to foreign investors.

For businesses operating in Dubai, this is a critical moment to reassess entity structures, compliance frameworks, and workforce deployment strategies.

Conclusion

Executive Council Resolution No. (11) of 2025 represents a transformative shift in Dubai’s commercial landscape. It offers free zone companies a clear, compliant, and cost-effective pathway to mainland market access while reinforcing Dubai’s position as a leading global business hub.

Stay tuned for updates as the DET and free zone authorities roll out the implementation framework.