Dubai Unlocks New Growth Avenues: Free Zone Businesses Can Now Expand into Mainland

Written By Akshaya Ashok, Reviewed By Retheesh R S

Published on 21/03/2025

Executive Council Resolution No. 11 of 2025 marks a significant milestone for free zone businesses in Dubai, enabling them to expand their operations into mainland Dubai. This resolution reflects Dubai's commitment to fostering a dynamic and flexible business environment, encouraging investment, and supporting business growth. By allowing free zone entities to operate beyond their designated zones, the resolution opens up new opportunities for diversification and market penetration, further solidifying Dubai's position as a global business center.

Key Highlights of the Resolution

• Expansion into Mainland Dubai: Free zone businesses can now establish branches or operations in mainland Dubai, breaking traditional geographical limitations.
• Licensing Requirements: Companies must obtain the necessary licenses from the Department of Economy and Tourism (DET) to operate in the mainland.
• Annual Renewal: The new branch licenses require annual renewal, ensuring compliance with regulatory standards.
• Activity Permits: Businesses are permitted to conduct specific activities outside their free zones, subject to approval, allowing for greater operational flexibility.

Licensing and Compliance Requirements

• Separate Financial Records: Businesses expanding into mainland Dubai must maintain separate financial records for their mainland operations to ensure transparency and compliance.
• Branch License Requirements: To obtain a branch license, free zone businesses must submit the necessary documentation to the Department of Economy and Tourism (DET), including proof of free zone registration, a business plan, and details of intended mainland activities.
• Activity Permits Process: Businesses must apply for specific activity permits to operate outside their free zones. The DET will review and approve these permits based on the nature of the activities and compliance with regulations.
• Workforce Employment Conditions: Companies must adhere to UAE labor laws and regulations when hiring employees for their mainland operations, including visa and sponsorship requirements.

Exclusions and Special Considerations

• Exclusion of Financial Institutions: The resolution does not apply to financial institutions regulated by the Dubai International Financial Centre (DIFC).
• Permissible Activities List: The DET and licensing authorities will issue a list of permissible activities for mainland expansion within six months of the resolution's implementation.
• Inspection and Compliance: Regulatory authorities will conduct regular inspections to ensure compliance with the resolution's requirements, including licensing, financial reporting, and operational standards.

Timeline and Transition Period

• Compliance Deadline: Businesses have one year from the resolution's effective date to comply with its provisions.
• Extension Possibility: The DET Director General may grant an extension to the compliance period if businesses demonstrate valid reasons for delay.

Implications for Businesses and Investors

Benefits of Mainland Expansion

• Access to a broader market and customer base in mainland Dubai.
• Opportunities for diversification and business growth.
• Enhanced visibility and credibility in the UAE market.

Potential Challenges:

• Navigating licensing and compliance requirements.
• Managing separate financial records and operational logistics.
• Adapting to mainland regulations and competition.

Alignment with Dubai’s Economic Vision:

• The resolution supports Dubai’s goal of becoming a global business and investment hub by fostering innovation, flexibility, and economic diversification.
• It encourages foreign investment and strengthens Dubai’s position as a leader in the region’s business landscape.

Conclusion 

Executive Council Resolution No. 11 of 2025 enables free zone businesses in Dubai to expand into mainland Dubai by establishing branches, obtaining DET licenses, and securing permits for specific activities outside free zones. While introducing compliance requirements like maintaining separate financial records and adhering to workforce regulations, it excludes DIFC-regulated financial institutions and allows a one-year compliance period, extendable if needed. This resolution unlocks opportunities for market access, diversification, and growth, aligning with Dubai’s vision to foster innovation and attract global investment. Businesses must navigate licensing, compliance, and operational challenges to capitalize on these opportunities. The future for free zone businesses is promising, and now is the time to assess strategies, engage with regulators, and take the first step toward mainland expansion to strengthen their presence in Dubai’s dynamic business culture.

Written By

Akshaya Ashok

Akshaya Ashok is a content writer specializing in creating content focused on accounting and auditing. With over two years of experience, she has developed expertise in crafting professional content for the financial sector.