There is a conversation BizHub has with freezone business owners more than almost any other. The business is registered, the trade licence is active, the company is operating. Then a mainland client comes along, a government-linked contract appears, or a UAE-based distributor asks for a formal invoice from a mainland-registered entity.
The freezone owner either walks away from the deal or invoices anyway and hopes nobody checks.
Both are bad outcomes. The first costs revenue. The second creates a compliance exposure that can result in fines, licence penalties, or forced company restructuring.
The situation changed significantly in 2025. Dubai’s Executive Council issued Resolution No. 11 of 2025, which created a formal, legal framework for freezone companies to conduct business on the UAE mainland. For the first time, freezone businesses do not need to convert to mainland or open a separate mainland entity to serve mainland clients. They need a permit.
This guide explains what that permit is, who needs it, how to get it, and what happens if your freezone company has already been trading on the mainland without one.
What Changed: Dubai Executive Council Resolution No. 11 of 2025
Before this resolution, the legal position for freezone companies trading on the UAE mainland was straightforward but restrictive. Freezone companies were authorised to operate within their specific freezone boundaries and to conduct international trade. Direct commercial activity with UAE mainland businesses and government entities required either a mainland company or a local distributor acting as an intermediary.
In practice, many freezone businesses traded on the mainland regardless. The enforcement was inconsistent and the process to formalise the arrangement was unclear. Resolution No. 11 of 2025 changed both.
The resolution introduced two formal authorisation pathways for Dubai freezone companies to operate on the mainland legally:
- A branch licence valid for one year and renewable
- A temporary activity permit valid for up to six months for specific, time-limited projects
The compliance deadline for existing freezone companies that were already trading on the mainland was March 2026. Companies that were conducting mainland business activity without one of these authorisations beyond that date are operating outside their licence terms.
This applies to Dubai freezone companies. Other emirates including Abu Dhabi, Sharjah, Ajman, and Ras Al Khaimah have separate regulatory frameworks. If your freezone is based outside Dubai, the specific rules for your zone and emirate apply, and a separate compliance review is recommended.
Option 1: The Branch Licence
A branch licence is the primary mechanism for freezone companies that want ongoing, regular access to the UAE mainland market.
A branch is not a separate legal entity. It is an extension of your existing freezone company, registered with the Department of Economic Development in Dubai and authorised to carry out the same activities as your parent freezone company on the mainland.
The branch operates under the trade name of the parent company. It does not require a local UAE national shareholder or local sponsor, which was previously one of the main barriers to mainland market access for freezone companies.
Key features of the branch licence:
Validity is one year and renewable annually in line with your parent freezone trade licence. The branch must maintain a physical presence, typically a registered office address in a mainland business centre or commercial space. All business activities must be consistent with the activities listed on your freezone trade licence. The branch cannot conduct activities that differ from those of the parent company.
For freezone companies that service recurring mainland clients, operate on long-term mainland contracts, or need to bid for government or semi-government projects, the branch licence is the correct route. It provides the stability and ongoing legitimacy that a temporary permit does not.
For a full breakdown of the differences between freezone and mainland structures, and when each is the right choice for your business, read the BizHub guide to Mainland vs Freezone vs Offshore in the UAE.
Option 2: The Temporary Activity Permit
A temporary activity permit is designed for freezone companies that have a specific, defined project on the mainland and need formal authorisation for that engagement rather than ongoing access.
The permit is valid for up to six months and covers a defined scope of work. It cannot be used as a substitute for a branch licence in situations where the business relationship with a mainland client is ongoing or recurring.
If you have a one-off consultancy engagement, a specific installation or delivery project, or a defined event or campaign for a mainland client, the temporary permit is appropriate. If you are servicing the same client quarterly or have a retainer arrangement, you need a branch licence.
Applying for a temporary permit when a branch licence is the correct structure is a compliance risk. Authorities assess the nature and frequency of the activity, not just the permit type submitted.
Who Needs to Comply Right Now
If any of the following describes your freezone company, you need to review your current compliance status without delay.
You are invoicing UAE mainland businesses directly from your freezone company. You have employees working from mainland locations under your freezone trade licence. You have been awarded or are bidding for contracts with mainland or government entities. You have a mainland client who is claiming input VAT on your invoices under the assumption that your company is a mainland-registered entity.
The last point is particularly important. If a mainland business has been reclaiming VAT on your freezone invoices incorrectly, this creates a liability not just for your business but for your client. For guidance on VAT and corporate tax obligations for UAE businesses, see the BizHub article on UAE corporate tax law for startups.
How to Apply for a Mainland Branch Licence as a Freezone Company
The process for a Dubai freezone company to obtain a branch licence on the mainland involves both the freezone authority and the Department of Economic Development.
Step 1: Internal approval from your freezone authority
Before approaching the DED, your parent freezone company must obtain internal approval from its freezone authority to establish a mainland branch. The freezone authority reviews this request against the terms of your trade licence and any applicable regulations specific to your zone. Most major freezones including IFZA, RAKEZ, and DMCC have established internal processes for this following Resolution No. 11.
Step 2: DED application
Once internal approval is in hand, you submit the branch licence application to the DED. Documents typically required include the original freezone trade licence, certificate of incorporation, articles of association, board resolution authorising the branch, parent company bank statements, and the freezone authority approval letter.
Step 3: Physical office requirement
The DED requires a mainland office address for the branch. A flexi-desk arrangement in a mainland business centre is accepted for most activity types. You do not need a dedicated retail or corporate office unless your activity requires it.
Step 4: Establishment card and additional registrations
Once the branch licence is issued, you obtain an establishment card and register the branch with relevant authorities depending on your activity. If your business involves regulated activities such as financial services, healthcare, legal services, or education, additional regulatory approvals are required from the relevant UAE authority before trading can begin.
Step 5: Tax and accounting setup
The branch is subject to UAE corporate tax as part of the wider entity. Your accounting structure must account for mainland revenue separately if you are claiming freezone qualifying income status for the parent company. Misallocation of mainland revenue to the freezone entity is one of the most common corporate tax errors for businesses in this structure. For ongoing compliance support, see BizHub accounting and bookkeeping services.
How Long Does It Take and What Does It Cost?
For a branch licence through the DED following freezone authority approval, the typical timeline from initial application to licence issuance is 15 to 25 business days. This can vary based on the freezone, the nature of your activities, and the completeness of your documentation.
Cost estimates for a Dubai freezone to mainland branch licence are in the range of AED 15,000 to AED 30,000 for the first year, covering the DED application fee, establishment card, and registered office address. Renewal costs are typically lower in subsequent years.
These figures vary based on activity type. Regulated activities such as real estate brokerage, contracting, or professional services carry higher fees and additional approval costs.
For a precise cost estimate based on your specific freezone, activity type, and business situation, use the BizHub business setup cost calculator.
Should You Convert Your Freezone Company to Mainland Instead?
For some businesses, the branch licence route is the appropriate long-term solution. For others, especially those where the majority of revenue comes from UAE mainland clients, it may make more sense to convert the company structure entirely rather than maintain a dual-licence arrangement.
The case for maintaining the freezone company with a branch licence:
Your international revenue stream remains significant. You benefit from the freezone’s specific regulatory environment or sector expertise. The 0 per cent corporate tax qualifying income status for freezone revenue is commercially meaningful to your business. Your freezone provides services, infrastructure, or connections that are relevant to your business model.
The case for converting to a full mainland company:
More than 70 per cent of your revenue comes from UAE mainland clients. You are growing a team that will be based on the mainland. You are bidding for large government contracts that require full mainland registration. The cost of maintaining both a freezone licence and a branch licence is not justified by the freezone benefits you receive.
For a consultation on which structure fits your current business stage and revenue mix, see the BizHub business setup and licensing service.
Corporate Tax Implications of Mainland Trading from a Freezone
This is the area where most freezone business owners are most exposed, and where professional advice is most critical.
UAE freezone companies can benefit from a 0 per cent corporate tax rate on what is defined as qualifying income. The qualification test is strict. Income derived from mainland UAE transactions, including sales to mainland businesses and services rendered on the mainland, is typically classified as non-qualifying income and is taxed at 9 per cent.
If your freezone company has been recording mainland revenue within the freezone entity and claiming it under the 0 per cent qualifying income regime, this is a corporate tax risk that requires immediate review with a qualified accountant.
The branch licence structure resolves this by creating a formal, separate registration point for mainland activity. Revenue earned through the mainland branch is accounted for separately and taxed accordingly. The parent freezone entity retains its qualifying income status for activities genuinely conducted within the freezone or internationally.
Getting this wrong does not just result in a tax adjustment. It can trigger penalties, interest on underpaid tax, and in serious cases, regulatory action from the Federal Tax Authority.
What If Your Freezone Is Outside Dubai?
Resolution No. 11 of 2025 applies specifically to Dubai freezones. Each emirate has its own regulatory framework for freezone-to-mainland activity.
Abu Dhabi freezone companies operating through zones such as ADGM, KEZAD, or Masdar City are subject to separate rules governed by the Abu Dhabi Department of Economic Development. Sharjah, Ajman, Fujairah, and Ras Al Khaimah freezones each operate under their own emirate-level regulations.
The general principle of requiring formal authorisation before trading on the UAE mainland applies across all emirates. However, the specific mechanism, cost, and process differ by zone and emirate.
If your freezone is outside Dubai, contact your freezone authority directly to understand the current rules for mainland business activity, or speak with BizHub for a compliance review specific to your zone.
Frequently Asked Questions
Can a freezone company in IFZA or SHAMS get a mainland branch licence?
Yes. Both IFZA and SHAMS are Dubai freezones and fall under the scope of Resolution No. 11 of 2025. The process involves obtaining approval from the freezone authority followed by DED registration. The specific internal process and documentation requirements vary between zones. BizHub works with both zones regularly and can guide you through the approval process for your specific zone.
Can we keep our existing freezone company name on the mainland branch?
Yes. The branch operates under the same trade name as the parent freezone company. You cannot use a different business name for the branch. This is one of the key distinctions between a branch and a new standalone mainland company.
Does the branch licence allow us to hire employees on the mainland?
Yes. A branch licence allows you to sponsor employees under the branch establishment card for mainland-based roles. These employees work under the branch rather than the parent freezone entity. MOHRE regulations apply to employees under the mainland branch.
We have been trading on the mainland since before March 2026 without a permit. What happens now?
The compliance deadline has passed. If you are currently conducting mainland business activity without a branch licence or temporary permit, you are trading outside your licence terms. The appropriate action is to apply for a branch licence immediately and regularise your status. Do not continue trading on the mainland without a formal authorisation in place. Contact BizHub for an urgent compliance consultation.
Can the branch licence cover multiple mainland locations?
A single branch licence covers your registered mainland office address and the activity scope listed on the licence. If you operate from multiple mainland locations or conduct different activities in different locations, you may require additional registrations. This is assessed on a case-by-case basis depending on your activity type and physical presence.
Take the Next Step
The rules for freezone companies trading on the UAE mainland changed. The window for informal arrangements closed in March 2026.
If your freezone company has mainland clients, if you are bidding for mainland contracts, or if you have already been conducting mainland business activity, the right move is to get your compliance in order before the cost of fixing it becomes significantly higher than the cost of doing it correctly now.
BizHub handles the full branch licence application process from freezone authority approval through to DED registration and establishment card. If your situation requires a full company restructure rather than a branch, we will tell you that clearly before you spend anything.
Book a free compliance review with BizHub and find out exactly what your freezone company needs to trade legally on the UAE mainland.
This article reflects UAE regulations as of June 2026 including Dubai Executive Council Resolution No. 11 of 2025. Regulations are subject to change. Freezone-specific rules vary by zone and emirate. Consult BizHub directly for advice applicable to your company’s specific structure and location.
