Free-Zone Companies Can Now Operate Mainland — What You Must Know
Date: 12-15-2025
Free-zone companies in the UAE can now legally operate in the mainland without converting to a mainland license. This shift removes long-standing operational barriers while introducing a structured compliance layer. The change allows businesses to expand client reach, sign mainland contracts, and deliver services locally, provided regulatory conditions are met. This article explains what the reform enables, what it restricts, and how businesses must adapt to stay compliant under the updated framework. The insights reflect hands-on experience managing cross-jurisdiction business structures in the UAE.
What changed under the new operating framework
The reform allows eligible free-zone entities to conduct mainland activities without establishing a separate mainland company. Instead of duplication, authorities introduced a permit-based system that connects free-zone licenses with mainland regulatory oversight.
Scope of permitted mainland activity
Free-zone companies can now:
- Serve mainland clients directly
- Sign contracts with UAE mainland entities
- Operate through registered addresses or approved virtual offices
- Employ staff under free-zone visas while working on mainland projects
Regulatory structure supporting mainland access
The updated system integrates free-zone registries with Dubai’s Department of Economy and Tourism and other emirate-level authorities. This integration enables real-time verification of business activity, licensing status, and compliance history.
Technical requirements for eligibility
Operational and compliance specifications
| Requirement Area | Description | Enforcement Mechanism |
|---|---|---|
| Activity Alignment | Mainland work must match free-zone license | Cross-authority activity verification |
| Permit Registration | Mainland operating permit required | DET-issued permit mapping |
| Office Substantiation | Physical or approved virtual office | Lease or Ejari validation |
| Tax Compliance | VAT and corporate tax alignment | Federal Tax Authority integration |
| Reporting Obligations | Periodic disclosures | Automated compliance alerts |
Free-zone only vs mainland-enabled free-zone operations
Operational capability differences
| Aspect | Free-Zone Only | Mainland-Enabled Free Zone |
|---|---|---|
| Client Reach | Restricted to free zones | Mainland and free zones |
| Contract Signing | Limited | Fully permitted |
| Office Requirement | Free-zone address | Free-zone + approved mainland address |
| Compliance Load | Moderate | Higher documentation and reporting |
| Regulatory Oversight | Single authority | Dual-authority supervision |
Market data reinforcing the reform’s impact
According to Dubai Economy’s 2025 outlook, over 65% of newly registered free-zone companies opt for mainland operating permits within the first year of incorporation. Dubai Chambers reports a 21% increase in cross-jurisdiction contracts following permit rollout. These figures indicate strong adoption driven by operational flexibility combined with regulatory clarity.
Practical implications for daily operations
Mainland-enabled free-zone companies must operate with higher documentation discipline. Client onboarding, invoicing, and employment records now require alignment across jurisdictions. Audits are no longer event-based; compliance monitoring occurs continuously through linked government systems.
Bonus operational tips
- Maintain separate client registers for mainland and free-zone engagements
- Align invoicing formats with mainland tax reporting standards
- Review activity descriptions quarterly to avoid scope mismatches
Decision factors before enabling mainland access
Before applying for a mainland operating permit, businesses must evaluate:
- Whether current license activities fully cover mainland work
- Readiness for enhanced compliance and reporting
- Office substantiation requirements
- Visa allocation flexibility under mainland operations
- Banking alignment for mainland revenue streams
Skipping this evaluation often leads to permit delays or post-approval compliance notices.
Services supporting compliant mainland operations
BizVibez supports businesses transitioning into mainland-enabled operations through carefully aligned services:
- Compliance Services: Regulatory alignment, permit documentation, and reporting readiness.
- Bank Account Opening in UAE: Structuring accounts to support mainland revenue flows and compliance checks.
- Virtual Office: Approved office solutions meeting mainland substantiation requirements.
- UAE Visa Services: Guidance on visa structuring aligned with cross-jurisdiction activity.
Long-term considerations after activation
Once enabled, businesses must maintain continuous compliance. Activity expansion requires permit updates. Banking reviews occur more frequently, and audits rely on digital verification rather than declarations. Strategic planning should account for compliance scalability as operations grow.
