Dubai's 2025 Onshore Access Framework for Free Zone Companies

Dubai has taken a major step in its journey toward economic modernization with the issuance of Executive Council Decision No. 11 of 2025. This reform introduces a game-changing framework that allows companies operating in freezones in the UAE to legally conduct business in mainland Dubai. 

As the latest strategic initiative under the Dubai Economic Agenda (D33), this move enhances Dubai's appeal for foreign investors and simplifies the process of business setup in the UAE. 

A Paradigm Shift in Economic Policy 

Historically, companies incorporated within freezones in the UAE were limited in their operational scope to within the boundaries of those zones. This separation forced businesses to establish multiple entities to serve both free zone and mainland markets, often at increased cost and administrative complexity. 

The new Decision, effective from March 3, 2025, addresses this issue by enabling a unified approach to company formation in the UAE. 

Three Flexible Pathways to Mainland Business Access 

The reform outlines three mechanisms for freezone business setup in the  UAE to gain legal access to mainland markets: 

1. Establishing a Physical Branch in Mainland Dubai – This involves opening a traditional branch office physically located within the mainland. 

2. Operating a Branch from the Free Zone – Companies can now legally conduct mainland business from their existing free zone premises. 

3. Obtaining a Temporary Permit – A flexible option for short-term projects or test runs, valid for up to six months. 

Each pathway provides businesses with the opportunity to expand into Dubai's mainland market without undergoing a full corporate restructuring. Notably,

these options exclude financial institutions operating within the DIFC due to its unique regulatory framework. 

Regulatory and Licensing Requirements 

While this reform opens new opportunities, companies must comply with several licensing and operational conditions to ensure alignment with Dubai's regulatory standards. 

All companies planning to operate in mainland Dubai must obtain licenses or permits from the Dubai Department of Economy and Tourism (DET). Depending on the industry, additional approvals from sector-specific regulators such as the Dubai Health Authority or Ministry of Education may be required. 

Additionally, businesses are mandated to maintain separate accounting for onshore and freezone activities to align with UAE's federal corporate tax laws, introduced in 2023. This segregation helps in accurately determining tax obligations and maintaining financial transparency. 

Labour Law and Emiratisation Compliance 

An important feature of the new framework is the ability to deploy free zone–based employees for mainland operations without the need to transfer sponsorship or alter employment contracts. However, companies must still adhere to Emiratisation quotas, necessitating strategic workforce planning. 

Strategic Advantages for Businesses 

The Decision creates several advantages that go beyond regulatory convenience: 

1. Cost Efficiency 

Freezone business setup in the UAE has always offered benefits like tax exemptions and simplified customs procedures. Now, these businesses can access mainland markets without additional physical infrastructure or hiring separate teams, resulting in considerable cost savings. 

2. Streamlined Operations 

Companies can reduce operational redundancies by centralizing their UAE presence. Instead of maintaining separate entities, businesses can operate under a single umbrella, making corporate governance and financial reporting far more efficient. 

3. Expanded Market Access 

The ability to access the broader mainland business ecosystem opens up opportunities for bidding on government contracts, building client relationships, and increasing revenue streams that were previously inaccessible. 

4. Flexible Growth Models 

The temporary permit option is particularly attractive for businesses that wish to explore new markets without long-term commitments. It allows for market testing, pilot projects, and seasonal campaigns with minimized risk. 

Implications for International Investors 

For multinational corporations and foreign investors, the new framework lowers the entry barriers for company formation in the UAE. Businesses no longer need to establish duplicate legal structures to engage with both free zone and mainland clients. 

This change enhances Dubai's position as a preferred location for regional headquarters, offering a one-stop operational base for the MENA region. The integration of freezone and mainland access also boosts investor confidence by aligning Dubai's business regulations with global standards. 

The city becomes more than just a commercial hub; it becomes a strategic launchpad for international expansion. 

Implementation Timeline and Next Steps 

While the new rules are already in effect, full-scale implementation is expected in phases. Key developments to look out for include: 

• Activity List Publication: The DET is expected to release a comprehensive list of permissible onshore activities within six months of the Decision's enactment. 

• Grace Period: Companies currently operating in the mainland without proper licensing will have until March 2026 to regularize their status, offering ample time for legal adjustments and internal audits. 

Anticipated Challenges and Considerations 

Despite the numerous advantages, businesses may face some initial hurdles: 

• Regulatory Clarity: Until full guidelines are issued, some ambiguity remains about sector-specific requirements. 

• Inter-agency Coordination: Aligning policies across multiple regulatory bodies might lead to temporary delays or inconsistencies. 

Summing Up 

Dubai’s Decision No. 11 of 2025 represents a significant leap forward in economic policy, removing long-standing barriers between freezone business setup and the mainland business environment. 

By simplifying company formation in the UAE and offering flexible market entry options, the reform marks a critical milestone in Dubai's journey toward becoming one of the world's top three economic cities by 2033. 

Whether you're exploring freezone business setup in the UAE or aiming for mainland expansion, this new framework offers the operational flexibility needed to succeed in one of the world’s most dynamic markets.