Dubai's Free Zone Mainland Operating Permit Reshapes Onshore Access With AED 5,000 Entry and 9% Tax

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Free zone firms can now trade on Dubai's mainland from AED 5,000 - but 9% corporate tax on onshore income changes the structuring maths.

Dubai Executive Council Resolution No. 11 of 2025 creates three routes for free zone companies to operate on the mainland - a temporary permit, a branch licence and a remote branch licence.
The temporary operating permit costs AED 5,000 for six months and covers specified project-based activities, while branch licences cost AED 10,000 per year for sustained onshore operations.
DIFC-licensed entities are excluded from the framework and must continue to use existing onshore access arrangements.
Mainland income earned under any route attracts the standard 9% corporate tax rate, and breaching the de minimis revenue threshold can strip a company's Qualifying Free Zone Person status entirely.
Companies that were already conducting mainland business without formal authorisation had until 21 March 2026 to regularise their position under the resolution's transitional provisions.
Corporate services providers must now model the combined cost of permit fees, 9% tax on onshore revenue and potential QFZP loss when advising clients on free zone versus mainland structuring.

How the Dubai Unified Licence Framework Opens the Mainland Door

Dubai has dismantled one of the longest-standing barriers in its commercial licensing architecture. Under Executive Council Resolution No. 11 of 2025, free zone companies can now conduct specified activities on Dubai's mainland through a permit and branch licence system administered by the Department of Economy and Tourism (DET). The framework applies to most Dubai free zones and is processed through the Dubai Unified Licence (DUL) and Invest in Dubai platform.

For corporate services firms, the resolution reshapes a structuring question that has defined the UAE market for two decades. The choice between a free zone licence and a mainland company is no longer binary. However, the Federal Tax Authority's treatment of mainland-sourced income at 9% corporate tax makes the calculation more complex than the headline AED 5,000 fee suggests.

Three Routes to Onshore Access and What Each Costs

The resolution establishes three distinct mechanisms for free zone entities to trade on Dubai's mainland. Each carries different fees, durations and operational assumptions. DET administers all three through the DUL system, with applications submitted via the Invest in Dubai platform after the applicant's free zone authority grants a no-objection certificate.

Route	Fee	Duration	Best Suited For
Temporary Operating Permit	AED 5,000	6 months	Project-based or short-term onshore contracts
Mainland Branch Licence	AED 10,000	1 year	Sustained mainland operations with a physical office
Remote Branch Licence	AED 10,000	1 year	Ongoing mainland trading from the free zone office

The temporary permit is activity-specific. It covers only the tasks described in the application and does not grant a blanket right to trade on the mainland. Renewal for additional six-month periods is available subject to DET approval. The two branch licence options provide broader authorisation, with the remote branch removing the requirement for a separate mainland office.

In its initial phase, the framework covers non-regulated sectors including technology, consultancy, professional services and trading. Regulated activities such as healthcare and education require additional sector-specific approvals. Practitioners recommend verifying activity codes directly during the application process, as public documentation on the eligible activities list remains limited.

The 9% Tax Layer and QFZP Threshold Risk

The permit's AED 5,000 price tag understates the true cost of mainland expansion. Under Federal Decree-Law No. 47 of 2022, mainland-sourced income earned by a free zone entity is subject to corporate tax at 9% regardless of the entity's registration status. DET press materials confirm that free zone companies using the permit must maintain separate financial records for onshore activities and account for corporate tax on that revenue.

For companies holding Qualifying Free Zone Person (QFZP) status, the stakes are higher. A QFZP retains its 0% tax rate on qualifying income only if non-qualifying revenue stays below a prescribed de minimis threshold. Mainland income earned under the permit counts as non-qualifying revenue. If onshore sales accumulate beyond that threshold, the company risks losing QFZP status entirely, exposing its full income base to 9% tax.

In practice, a free zone consultancy generating AED 2 million from international clients could jeopardise its entire zero-rate position by taking on a single large mainland contract. Tax advisors recommend modelling the QFZP de minimis calculation before applying for the permit. Companies expecting significant onshore activity may find it more efficient to accept full corporate tax liability from the outset.

VAT adds a further layer. Free zone entities that begin mainland operations may trigger the AED 375,000 mandatory VAT registration threshold. Where this applies, the company must register with the Federal Tax Authority (FTA) and charge VAT on mainland transactions.

DIFC Exclusion and Scope Limitations

The resolution explicitly excludes entities licensed in the Dubai International Financial Centre. DIFC operates under its own common-law framework with a separate regulator, the Dubai Financial Services Authority (DFSA), and maintains independent arrangements for any mainland access. This carve-out reflects the structural distinction between DIFC as a financial services jurisdiction and Dubai's commercial free zones, which fall under emirate-level regulation.

Beyond the DIFC exclusion, the permit applies only within the Emirate of Dubai. Cross-emirate operations still require separate licensing. Abu Dhabi runs its own dual-licence mechanism through the TAMM portal, with fees starting at AED 1,200 for up to six activities.

The resolution also imposed a transitional deadline. Companies already conducting mainland business without formal authorisation had until 21 March 2026 to regularise their position, with a possible one-time extension. For those that missed the deadline, enforcement risk remains an open question that DET has not yet publicly clarified.

Practical Implications for Corporate Services Providers and Formation Advisors

The permit regime directly changes the advisory conversation. The free zone versus mainland decision is no longer a clean either-or choice. Advisors must now map a third path where a free zone entity accesses onshore markets through a permit or branch licence. That model must account for government fees, 9% corporate tax on mainland revenue, potential QFZP disqualification and any VAT obligations.

For real estate advisory and brokerage firms, the implications are equally direct. Free zone-registered property consultancies can now transact on the mainland without appointing a local agent or forming a separate LLC. This expands the pool of entities able to participate in Dubai Land Department registrations. However, firms with ongoing brokerage operations should consider the annual branch licence rather than rolling six-month permits.

What Clients are Asking their Advisors

Can a DMCC or IFZA company sell directly to mainland Dubai customers under the new permit?

Yes, most Dubai free zone companies outside DIFC can apply for the temporary operating permit through the Invest in Dubai platform. The permit costs AED 5,000 for six months and covers specified activities only. Applicants need a valid free zone licence and approval from their zone authority before DET issues the permit.

Does the AED 5,000 permit replace the need for a mainland trade licence?

Not in every case. The temporary permit suits short-term or project-based onshore work. Companies that expect sustained mainland operations should consider the annual branch licence at AED 10,000 or a full mainland LLC. The choice depends on whether the mainland activity is ongoing or periodic.

Will mainland income earned under the permit affect my free zone tax status?

Mainland revenue is taxed at 9% under UAE corporate tax law regardless of where the entity is registered. If non-qualifying income breaches the de minimis threshold, the company may lose Qualifying Free Zone Person status entirely. Separate financial records for onshore activity are mandatory.

Is DIFC included in the free zone mainland permit framework?

No. Executive Council Resolution No. 11 of 2025 explicitly excludes DIFC-licensed entities. DIFC operates under its own common-law framework with separate arrangements for any mainland access. Companies registered in DIFC must continue to use existing routes if they need onshore Dubai operations.