Dubai’s New Resolution Eases Expansion for Free Zone Companies

Dubai has introduced a landmark regulation allowing free zone businesses to expand beyond their designated areas and into the mainland. Issued by Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council, Executive Council Resolution No. (11) of 2025 simplifies expansion opportunities for free zone entities while reinforcing Dubai’s position as a global business hub (Dubai Media Office).

Key Aspects of the New Resolution

The resolution enables free zone companies to operate outside their designated zones and within Dubai, provided they obtain the necessary permits from the Dubai Department of Economy and Tourism (DET) (Emirates News Agency). Previously, free zone entities were generally restricted from conducting mainland business without separate mainland licensing. This regulation eliminates those barriers and allows a more integrated economic landscape.

However, financial institutions licensed under the Dubai International Financial Centre (DIFC) are exempt from this policy. This ensures that specialized financial regulations remain distinct from broader commercial activities (Dubai Media Office).

Additionally, companies must comply with federal and local laws, maintain separate financial records for their mainland and free zone operations, and secure relevant permits for any business outside Dubai (Financial Times fDi Markets).

Facilitating Free Zone Business Expansion

The new resolution allows free zone companies to establish branches in Dubai under two licensing categories:

1. Mainland Branch License – allows a free zone company to establish a fully registered mainland branch.
2. Free Zone Headquarters Branch License – allows a free zone company to expand operations while maintaining headquarters within the free zone.

Each license is valid for one year and can be renewed (Dubai Media Office). Companies can also apply for specific activity permits for short-term mainland operations.

The DET, in coordination with free zone authorities, will issue a list of permitted economic activities within six months, ensuring clarity on which sectors are eligible for mainland expansion.

Alignment with Dubai’s D33 Economic Agenda

This initiative is a crucial step toward achieving the objectives of Dubai’s D33 Economic Agenda, which aims to double the emirate’s economy to AED 32 trillion ($8.71 trillion) by 2033 (Dubai Media Office). By streamlining business regulations, Dubai strengthens its position as a top destination for entrepreneurs, investors, and global corporations.

In 2024, Dubai attracted 1,117 greenfield FDI projects worth over AED 52.3 billion, marking a 33.2% increase from the previous year. The new resolution is expected to further boost foreign direct investment (FDI) by offering businesses greater operational flexibility (Financial Times fDi Markets).

Business Benefits and Economic Impact

The new resolution provides multiple advantages for businesses:

• Simplified expansion – free zone firms can now reach a broader customer base.
• Reduced operational barriers – companies no longer need complex joint ventures or distributor partnerships.
• Access to new contracts – allows participation in government and private sector projects in Dubai.
• Enhanced job creation – as businesses expand, more employment opportunities will emerge across multiple industries .

Additionally, the resolution ensures better integration between free zone and mainland economies, reducing regulatory inefficiencies and enhancing competition.

Compliance and Challenges

While the resolution offers significant growth opportunities, companies must navigate certain regulatory requirements:

• Permit acquisition – businesses must obtain DET-issued permits and renew them annually.
• Financial separation – companies must maintain separate financial records for free zone and mainland operations, ensuring transparency for taxation purposes.
• Sector limitations – DET will release an approved activity list, which may restrict certain business types from expanding (Financial Times fDi Markets).

Free zone firms already operating in the mainland informally must regularize their status within one year, ensuring compliance with the new law (Dubai Media Office).

Conclusion

Dubai’s latest resolution on free zone companies marks a pivotal step in the evolution of its business environment. By removing barriers between free zones and the mainland, the emirate is fostering greater integration, efficiency, and opportunity in its economy. This regulatory change serves the dual purpose of empowering businesses to grow while propelling Dubai toward its D33 agenda goals of economic expansion. Early indicators suggest it will attract even more foreign investment and solidify Dubai’s status as a top global business hub. Companies operating in Dubai’s free zones now have a clear, simplified pathway to expand across the city, which bodes well for entrepreneurs and established firms alike.

As with any policy shift, there will be details for businesses to manage – permits, compliance, and adjustments to new rules. Yet, the consensus is that the benefits far outweigh the challenges. The move is expected to unlock new ventures, partnerships, and innovations, reinforcing Dubai’s image as a pro-business, future-forward city. In the words of the Dubai government, this initiative is a “progressive” measure that enhances Dubai’s competitiveness and sends a welcoming message to global investors and innovators . With robust implementation and continued support from authorities, Dubai’s free zone and mainland synergy will likely become a model for other global cities aiming to cultivate a thriving, diversified economy.