DUBAI EXECUTIVE COUNCIL RESOLUTION NO. 11 OF 2025: A GAME-CHANGER FOR FREE ZONE BUSINESSES EXPANDING INTO THE MAINLAND
With the issuance of Dubai Executive Council Resolution No. 11 of 2025 (Resolution), Dubai has made a substantial stride towards promoting economic growth and business flexibility. The Resolution enables free zone companies to operate legally on the mainland of Dubai, a development consistent with the emirate’s aspiration to improve its investment environment and economic diversification. This modification offers new opportunities for businesses operating within Dubai’s free zones but also introduces regulatory complexities that necessitate detailed attention.
Framework of the Resolution
Companies that free zone authorities have granted a licence to conduct business, are now permitted to do so on the mainland, provided they obtain the requisite approvals from the Dubai Department of Economy and Tourism (DET). This eliminates the previous constraints that necessitated companies to establish a separate mainland entity or depend on third-party agents. Nevertheless, although this transition improves operational flexibility, businesses should analyse the applicability of tax regulations, financial reporting, and licensing to ensure a seamless transition.
Additionally, the Resolution mandates that the DET, in collaboration with the licensing authority, shall publish a list of the economic activities that the establishment may engage in within Dubai within six months from the effective date of the Resolution.
Possible Compliance Requirements
Free zone companies interested in expanding should evaluate several critical legal and compliance requirements. Initially, they must obtain DET licences or permits before conducting mainland operations.
Furthermore, businesses must maintain distinct financial records for their free zone and mainland operations. Employment considerations are also of paramount importance, as personnel employed in the mainland may be subject to the UAE Labour Law rather than the employment regulations applicable to the free zone.
Analysis
This Resolution could offer businesses numerous strategic advantages. It may allow companies to engage in government contracts and onshore business activities without intermediaries, reduce the administrative burden of setting up a separate mainland entity, and enable direct market access.
To ensure complete compliance with applicable laws and regulations, organisations shall evaluate their corporate structure, commercial agreements, and tax obligations. Failure to comply with licensing regulations may lead to operational disruptions, business restrictions, or penalties. Consequently, businesses that intend to capitalise on this new regulatory framework must conduct legal, due diligence and seek expert advice.
Disclaimer
This article analyses the proposed Resolution and is based on publicly available information at the time of writing. It is intended for general informational purposes only and should not be considered a substitute for legal advice.