In 15 years of living and doing business in the Emirates, one of the most common dilemmas I see among entrepreneurs is choosing between a free zone and the mainland. The good news: in Dubai this dilemma has largely been solved. Many people still don’t know.
In shortSince 2025, Dubai free-zone companies can serve clients in the city: through a standard branch, a branch licensed by DET (about AED 10,000 a year) or a temporary permit (about AED 5,000, up to six months). You no longer have to choose between free zone and mainland.
How it used to be
The rules were strict.
- Free zone — 100% ownership, no customs duties, convenient for international business. But you could not work directly with clients inside the city.
- Mainland — work anywhere in Dubai without restrictions, but lose some of the specific free zone benefits.
You had to choose: international contracts with benefits, or the local market.
What has changed
Dubai Executive Council Resolution No. 11 of 2025 allowed free zone companies to operate in the city. The mechanism is now fully in force. There are three options:
- A regular branch in the city — under standard mainland rules.
- A branch of a free zone headquarters — a licence from Dubai’s Department of Economy and Tourism (DET), about AED 10,000 a year.
- A temporary permit for a specific activity in the city — about AED 5,000, for up to six months.
What this gives in practice
In effect, entrepreneurs now have a hybrid tool:
- international deals you keep running through the free zone and enjoy its benefits;
- the local market — you work officially with clients in Dubai through the city branch.
No more need to open two separate companies or give up local clients.
What to keep in mind
- The city branch’s income and expenses must be kept separately.
- The permit applies only in Dubai. Abu Dhabi or Sharjah need separate licences.
- Not all activities are available in this format; DET defines the list.
- Check with a tax adviser how city income will affect your free zone company’s tax status.
My advice
If you are just starting a business in Dubai, begin with one question: where are your clients? Abroad — free zone. In the city — mainland. Both — now there is a hybrid.
Video: how to set up a company in the UAE in 2026
In this episode (in Russian) I explain how to open a business in the Emirates today, what has changed in the law and how taxes work. Watch it before choosing between a free zone and the mainland.
If you are planning a business together with buying an office or a home, leave a request — we will help with property and point you in the right direction.
Information as of September 2026; not legal advice. Sources: Dubai Executive Council Resolution No. 11 of 2025, Dubai Department of Economy and Tourism.
