Dubai’s dual licensing system allows a company registered in a free zone to also carry out approved activities on the mainland, without opening a second legal entity in the traditional sense. For years this option existed only through isolated agreements between individual free zones and the emirate’s licensing authority. That has changed. Since March 2025, dual licensing and two related pathways for free zone businesses to reach mainland customers have been placed on a single, emirate-wide legal footing, administered by the Dubai Department of Economy and Tourism (DET) in coordination with each free zone authority. This article explains how the current system works, who can use it, what it costs, and what businesses operating under a dual license need to watch for in their corporate tax position.
What Is a Dual License in Dubai?
A dual license, in the commercial sense most business owners mean when they use the term, lets a free zone company keep its registered office and legal status inside the free zone while also holding approval to transact with mainland clients, sign mainland contracts, and in most cases bid for government tenders. The company does not need to lease separate mainland premises for this purpose, and it continues to benefit from the ownership and repatriation terms attached to its free zone license. What changes is scope: the business can now legally invoice and contract with customers located outside the free zone’s boundaries, something a standard free zone license does not, by itself, permit.
It is worth being precise about terminology here. In DET’s own drafting, this free-zone-based route is formally described as a branch license operated from a free zone address, distinct from a branch license involving a physical mainland premises. Both are licensing instruments; the practical difference is whether the company takes on a separate mainland office or continues operating from its existing free zone location while its approved activities extend to the mainland.
From a DMCC Pilot to a Dubai-Wide Framework
Dual licensing in Dubai began as a narrower arrangement. In 2019, DMCC and the then Department of Economic Development signed a memorandum allowing DMCC-registered companies to obtain mainland approval through a no-objection certificate process specific to that free zone. It was useful for DMCC license holders, but it left companies registered in other free zones without an equivalent, consistent route to mainland trading.
That gap has now been closed. Executive Council Resolution No. 11 of 2025, which took effect on 3 March 2025, replaced the patchwork of individual free zone arrangements with a single regulatory framework covering free zone establishments across the emirate. The resolution sets out how free zone companies may conduct activities outside their free zone, which authority approves each route, and what obligations attach to doing so. DET, rather than any single free zone, is now the central approving authority for mainland access, working alongside the relevant free zone authority on each application.
The Three Routes Into the Mainland
Under the current framework, a free zone establishment has three distinct options for reaching the Dubai mainland, and choosing the right one depends on how much physical presence and how long-term the mainland activity will be.
| Route | How it works | Typical use case |
|---|---|---|
| Branch license (mainland premises) | The free zone company establishes a physical branch in Dubai mainland, tied to the parent free zone entity | Ongoing mainland operations that need a dedicated office, staff, or storefront |
| Branch license (free zone premises), commonly called a dual license | The company keeps its registered office in the free zone but is approved to carry out specific activities with mainland clients | Service-based or contract-based businesses that do not need a separate mainland office |
| Temporary activity permit | A short-term authorization for a defined activity, valid for up to six months | A one-off project, a limited-duration contract, or a pilot engagement with a mainland client |
All three routes require DET approval in addition to the free zone authority’s own consent, and all three are limited to the specific economic activities named in the approval. A company cannot assume that mainland approval for one activity extends automatically to others on its free zone license.
Which Free Zones Does the Framework Cover?
Executive Council Resolution No. 11 of 2025 applies across free zone establishments in Dubai, with one explicit exclusion: the Dubai International Financial Centre. DIFC-licensed financial establishments fall outside this framework and are governed separately. For companies licensed in other Dubai free zones, including DMCC, JAFZA, Dubai South, DAFZA, Dubai World Trade Centre, and comparable zones, the same DET-administered process now applies, replacing the earlier zone-by-zone agreements.
Companies established through free zones such as IFZA should confirm their specific activity’s eligibility with DET before assuming a dual license route is available, since eligibility is tied to the activity itself, not simply to the free zone of registration.
Documents and Approval Process
The application sits with DET, but it is initiated through the free zone authority where the company already holds its license. In practice, the process generally involves:
- Confirming with the free zone authority that the intended mainland activity is eligible for a dual license or branch license under DET’s published activity list
- Obtaining a no-objection certificate or equivalent internal approval from the free zone authority
- Submitting the DET application with the trade license copy, memorandum of association, shareholder and manager passport copies, and, where the activity requires it, a tenancy contract or Ejari for any mainland premises
- Securing sector-specific approval where the activity is regulated, for example activities requiring health, education, or financial sector sign-off
- Paying the applicable fee and receiving the mainland approval or branch license
Businesses that plan to route mainland work through PRO channels rather than manage government submissions internally often find that using PRO services shortens the back-and-forth with DET and the free zone authority, particularly where sector approvals are involved.
Fees and Processing Timelines
Under the current framework, a branch license carries an annual fee of AED 10,000, and a temporary activity permit is priced at AED 5,000. The free-zone-based branch license commonly referred to as a dual license generally follows a comparable fee structure to the mainland branch license, though the exact amount can vary by activity and by any additional approvals the activity requires. Processing timelines depend heavily on the activity: straightforward, non-regulated activities are typically approved within a matter of days once documentation is complete, while activities requiring a sector regulator’s sign-off take longer.
The Regularization Deadline for Existing Mainland Operators
The resolution gave free zone companies that were already conducting business outside their free zone, whether formally or informally, one year from the 3 March 2025 effective date to bring their status into line with the new framework, with provision for a single further extension of equal length at the Director General’s discretion. Businesses that were operating on the mainland without a proper branch license, dual license, or permit before the framework existed should treat regularization as time-sensitive: non-compliant establishments remain subject to the administrative penalties set out in Dubai’s existing commercial licensing legislation. Because the exact status of any extension can change, companies in this position should confirm current deadlines directly with DET or their free zone authority rather than relying on the original one-year window without verification.
Separate Accounting and Ongoing Compliance
A condition that runs through all three mainland access routes is that income and expenses attributable to mainland activity must be recorded separately from the company’s free zone operations. This is not simply good practice, it is an audit and inspection requirement, and it matters for two reasons. First, DET and the free zone authority can request evidence that the company is operating strictly within the activities it was approved for. Second, and more consequential for most businesses, separate accounting is what allows a company’s corporate tax position to be assessed correctly, since mainland-derived income is treated differently from free zone qualifying income. Businesses managing this alongside their existing bookkeeping often extend their accounting services engagement to cover the mainland activity specifically, so the two income streams are never commingled in the underlying records.
Corporate Tax Implications of Mainland-Sourced Income
This is the section most guides on dual licensing skip, and it is where a free zone company can unintentionally put its Corporate Tax position at risk. A Qualifying Free Zone Person benefits from a 0 percent Corporate Tax rate on qualifying income, but income earned from mainland Dubai through a branch license or dual license arrangement is generally not qualifying income for this purpose. In practical terms, profit generated through the mainland route is ordinarily taxed at the standard 9 percent rate applicable above the AED 375,000 threshold, even while the company’s free zone-sourced income continues to benefit from the 0 percent rate, provided the company still meets all other Qualifying Free Zone Person conditions.
The risk is not the 9 percent rate itself, most businesses accept that as the cost of mainland access, but what happens if non-qualifying income grows too large relative to total revenue. Exceeding the applicable de minimis threshold for non-qualifying income can cause the company to lose Qualifying Free Zone Person status altogether for the tax period and a number of subsequent periods, at which point the 0 percent rate is lost on income that would otherwise have qualified for it. Any business scaling up mainland activity under a dual license should model this before, not after, mainland revenue becomes a significant share of turnover, and should treat the separate accounting requirement described above as the foundation for that analysis. A review with a corporate tax consultant before expanding mainland activity is generally the more cost-effective route than discovering a Qualifying Free Zone Person breach at filing time.
Dual License or Full Mainland Branch: Which Fits Your Business?
The right route depends less on preference and more on how the business actually operates.
| Consideration | Dual license (free zone premises) | Full mainland branch |
|---|---|---|
| Physical mainland office | Not required | Required |
| Suited to | Consulting, professional services, contract-based activity, remote-deliverable work | Retail, activities needing a mainland storefront, warehousing, or walk-in client footfall |
| Setup complexity | Lower, no new premises to lease and register | Higher, requires a tenancy contract or Ejari and a mainland fit-out where relevant |
| Annual fee | Broadly comparable to the branch license fee | AED 10,000 |
Businesses considering a full mainland presence rather than a dual license arrangement, for example because the activity genuinely requires a mainland office or storefront, may find that opening a branch office or reviewing options through mainland business setup better matches the activity than a free-zone-based dual license. Companies that are still deciding between a free zone and mainland structure from the outset, rather than adding mainland access to an existing free zone company, should compare the two routes directly through free zone business setup and business setup in Dubai before committing to either.
Practical Considerations Before Applying
A few points are worth confirming before submitting a dual license application. First, confirm that the specific activity on the free zone license appears on DET’s published list of activities eligible for branch licensing or temporary permits, since eligibility is activity-specific rather than a blanket approval for the free zone as a whole. Second, confirm whether the activity requires any sector regulator’s approval in addition to DET’s, which will extend the timeline. Third, set up the separate accounting structure before, not after, mainland income starts flowing, since retrofitting records to separate two income streams is considerably more work than building the separation in from day one. Businesses that also need a dedicated account for mainland receivables sometimes coordinate this with corporate bank account opening planning, so banking, accounting, and licensing timelines move together rather than creating delays for one another. Broader administrative support, including coordinating between the free zone authority and DET during the application, is available through business services in Dubai.
Frequently Asked Questions
Is a dual license the same as opening a mainland branch?
No. A dual license, in DET’s terms a branch license operated from the free zone premises, lets the company keep its existing free zone office while extending approved activities to mainland clients. A full mainland branch requires a separate physical premises in mainland Dubai.
Does DIFC participate in the dual licensing framework?
No. Executive Council Resolution No. 11 of 2025 explicitly excludes financial establishments licensed in the Dubai International Financial Centre, which remain governed by DIFC’s own regulatory regime.
Can a dual license cover any activity on my free zone trade license?
Only activities that appear on DET’s published list of activities eligible for mainland access through this framework. Eligibility is assessed activity by activity, not granted automatically for every activity on an existing free zone license.
Does mainland income under a dual license affect my Corporate Tax rate?
Generally, yes. Income earned from mainland activity is typically not treated as qualifying income for Corporate Tax purposes, meaning it is usually taxed at the standard 9 percent rate rather than the 0 percent rate that applies to qualifying free zone income, and growing mainland income beyond the applicable threshold can put Qualifying Free Zone Person status at risk.
What happens if my company was already operating on the mainland before this framework existed?
The resolution set a one-year regularization window from its 3 March 2025 effective date, with a possible one-time extension of equal length. Companies in this position should confirm the current deadline status with DET or their free zone authority rather than assume the original window still applies without checking.
