Dubai's New Permit Opens Mainland Market

Dubai's New Permit: Free Zone Companies Can Operate on the Mainland

Dubai has once again introduced an innovation that attracts the attention of not only local but international business players. The Dubai Department of Economy and Tourism (DET) announced a new permit called the Free Zone Mainland Operating Permit, which allows companies operating in free zones to officially conduct activities on Dubai's mainland market. This move represents a significant regulatory breakthrough, opening a new era in the development of the United Arab Emirates' business-friendly environment.

What is the Free Zone Mainland Operating Permit?

The new permit is part of a structured system that allows free zone companies to enter the mainland market without having to obtain a full mainland license. This not only provides a cost-effective but also a less risky entry into domestic trade.

In its initial phase, the permit applies to so-called unregulated activities, such as:

technology services, consulting, design, professional services, trade.

DET plans to extend the permit to regulated sectors in the future, such as financial or healthcare services.

Why is this important for businesses?

Previously, free zone companies could only officially do business with mainland clients by involving intermediaries or establishing a subsidiary with a mainland license. This imposed extra costs and administrative burdens on companies. The new permit overcomes this problem and allows direct operations, such as:

conducting local trade, winning government tenders, joining domestic supply chains, reaching new customer bases.

According to DET, with the new permit, economic activity between the free zone and mainland could increase by 15–20% in the first year, opening new doors for more than 10,000 active free zone companies.

What are the costs?

The permit fee is 5,000 dirhams and is valid for six months. This period can be renewed for the same fee. Companies with the permit can use their existing employees for mainland activities, without needing to hire additional staff.

It is important to note that a 9% corporate tax must be paid on revenues from mainland activities, and separate accounting records should be kept in accordance with the Federal Tax Authority (FTA) regulations. This ensures transparency and regulatory uniformity.

How to apply for the new permit?

Eligible companies must hold the Dubai Unified Licence (DUL), and the permit can be applied for entirely digitally via the Invest in Dubai (IID) platform. This online process is particularly advantageous for small and medium-sized enterprises (SMEs), startups, and registration agents.

A detailed guide and document list related to the application can be found on the official Invest in Dubai website.

What impact could this have on Dubai's economy?

This permit is not just an administrative relief but a strategic economic policy decision. For free zone companies, it means retaining tax and operational advantages while entering the domestic market. This is particularly important for startups and technology companies, which often originate in free zones but require a domestic presence for growth.

Additionally, Dubai's government contracts, tenders, and bidding opportunities can now be opened to these businesses—of which value amounts to billions of dirhams annually. This market was previously only accessible to companies with a mainland license.

Job creation and fostering entrepreneurship are also among DET's goals. With this permit, more new players can enter the market, enhancing competition and innovation in the long term.

Why now?

Globally, there is a growing demand for flexible, quickly adaptable business models. Traditional legal and permit structures often hinder innovation. With this step, Dubai proves its ability to quickly respond to global economic trends and lead the way in creating business-friendly regulations.

The 9% corporate tax introduced by the United Arab Emirates in 2023 also placed corporate operations on new foundations. Within the framework of the new permit, free zone and mainland revenues can now be clearly and transparently separated, promoting compliance and regulatory unity.

Summary

The Free Zone Mainland Operating Permit is an innovative solution that raises the possibilities for businesses operating in Dubai to a new level. It supports growth, administrative simplification, and facilitates entry into the domestic market. The online application option, low fee, and the ability to work with existing workforce all make this option attractive for free zone companies.

Businesses now have the opportunity to take advantage of Dubai's latest opening and enjoy both the flexibility of the free zone and the benefits of the mainland market.

(Source of the article based on the announcement from Dubai Department of Economy and Tourism (DET).)