Dubai Free Zone Companies on the Mainland: Resolution No. 11 of 2025 and Corporate Tax

Before 2025, a Dubai free zone company could not lawfully trade with mainland customers from outside its zone without a separate mainland licence. Executive Council Resolution No. 11 of 2025 created a formal framework for this. It was published in the Dubai Official Gazette on 3 March 2025.

Law firm and Big Four summaries describe these licensing routes:

• Branch licence operating from the free zone: the free zone company serves the mainland while staying based in its zone. The fee is AED 10,000 a year, renewable annually, under Article 12(1).
• Branch within the Emirate: a branch outside the free zone in Dubai, licensed by Dubai's Department of Economy and Tourism (DET).
• Temporary permit: for specific activities outside the zone. It lasts no more than six months and costs AED 5,000 under Articles 7 and 12(2).

Applications need prior approval from the free zone authority, and regulated activities need the sector regulator's approval too. DIFC financial entities are excluded. None of these licences covers other emirates, which keep their own licensing. Under Articles 5(b) and 6(b), a branch has no separate legal personality from the free zone company.

The Resolution required DET to publish a list of eligible activities, showing which need a branch licence and which can use a temporary permit. Summaries gave a deadline of 3 September 2025 for this list. Check the current list and application channel on DET's and Invest in Dubai's portals, because activities not on the list cannot use these routes.

Reported conditions include:

• separate financial records for the mainland activity;
• compliance with federal and Dubai laws, and with DET and free zone inspections;
• any additional conditions set by DET's Director General.

Free zone companies already doing mainland business had one year from the effective date to regularise, with a possible extension. That window ran to around March 2026, so companies still trading onshore without a licence should take advice now.

Licensing and tax are separate questions. A licence makes mainland trading lawful. It does not make the income qualifying for the 0% corporate tax rate.

A qualifying free zone person (QFZP) pays 0% only on qualifying income and 9% on other taxable income. Under Cabinet Decision No. 100 of 2023 and Ministerial Decision No. 229 of 2025, qualifying income broadly means:

• income from transactions with other free zone persons (excluding excluded activities); and
• income from transactions with non-free zone persons only for listed qualifying activities, such as certain headquarter, treasury, logistics or fund management activities.

Most ordinary mainland sales do not fall into either category, so the revenue is non-qualifying.

A mainland branch licensed under Resolution No. 11 is a domestic permanent establishment of the free zone company. The FTA's Free Zone Persons guide confirms that profits attributable to a domestic permanent establishment are taxed at 9%. These profits are attributed as if the branch were a separate enterprise, with dealings with head office priced at arm's length. Our page on mainland branch tax covers attribution in detail.

To keep 0% on its qualifying income, a QFZP's non-qualifying revenue must not exceed the lower of 5% of total revenue or AED 5,000,000 in the tax period. Breaching this limit by any amount loses QFZP status for that period and the following four periods.

The route chosen affects the test:

• Branch licence. Article 4(3) of Cabinet Decision No. 100 of 2023 takes revenue attributable to a domestic permanent establishment out of both sides of the de minimis fraction. The branch's profits are taxed at 9%, but its revenue does not count towards the 5% limit.
• Temporary permit or direct mainland invoicing from the zone. If no permanent establishment arises, mainland revenue sits inside the free zone company's own revenue and counts as non-qualifying revenue in the de minimis test.

For example, a company with AED 20,000,000 of revenue has a limit of AED 1,000,000 (5% is lower than AED 5,000,000). AED 1,500,000 of direct mainland sales would breach it. The same sales booked through a properly attributed branch would be taxed at 9% without breaching. See the de minimis threshold for worked examples.

Use these questions to decide:

1. How much mainland revenue do you expect? If it stays comfortably inside 5% of total revenue and AED 5,000,000, a temporary permit may be enough. If it is larger, a branch protects the 0% on the free zone business.
2. Is the activity on DET's eligible list, and does the free zone authority issue a no-objection?
3. Can you separate the books? Branch attribution needs its own revenue, costs, staff and assets, plus transfer pricing documentation for head office dealings.
4. Would a separate mainland company be cleaner? Some groups prefer a mainland subsidiary that claims Small Business Relief or simply pays 9%, leaving the free zone entity untouched. Compare with dual licence tax treatment.

Remember that VAT, e-invoicing and UBO filings follow the legal entity, so the branch is covered by the free zone company's registrations. Check current DET procedures and the FTA's Free Zone Persons guide before acting.

A free zone company with a mainland branch still files one corporate tax return. The return must separate the income streams:

• qualifying income taxed at 0%;
• income attributable to the domestic permanent establishment, taxed at 9%;
• any other non-qualifying income, which must fall within the de minimis limit.

A QFZP must prepare audited financial statements, and the FTA expects the free zone and branch results to be separately identifiable. In practice this means separate cost centres or ledgers for the branch, with a documented allocation of shared costs such as rent, salaries and head office services. The Resolution's own requirement for separate financial records for mainland activity points the same way.

See our QFZP tax return guide for the return mechanics. Errors in attribution are a common audit point, because they move profit between the 0% and 9% streams.