Dubai’s New Resolution: Free Zone Businesses Can Expand to the Mainland – What Does This Mean for Corporate Tax?

Introduction to Dubai Resolution 11 of 2025

Dubai Resolution 11 of 2025 marks a transformative change in the UAE’s regulatory framework by allowing free zone companies to establish branches on the mainland without the need for a local partner. Traditionally, free zone companies were confined to specific economic areas with limited access to the broader UAE market. This resolution simplifies expansion and promotes deeper economic integration by bridging the gap between free zones and the mainland.

Context and Rationale of Dubai Resolution 11 of 2025

• Economic integration: The resolution creates a more seamless economic environment by enabling free zone companies to access the mainland directly. Removing the local partner requirement encourages competition, innovation, and cross-market activity.
• Attracting foreign investment: By easing mainland access, Dubai reinforces its position as a global business hub offering flexibility, transparency, and strategic market reach for international investors.
• Regulatory modernisation: The resolution reflects the UAE’s commitment to reducing administrative burdens and creating an agile regulatory framework capable of responding to global economic trends.

Key Highlights of the Resolution

1. Expansion flexibility
   • What’s new: Free zone companies may now establish mainland branches, granting direct access to a significantly larger customer base.
   • Strategic advantage: Businesses can leverage mainland infrastructure, talent pools, and market proximity while maintaining their free zone base.
2. Licensing and compliance
   • Regulatory process: Mainland branches must obtain approvals from the Dubai Department of Economy and Tourism (DET), ensuring compliance with local standards.
   • Fair competition: Licensing requirements protect market integrity and ensure equal treatment of local and international businesses.
3. Sectoral exclusions
   • Targeted industries: Certain sectors, including financial institutions operating in specialised zones such as the DIFC, remain excluded to preserve strict regulatory oversight.
   • Policy rationale: This approach balances economic growth with risk management in strategically sensitive industries.

Corporate Tax Implications of Dubai Resolution 11 of 2025

The introduction of the UAE Corporate Tax under Federal Decree-Law No. 47 of 2022 established a 9% tax rate for mainland businesses, while Qualifying Free Zone Entities (QFZEs) may continue to benefit from a 0% rate on eligible income. Dubai Resolution 11 of 2025 introduces important tax considerations for free zone companies expanding into the mainland.

1. Tax Treatment for Free Zone Entities

• Preservation of 0% benefits: QFZEs that operate exclusively within free zones may retain the 0% tax rate on qualifying income.
• Mainland income exposure: Income generated through mainland branches is generally subject to the 9% corporate tax rate, requiring careful operational separation.

2. Operational and Tax Structure of Mainland Branches

• Mainland branch as an extension: A mainland branch is treated as an extension of the free zone entity, meaning mainland-derived revenue may attract corporate tax.
• Managing dual operations: Businesses must balance tax-exempt free zone activities with taxable mainland operations through careful structuring and compliance planning.

3. Strategic Considerations

• Market expansion: Access to mainland customers can significantly increase revenues, often offsetting additional tax costs.
• Brand positioning: A mainland presence enhances credibility, visibility, and competitiveness.
• Operational efficiency: Mainland operations may improve logistics, partnerships, and resource allocation.

Conclusion: Strategic Opportunity with Informed Tax Planning

Dubai Resolution 11 of 2025 aligns with the UAE’s long-term economic vision by enabling free zone companies to expand seamlessly into the mainland. While it unlocks significant growth opportunities, it also introduces additional tax and compliance considerations.

Businesses must reassess their corporate tax strategies to balance free zone tax incentives with mainland tax exposure. Careful planning and professional advice are essential to ensure compliance and optimise overall tax efficiency.

Key takeaway: Dubai Resolution 11 of 2025 presents a powerful expansion opportunity, but success depends on informed legal and tax structuring that aligns with regulatory requirements.

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Disclaimer: This content is provided for general informational purposes only and does not constitute legal advice. It serves as an introductory overview of Dubai Resolution 11 of 2025.