Dubai Executive Council Decision 11/2025: New Framework for Free Zone Companies Operating in Dubai

Introduction

Dubai has once again demonstrated its commitment to enhancing its business environment with the issuance of Executive Council Decision No. 11/2025. Signed by H.H. Hamdan bin Mohammed bin Rashid Al Maktoum on March 3, 2025, this landmark regulation establishes clear pathways for free zone companies to conduct business operations within mainland Dubai.

As a corporate services professional specializing in UAE business structures, I believe this decision represents a significant development that merits attention from business owners, investors, and advisors alike.

The Historical Context

Traditionally, Dubai's free zones have operated as distinct jurisdictions, offering foreign ownership, tax benefits, and streamlined processes, but with limitations on conducting business directly within the mainland. Companies seeking to operate both within and outside free zones often required separate legal entities, creating administrative complexities and increased costs.

The New Framework

Decision 11/2025 introduces three structured approaches for free zone establishments to operate within the emirate:

1. Establishment Branch in Mainland Dubai

• Requires a physical headquarters within Dubai

• Maintains connection to parent establishment in the free zone

• Full compliance with relevant federal and local regulations

2. Branch with Headquarters in the Free Zone

• Maintains primary presence within the free zone

• Requires specific documentation and approvals

• Annual license fee of AED 10,000

3. Temporary Activity Permit

• Six-month duration for specific activities

• Must be on the approved activities list (forthcoming)

• Fee of AED 5,000 per permit/renewal

Key Requirements

Regardless of the chosen pathway, companies must:

• Obtain prior approval from their free zone licensing authority

• Secure necessary approvals from relevant regulatory bodies

• Maintain separate financial records for activities conducted outside the free zone

• Ensure compliance with all applicable federal and local legislations

The Workforce Advantage

Perhaps the most significant practical benefit is Article 8, which allows companies to use their existing free zone-registered workforce for operations in mainland Dubai while maintaining the advantages typically associated with free zone employment. This provision offers considerable flexibility and potential cost savings.

Implementation Timeline

The Department of Economy and Tourism will coordinate with free zone authorities to issue a comprehensive list of permitted economic activities within six months. Meanwhile, existing businesses have a one-year grace period to adjust their status to comply with the new regulations, with the possibility of an extension for an additional year.

Strategic Implications for Businesses

For businesses, this decision introduces several strategic considerations:

1. Operational Streamlining: The ability to leverage existing free zone entities for mainland operations potentially reduces administrative overhead and regulatory complexity.

2. Market Access: Direct access to the Dubai market without establishing separate mainland entities may accelerate growth opportunities.

3. Cost Efficiency: The fee structure (AED 10,000 or AED 5,000) represents a significant cost reduction compared to establishing and maintaining a separate mainland company.

4. Workforce Flexibility: The ability to deploy free zone employees for mainland operations offers logistical and financial benefits.

Conclusion

Executive Council Decision No. 11/2025 represents Dubai's continued evolution toward a more integrated business environment while maintaining appropriate regulatory distinctions. The decision aligns with Dubai's broader economic vision of creating a flexible, adaptive business ecosystem that balances regulatory oversight with commercial practicality.

As this framework is implemented over the coming months, businesses should work closely with corporate service providers to assess opportunities, ensure compliance, and optimize their operational structures accordingly.

The author is a corporate services professional specializing in UAE business structures. For more information on how these regulations might affect your business, visit www.cbccorporateservices.com.