Yes, a free zone company in the UAE can sell to mainland customers in 2026. The question is how. The process varies according to the business type, the products or services it provides, and the relevant laws and regulations.

A free zone licence allows 100% foreign ownership and offers good tax breaks, but it doesn’t automatically let you do business anywhere on the UAE mainland. Many company owners don’t realise this until a mainland customer in Dubai asks for a price and they don’t know whether they can legally say yes.

The good news is that Dubai has made it simpler and cheaper than ever to enter the mainland, and free zone businesses now have multiple legal ways to reach local consumers. In this post , HA Group shares those routes, the prices, the tax traps, and the errors to avoid so you can enter the mainland market with confidence and without compliance concerns.

Selling to the Mainland vs. Operating in the Mainland

There is one important difference to know before you choose a route:

  • Selling to mainland customers means you’ll be paid by a mainland customer for goods or services you’ve sold from your free zone base.
  • Operating on the mainland means having workers, an office, site visits or regular commercial activity on mainland soil.

The first has long been possible in many cases. The second traditionally required a separate mainland licence. Since 2025, Dubai has built a structured bridge between the two

The 2025 Reform That Changed the Rules

In March 2025, Dubai issued Executive Council Resolution No. 11 of 2025, creating a legal way for free zone companies to do business in mainland Dubai, as long as they get licences and permits from the Department of Economy and Tourism (DET).

Key points:

  • Applies to all Dubai free zones except financial institutions licensed in the DIFC
  • Requires a DET licence or permit before any onshore activity
  • Makes separate financial records for mainland operations mandatory
  • Gave existing onshore operators until 3 March 2026 to regularise their status

The grace period is now over. If your company is still operating in mainland Dubai without approval, make sure to get compliant in 2026.

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4 Legal Ways a Free Zone Company Can Sell to Mainland Customers

1. Apply for the Free Zone Mainland Operating Permit (2026’s Best Option for SMEs)

The Dubai Free Zones Council and DET introduced this permit in October 2025, allowing you to operate in mainland Dubai without losing your free zone status.

  • Fee: AED 5,000, one of the most affordable ways to enter the local market
  • Validity: six months, renewable at the same fee
  • Eligibility: Free zone companies holding a Dubai Unified Licence (DUL)
  • Application: Fully online via the Invest in Dubai platform, with approval from both DET and your free zone authority
  • Physical office: Not required
  • Staff: Existing free zone employees can work on permitted mainland activities
  • Activities: Initially covers technology, consultancy, design, professional services, and trading

This option works best for consultants, IT firms, agencies, and traders who want to enter the mainland market without a huge investment.

2. Open a Mainland Branch

If mainland customers become a major portion of your revenue, it may be time to put down roots. A branch license lets your free zone company have a legal office in mainland Dubai under its own name, as an extension of your current business, not a new one.

  • The branch office is not an independent legal entity, so the parent corporation is fully accountable.
  • Best for companies needing a showroom, local personnel or regular demand in Dubai.

3. Sell Through a Licensed Mainland Distributor

If you offer physical products, you don’t necessarily need your own mainland infrastructure. You can work with a mainland distributor that has the commercial licensing and let them handle the local side.

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  • The distributor takes responsibility for import, customs clearance and local distribution.
  • Example: A JAFZA or DMCC firm selling electronics may sell to Dubai stores via a mainland partner without building a branch.
  • The agreement must explicitly state duties and product approvals.

4. Set Up a Separate Mainland LLC

Some business owners prefer a clean break and set up a completely separate mainland company with its own trade licence. It costs more and takes more effort to run, but it gives your mainland operations a life of their own.

  • A fully independent legal structure.
  • Access to a variety of business activities.
  • A permanent presence in the local market.

Goods vs. Services: The Rules Are Different

Physical products: Products moved from a free zone to the mainland are classified as imports. They must pass customs and pay a 5% customs charge. Products that are regulated, such as food, cosmetics and medical devices, must be authorised by the appropriate authority.

Services: Consultancy, marketing, IT and design are generally services that you can charge to mainland customers from your free zone. If your staff work on site, see clients often, or you compete for government contracts, you will need an operating authorisation or a branch. Regulated fields such as health care, education, banking and legal services have additional standards.

The Corporate Tax Trap: How Mainland Sales Can Cost You Your 0% Rate

Corporate tax: A Qualifying Free Zone Person (QFZP) pays 0% corporate tax on qualifying income. Revenue from mainland customers is generally non-qualifying income taxed at 9%.

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The de minimis trap: To maintain your QFZP status, your non-qualifying income must be below 5% of your total revenue or AED 5 million (whichever is lower). Cross that limit and you lose the 0% rate on all income for the year and the next four tax years. It may be sparked by one big mainland contract

Other responsibilities:

  • Keep separate financial records for mainland and free zone activities.
  • Satisfy transfer pricing and economic content standards.
  • Charge 5% VAT on mainland sales and submit returns as directed.

Tip: Run the numbers before signing your first big mainland deal. Sometimes the tax cost outweighs the contract value.

Does the Dubai Permit Cover Other Emirates?

Resolution No. 11 applies to the Dubai mainland exclusively. If you sell to clients in Abu Dhabi, Sharjah, or Ajman, you must comply with that emirate’s requirements. Abu Dhabi has its own dual-licence scheme. Don’t think one permission covers the full UAE.

Common Mistakes to Avoid

  • Invoicing mainland clients for onshore work without a permit.
  • Letting your free zone license or DUL expire, which also ends your permit.
  • Mixing mainland and free zone income in one set of books.
  • Forgetting to renew the six-month permit.
  • Assuming 0% tax covers all revenue.

How HA Group Helps

Mainland expansion is a real growth opportunity, but the question is whether it benefits or hurts your bottom line. HA Group helps free zone businesses with permit applications, DUL registration, branch establishment, corporate tax planning, VAT compliance and continuous accounting. We ensure that you attract new clients without sacrificing the advantages that drove you to the free zone in the first place.

​Ready to sell to mainland customers the right way? Contact HA Group today.

FAQs

Is it legal for a free zone company to sell to mainland customers in 2026?

Yes. Dubai Executive Council Resolution No. 11 of 2025 provides the legal basis, and the Free Zone Mainland Operating Permit makes it possible.

​What does the Free Zone Mainland Operating Permit cost?

The temporary permit costs AED 5,000 and is valid for up to six months. Renewal, subject to relevant restrictions and expenses.

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Who can apply for the permit?

Free zone companies holding a Dubai Unified Licence, excluding DIFC financial institutions.

​Do mainland sales affect my 0% corporate tax rate?

Yes. Mainland income is generally taxed at 9%, and exceeding the de minimis limit can cost you QFZP status entirely.

Do I need a mainland office?

Not for the operating permit. A branch license typically does require one.

Does selling to mainland customers affect free zone corporate tax benefits?

Yes, it can. Depending on the transaction and the relevant corporation tax regulations, Mainland earnings can be classified as non-qualifying income. Companies should take a hard look at whether they qualify for QFZP.

Can a free zone business open a branch in mainland without closing its existing company?

Yeah. A free zone company may keep its current registration and open an official mainland branch, with the necessary licenses and licensing procedures in place.

Final Thoughts

Yes, a free zone business can sell to mainland clients in 2026, but the right legal strategy depends on your product, operations, and development plans. Select an operating permit, branch or distributor, but keep your documents clean and your tax status clear. With the HA Group, you are sure of help at every level.

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