Converting a Free Zone Company to Mainland UAE

Converting a Free Zone Company to Mainland UAE: Process and Considerations in 2025

The United Arab Emirates (UAE) offers businesses two main structures: Free Zones and the Mainland. Free Zones provide benefits such as 100% foreign ownership and tax exemptions. The Mainland offers unrestricted access to the local market, government contracts and a broader operational scope. For a growing business, converting a Free Zone company to Mainland UAE status is often the next step.

Related: Explore our contract and agreement drafting services in the UAE.

This transition, known as re-domiciliation or migration, becomes necessary for many businesses that want to scale and expand. In 2025, significant legal reforms streamlined the process and clarified the pathways for Free Zone entities seeking greater Mainland access.

Related: Explore our Free Zone company formation for foreign investors services in the UAE.

This guide explains the updated legal framework, the two primary conversion paths, and the key considerations for any business planning this move.

The New Legal Landscape: What Changed in 2025

The UAE continues to update its corporate environment to stay competitive and attract foreign direct investment. Two legislative updates in 2025 have reshaped the process of converting a Free Zone company to the Mainland.

1. Federal Decree Law No. 20 of 2025: The Re-Domiciliation Framework

This Federal Decree Law introduced a unified framework for the re-domiciliation of companies across the UAE. It allows companies to relocate their registration between different Emirates, between a Mainland authority and a Free Zone, or between different Free Zones, while retaining their legal personality.

This is a significant advantage. The company avoids the complex and time-consuming process of full liquidation and re-establishment. Instead, it can "move" its legal identity and preserve its history, contracts and assets.

2. Executive Council Resolution No. 11 of 2025 (Dubai-Specific)

In Dubai, Executive Council Resolution No. 11 of 2025 provides a clear, practical mechanism for Free Zone companies to do business on the Mainland without full re-domiciliation. The resolution sets out two primary methods:

• Mainland Branch License: A Free Zone company can establish a branch on the Mainland to conduct activities within the scope of its Free Zone license. This is a more permanent arrangement for continuous Mainland operations.
• Temporary Operating Permit: A simpler, shorter-term option, typically valid for six months, that allows Free Zone companies to carry out specific projects or contracts on the Mainland.

These updates show a clear intent by the UAE government to integrate the Free Zones and the Mainland more closely, giving businesses more flexibility than before.

Two Paths for a Free Zone Company to Access Mainland UAE

A Free Zone company expanding to the Mainland generally has two options. Each has distinct legal and operational implications.

Path 1: Full Re-Domiciliation (Conversion)

This path formally migrates the company's registration from the Free Zone to the Department of Economy and Tourism (DET) or the equivalent economic department in the relevant Emirate. The company becomes a fully licensed Mainland entity.

Feature	Free Zone to Mainland Re-Domiciliation
Outcome	Full Mainland company with unrestricted onshore access.
Legal Basis	Federal Decree Law No. 20 of 2025.
Legal Personality	Retained (avoids liquidation).
Market Access	Unrestricted access to the entire UAE market, including government tenders.
Ownership	Subject to Mainland ownership rules (may require a local partner/agent for certain activities, though 100% foreign ownership is now common for many sectors).
Office Space	Mandatory physical office space (Ejari) on the Mainland.

The process of full re-domiciliation:

1. Due Diligence and Planning: Assess the new legal structure, activity requirements and capital obligations.
2. Free Zone Clearance: Obtain a No Objection Certificate (NOC) from the current Free Zone Authority, confirming that all dues are paid and the company is in good standing.
3. Application to DET/DED: Submit the application, with the NOC, audited financial statements and the required documents, to the relevant Mainland economic department.
4. License Issuance: Pay the required fees and receive the new Mainland trade license.
5. Operational Setup: Secure Mainland office space (Ejari), update bank accounts and transfer employee visas.

Re-domiciliation requires careful legal guidance to ensure compliance with both Federal and Emirate-specific laws. Our complete guide to company formation in Dubai explains the wider process, from initial due diligence to final license issuance.

Path 2: Mainland Branch or Temporary Permit

This option lets the Free Zone company keep its primary Free Zone license while establishing a secondary presence on the Mainland. It suits companies that want to retain their Free Zone benefits while engaging in selected Mainland activities.

Mainland Branch License:

• Purpose: To conduct a specific, limited scope of activities on the Mainland that are consistent with the parent Free Zone license.
• Duration: Continuous, subject to annual renewal.
• Requirements: A physical office space on the Mainland and the appointment of a local service agent (for professional licenses) or a branch manager.

Temporary Operating Permit (Dubai):

• Purpose: To carry out a short-term project or contract on the Mainland.
• Duration: Typically six months, non-renewable.
• Requirements: A simpler application process through the Department of Economy and Tourism (DET) in Dubai, often without the need for a full Mainland office lease.

Feature	Mainland Branch License	Temporary Operating Permit
Parent License	Free Zone license is maintained.	Free Zone license is maintained.
Market Access	Limited to the scope of the branch license.	Limited to the scope and duration of the specific project.
Office Space	Mandatory Mainland office (Ejari).	Not always mandatory; depends on the nature of the activity.
Complexity	Moderate setup and compliance.	Low complexity, quick setup.

For legal support, see our Dubai Free Zone company formation and Dubai Mainland company formation service pages.

Key Considerations Before Converting to Mainland UAE

Moving to the Mainland affects every part of the business. Careful planning and due diligence help you avoid unexpected costs and legal obstacles.

1. Legal and Compliance Requirements

• Commercial Companies Law (CCL): Mainland companies are governed by the CCL, which sets rules on corporate governance, share capital and reporting. Make sure your corporate structure aligns with these rules.
• Share Capital: Mainland companies often have higher minimum share capital requirements than Free Zone entities, and these must be met on re-domiciliation.
• Local Partner/Agent: While 100% foreign ownership is now permitted for many activities, some strategic sectors still require a local partner or a local service agent (for professional licenses).
• Compliance: Mainland entities face stricter reporting requirements, including economic substance regulations (ESR) filings for financial years ending on or before 31 December 2022 and ultimate beneficial ownership (UBO) declarations, which must be managed proactively.

The legal landscape is complex and changes often. Before committing to a conversion path, obtain a detailed legal assessment. Our guide to Mainland, Free Zone and Offshore structures in the UAE compares the options, and our team can advise on corporate structuring, compliance and risk management for your Mainland transition.

2. Financial and Tax Implications

• Corporate Tax: Both Free Zone and Mainland companies are subject to the UAE Corporate Tax regime. However, the application of the 9% tax rate may differ depending on whether the Free Zone company is considered a "Qualifying Free Zone Person" and whether its Mainland activities are "Qualifying Income".
• VAT Registration: If the Mainland activities exceed the mandatory registration threshold, the company must register for VAT with the Federal Tax Authority (FTA).
• Customs Duties: Goods imported to the Mainland are subject to customs duties, unlike goods imported into a Free Zone, which are generally exempt until they enter the Mainland.

3. Operational and HR Logistics

• Office Space: Full re-domiciliation requires physical office space on the Mainland with a valid Ejari contract, which can be a significant operating cost.
• Employee Visas: The company must arrange the transfer of all employee visas from the Free Zone authority to the Mainland Department of Human Resources (DHR) or the relevant labor authority. This must be managed carefully so that employees remain legally employed throughout the transition.
• Banking: Bank accounts linked to the Free Zone license will need to be updated, or possibly replaced with accounts registered under the new Mainland license.

Transferring employees, including visa and labor contract updates, is a critical and often complex part of the conversion. Nour Attorneys Visa and HR Services can handle the labor department formalities and visa processing to keep the transition smooth for your team.

Step-by-Step Guide to the Conversion Process

The exact steps vary by Free Zone and Emirate, but the following general sequence applies to a full re-domiciliation:

Step	Action	Authority Involved	Key Deliverable
1	Initial Assessment	Internal/Legal Consultant	Feasibility Report and New Structure Plan
2	Free Zone Clearance	Free Zone Authority	No Objection Certificate (NOC)
3	Deregistration/Liquidation	Free Zone Authority	Deregistration Certificate (if full liquidation is chosen)
4	Name Reservation	DET/DED	Trade Name Reservation Certificate
5	Initial Approval	DET/DED	Initial Approval Certificate
6	MoA/AoA Notarization	Notary Public	Notarized Memorandum of Association (MoA)
7	Lease Agreement	Landlord/Ejari	Valid Ejari Contract for Mainland Office
8	Final Submission	DET/DED	Final Application Submission
9	License Issuance	DET/DED	New Mainland Trade License
10	Post-Licensing	DHR, Banks, FTA	Visa Transfers, Bank Account Updates, Tax Registration

Conclusion: A Considered Move for Growth

Converting a Free Zone company to a Mainland entity is more than an administrative procedure. It is a business decision that can open significant growth potential in the UAE economy. The 2025 legal reforms, particularly the Federal Decree Law on re-domiciliation and Dubai's Resolution 11, have made this transition more accessible and less disruptive than before.

By understanding the two primary paths, full re-domiciliation or a Mainland branch, and addressing the legal, financial and operational considerations, businesses can combine the best of both worlds: the tax efficiency of the Free Zone and the market reach of the Mainland.

To make sure your conversion is carried out correctly and in full compliance with the latest 2025 regulations, working with experienced legal and corporate service providers is highly recommended.

References

• Federal Decree Law No. 20 of 2025 on Commercial Companies (UAE)
• UAE Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (Corporate Tax Law)

Related Services: Explore our Dubai Free Zone company formation services for practical legal support in this area.

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.

Nour Attorneys Team

Additional Resources

Explore more of our insights on related topics:

• Mainland vs. Free Zone vs. Offshore: The Complete UAE Company Formation Guide 2025
• Dubai Free Zone Company Formation: Benefits, Costs, and Step-by-Step Process
• Mainland Company Formation in Dubai: Complete Guide for 2025
• Mainland vs. Free Zone vs. Offshore: Choosing the Right Company Structure in UAE