One of the most common questions investors ask is: Can free zone companies do business in Dubai? The short answer is yes, but with certain restrictions and compliance rules. Free zones are designed to support international trade, innovation, and foreign investment, but when operating on the Dubai mainland, specific regulations apply.
This comprehensive guide explains how free zone companies can legally operate in Dubai, what activities are permitted, the limitations, the best expansion options, and how Shuraa UK can help you navigate the process seamlessly.
What Is a Free Zone Company in Dubai?
A free zone company is a legal entity established in one of Dubai’s specialised free zones, such as DMCC, DIFC, DAFZA, IFZA, or JAFZA. These zones offer powerful incentives such as:
- 100% foreign ownership
- 0% personal income tax
- Corporate tax benefits
- Full profit return
- Quick and flexible business setup
- Exemption from import/export duties
- Simplified visa processing
Free zones are ideal for global-facing operations, digital service providers, logistics, trading, tech companies, and startups that want low costs and high flexibility.
How Free Zone Companies Can Legally Do Business in Dubai Mainland?
To operate within Dubai’s thriving mainland marketplace, free zone companies must follow specific legal pathways that define what they can and cannot do. Here’s a clear breakdown of how it works.
1. Trading Companies Must Use a Local Distributor
If your free zone company trades physical products and wants to sell them in the Dubai mainland, you cannot directly import, store, or sell goods.
Instead, you must:
- Appoint a mainland distributor, OR
- Work with a commercial agent registered in the UAE
This is because only mainland-licensed businesses can conduct commercial operations directly in Dubai.
Example
A cosmetics trading company in IFZA wants to supply products to the Dubai Mall. They must partner with a registered mainland distributor who will import and handle the goods.
2. Free Zone Service Companies Can Work with Mainland Clients
Service-based companies enjoy more flexibility. If your business conducts consulting, marketing, IT, digital media, HR, design, online services, or tech, you can work with mainland clients under specific conditions:
- You may need additional approvals
- You cannot have a physical office in the mainland without a mainland license
- Employees cannot operate from client premises for extended periods
However, invoicing, remote services, and project-based work are allowed.
3. Establish a Mainland Branch of Your Free Zone Company
If you want full access to Dubai’s local market, you can open a branch office under a Dubai mainland license.
Benefits include:
- Full mainland operations
- Direct trading and service provision
- No need to close your free zone company
- You keep your free zone benefits while expanding legally
Shuraa UK often recommends this option to companies planning long-term expansion in the UAE.
4. Convert to a Mainland Company (If needed)
Some businesses eventually grow beyond what a free zone structure can support. You can convert your setup into a mainland company with:
- 100% foreign ownership (in most activities)
- A wider customer base
- Freedom to operate anywhere in the UAE
This is a popular path for businesses shifting from online/remote operations to physical presence in Dubai.
5. You Can Sell Services Remotely Without Restrictions
If you serve global clients or offer online services, your free zone license is entirely sufficient.
Examples:
- Digital marketing agency
- Web development firm
- Social media consultancy
- E-commerce platform (no physical goods)
- Freelance design or content studio
- AI or tech consultancy
There are no restrictions as long as your work does not involve physical activities inside Dubai mainland.
What Free Zone Companies Cannot Do Directly in Dubai Mainland?
To answer the question “Can free zone companies do business in Dubai?” correctly, it’s essential to highlight the limitations.
Free zone companies cannot:
- Open a shop, showroom, or office in the mainland
- Hire employees who work in the mainland premises
- Sell products directly in local UAE markets
- Bid for specific government tenders without a mainland branch
- Provide regulated professional services without mainland approval
However, all these limitations have legal workarounds, most of which Shuraa UK can guide you through.
Benefits of Allowing Free Zone Companies to Operate in Dubai
Even with restrictions, free zone companies enjoy significant advantages when expanding into the mainland:
1. Access to Millions of Consumers
Dubai mainland is one of the biggest business hubs in the Middle East.
2. Low Operating Costs
You can keep free zone benefits (like low rent and easy visas) while accessing mainland markets.
3. Lower Risk, Higher Flexibility
You only expand when your business is ready.
4. Opportunities for Partnerships
Mainland companies frequently collaborate with free zone businesses for services and projects.
Mainland vs Free Zone: Which One Should You Choose?
Below are the key differences between a Mainland and a Free Zone company:
| Feature | Free Zone Company | Mainland Company |
| Ownership | 100% | 100% allowed for most activities |
| Market Access | Regional & global | UAE-wide |
| Operating Costs | Low | Moderate |
| Physical Presence | Only inside the free zone | Anywhere in Dubai |
| Best For | Tech, services, trading via distributor | Retail, restaurants, clinics, logistics, manufacturing |
Can Free Zone Companies Do Business in Dubai?
Yes, free zone companies can do business in Dubai, but only by following legal methods:
- For products → use a distributor or open a mainland branch.
- For services → work remotely or get additional approvals.
- For full Dubai access → establish a mainland branch or convert your company structure
With the right strategy, you can enjoy free zone benefits and expand into Dubai’s booming market.
How Shuraa UK Helps You Expand Your Free Zone Company into Dubai?
Whether you’re setting up a new business or expanding a free zone company into the Dubai mainland, Shuraa UK provides:
- Free consultation on UAE business laws
- Guidance on free zone vs mainland structures
- Assistance with distributors and commercial agents
- Mainland branch formation
- Office space, visas, permits, PRO services
- Legal compliance and documentation
- Corporate bank account support
- Complete end-to-end business setup support
Shuraa UK ensures a smooth, fast, and fully compliant expansion, no matter where you register your company. For more details, you can drop a mail at info.london@shuraa.com or call us on +44 7538 205604
FAQs
Q1. Can a free zone company legally do business in Mainland Dubai?
Yes, free zone companies can do business in the Dubai mainland, but only through approved legal structures such as partnering with a local distributor, working remotely with clients, or establishing a mainland branch.
Q2. Can a free zone company sell products directly in the Dubai mainland?
No. Free zone companies cannot directly sell or trade physical goods in the mainland.
To do so, they must appoint:
- A UAE-based distributor, or
- A registered commercial agent.
Q3. Can service-based free zone companies work with mainland clients?
Yes. Service businesses such as IT, consulting, marketing, design, and digital solutions can work with mainland clients.
However, they cannot:
- Operate from a physical mainland office without a mainland license
- Station employees at client premises long-term
Remote operations and project-based invoicing are allowed.
Q4. How can a free zone company expand into the Dubai mainland?
Free zone businesses can expand through:
- Mainland branch office formation
- Conversion to a full mainland company
- Using a mainland distributor (for trading companies)
These options provide legal access to the UAE market.
Q5. Can free zone companies open offices in the Dubai mainland?
Only if they establish:
- A mainland branch, or
- A whole mainland company
Free zone licenses do not allow the opening of showrooms, offices, or shops on the mainland.
Q6. Can I offer online or global services from a free zone without restrictions?
Yes. Suppose your business provides online, remote, or global services, like digital marketing, IT consulting, SaaS, or content creation. In that case, you can operate freely without mainland approvals, if services are not physically delivered within the Dubai mainland.
Q7. Can a free zone company bid for Dubai government contracts?
Not directly. Most government tenders require a mainland-licensed entity.
You will need a mainland branch or complete mainland conversion to participate.
Q8. What activities require additional approvals for free zone companies?
Some regulated services, such as legal, engineering, auditing, healthcare, HR recruitment, or financial advisory, require approval from the relevant UAE authorities before operating on the mainland.
Q9. What is the best way for a free zone company to access the Dubai mainland market?
The most efficient method is to establish a mainland branch, enabling full operations while retaining free zone advantages. Shuraa UK frequently recommends this for long-term, scalable growth.
Q10. Can a free zone company hire employees who work in the Dubai mainland?
No. Employees with a free zone visa cannot regularly work from mainland offices or client premises. To hire mainland-based staff, you need a mainland license or a mainland branch office.
