Many business owners in the UAE reach a point where their free zone license feels limiting. You might be unable to bid for local government contracts, open multiple branches across Dubai, or even serve clients outside your designated free zone. If this sounds familiar, you are not alone.
However, converting a free zone license to a mainland one isn’t as easy as it sounds. Without proper planning, the process may drain time, money, and energy. The stakes are high, missed approvals, wrong documentation, or compliance issues could stall your operations or worse, attract penalties. But there’s a way forward.
At Jitendra Business Consultants (JBC), we’ve helped thousands of entrepreneurs just like you overcome these exact challenges. This blog will walk you through the process, the common pitfalls, and the smarter route to expansion in Dubai.
Understanding Why Businesses Opt for Mainland License Conversion
When you first start out, free zones seem perfect, low-cost setup, 100% ownership, and quick registration. But once your business begins to grow, the limitations become clearer. Free zone licenses restrict you to operating within your zone or internationally, not in the UAE mainland.
You cannot directly serve customers across Dubai or Abu Dhabi unless you appoint a local distributor or agent. This often eats into your profits and control. Moreover, free zone entities cannot participate in government tenders, a serious loss if your sector depends on public projects.
That’s when the decision to move becomes obvious.
Businesses begin looking into mainland license conversion UAE as a way to scale. They want full operational freedom, access to all Emirates, multiple branches, and reduced restrictions. With the right structure, foreign investors can even retain 100% ownership in mainland operations, a big advantage after the 2021 Commercial Companies Law amendments.
Key Steps in the Free Zone to Mainland Conversion Process
To convert free zone license to mainland, you’ll need to consider the following steps:
1. Choose the right transition strategy
You may either:
- Set up a new mainland company under the Dubai Department of Economic Development (DED); or
- Register a branch of your existing free zone entity in the mainland, subject to activity approval.
Each path has its benefits. A branch may preserve your free zone identity, while a new entity gives a fresh start under the mainland legal framework.
2. Secure approvals
You must obtain permits from DED and cancel your existing free zone license if setting up a fresh company. This includes trade name reservation, legal structure documents, tenancy contracts, and activity approvals. Many activities require external regulatory clearance too.
3. Set up a physical office
A UAE mainland business license process mandates a real office space — virtual addresses are not accepted. The location and size of the office depend on your chosen activity and DED requirements.
4. Register for VAT and corporate tax
Once active in the mainland, you will become liable for VAT registration and the new corporate tax regime if your income exceeds the threshold (AED 375,000).
Common Pitfalls of Free Zone to Mainland Conversion
Many business owners begin this process without understanding the challenges. These are the most frequent mistakes we’ve seen at JBC:
- Not cancelling the free zone license properly
This can lead to fines, legal issues, or complications in bank dealings later. You must cancel the license in line with free zone authority rules. - Inadequate planning of legal structure
If you don’t choose the right structure (LLC vs branch), you might end up paying higher taxes or losing control over shares. - Ignoring compliance obligations
Businesses forget that moving to mainland means adapting to stricter tax, audit, and reporting rules. - Assuming lower costs
Mainland operations often come with added expenses — tenancy contracts, sponsor fees (if applicable), government approvals. You need a clear budget. - Skipping DED-specific requirements
Every activity has specific documents. Missing even one can result in rejection.
Legal & Regulatory Requirements You Cannot Ignore
The legal process for license conversion in the UAE is closely monitored. Dubai authorities are tightening checks to prevent misuse and ensure fair competition. As per Executive Council Resolution No. (11) of 2025, free zone companies must get DET (formerly DED) approval before operating in the mainland.
Also, the company must maintain separate accounts for mainland and free zone operations. Failing to do this could attract tax scrutiny and penalties.
You must also register for corporate tax if profits exceed the required limit, as mainland businesses now fall under the UAE’s 9% corporate tax structure.
How Jitendra Business Consultants (JBC) Supports Seamless Business License Migration
Running a business in Dubai is challenging enough. You don’t want to waste time juggling legal paperwork, chasing government offices, or fixing avoidable mistakes. That’s where we come in.
At Jitendra Business Consultants, our expertise in business license migration UAE saves you stress, time, and money.
We simplify what seems complicated and help you unlock access to Dubai’s broader business ecosystem, with confidence, clarity, and control.
Let us guide your free zone to mainland company transfer with precision. Whether you’re unsure how to start or already midway in the process, we’re here to help you complete your transition without delays or penalties.
