Quick answer: According to Dubai’s Executive Council Resolution No. 11 of 2025, companies that are registered within the Free Zone can now conduct business activities on the Mainland using either a branch license, temporary license, or Mainland linked license without creating a new onshore company. Companies conducting operations on the Mainland without proper licensing have until 3 March 2026 to comply. Corporate tax, ESG reporting under Federal Decree-Law No. 11 of 2024, and Economic Substance rules all apply alongside these licensing changes.
The UAE is always making its economy better for businesses. In 2026, there are big updates coming for how companies work in Free Zones and on the Mainland. These changes help entrepreneurs and startups follow the new rules and find new ways to grow.
Smart Zone knows all about these updates and can guide you through them step by step so your business stays safe and strong.
Big Updates for Free Zone Companies in 2026
Dubai’s rule, Executive Council Resolution No. 11 of 2025, changes how Free Zone companies can work. Since the resolution took effect on 3 March 2025, these companies can do business on the Mainland without starting a whole new onshore company. This makes things easier if you want to sell to local customers while keeping Free Zone perks like full ownership from other countries and no tax on most income.
Free Zone companies now have choices like getting a branch license, a linked Mainland license, or a short-term permit for quick projects. These options cut down on extra work and let businesses grow faster. But you must keep separate books for Free Zone and Mainland money to follow the new clear rules on taxes and reports.
This helps everyone see where your income comes from. Companies that were already trading on the Mainland without the right authorization had until 3 March 2026 to get the right papers, with a possible one-time extension available, or face penalties and loss of authorization.
Mainland Business Rules for 2026
Mainland companies will see changes too. They pay the normal 9% company tax on profits over AED 375,000, but businesses under that threshold pay zero. Free Zone companies moving to the Mainland must follow the Department of Economy and Tourism (DET) rules and submit financial records that split Free Zone and Mainland income clearly.
Not every type of activity qualifies for a branch license or permit. DET publishes and updates the list of eligible economic activities, specifying which require a branch license and which can operate under a temporary permit, so it’s worth checking that list before applying.
These updates make the Mainland more open but add checks to keep things fair. Businesses need to plan to avoid surprises with taxes or licenses.
Dual Licenses and Growing from Free Zone to Mainland
The new rules push for dual licenses, so Free Zone companies can open Mainland branches and keep their home benefits. Abu Dhabi has run a similar dual license system through ADDED for longer, and other emirates are adding more dual options too.
You can now pick smart paths: stay entirely in the Free Zone, shift part of the business to the Mainland, or mix both to reach more customers with less hassle.
This flexibility helps small startups test ideas, and larger firms grab more market share. Costs are relatively low too, around AED 10,000 a year for a branch license or AED 5,000 for a six-month temporary permit, and no local partner is needed.
Staying on Track with Rules in 2026
Apart from licenses, new requirements are becoming mandatory. ESG reporting based on Federal Decree-Law No. 11 of 2024 applies generally to enterprises in the UAE with full compliance by 30 May 2026. It involves measuring and reporting greenhouse gas emissions, record-keeping, and climate-related risk disclosure, and applies to both Free Zone and Mainland firms in the context of the country’s overall move towards Net Zero 2050.
Accounting, corporate taxes, and license renewals are required to escape penalties. Economic Substance requirements tie directly into this; Free Zone companies must demonstrate genuine activity and presence in the UAE to access the 0% rate on qualifying income under Qualifying Free Zone Person rules. Falling short means the 9% rate applies to that income instead. Getting professional guidance on this is worth the cost, since substance requirements are assessed every year, not once at setup.
How to Get Ready for UAE Business Setup in 2026
Start planning now to make the changes work for you. Here are the practical steps:
- Check DET’s list of allowed activities for branch licenses or permits before applying.
- Look at your best setup: full Free Zone, full Mainland, or a dual-license mix.
- Update your books and internal processes to match the new tax and ESG requirements.
- Talk to business setup experts for help with licenses, banking, and visas.
With good preparation, you can use these 2026 rules to grow your business safely and confidently in the UAE. The country still offers zero personal tax, full foreign ownership in most sectors, and access to a large regional market.
Ready to Set Up or Update Your UAE Business for 2026?
Don’t wait for the rules to catch up with you – team up with Smart Zone today. We make Free Zone and Mainland setups simple, fast, and worry-free. From picking the right license to handling taxes and ESG reporting, our experts guide you every step. Thousands of clients trust us to turn ideas into successful UAE businesses.
Get your free quote now:
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