Dubai has long stood as a global symbol of innovation, opportunity, and economic excellence. From its world-class infrastructure to its investor-friendly environment, the city has consistently attracted entrepreneurs and corporations from around the world. Over the years, one of the key pillars of Dubai’s success has been its free zones—special economic areas that offer 100% foreign ownership, tax benefits, and simplified business regulations.

Traditionally, free zone companies have operated within the boundaries of their respective zones and were not permitted to trade directly with the mainland market without the help of a local distributor or commercial agent. This separation created a clear distinction between free zone entities and mainland companies, each offering different advantages but also certain limitations.

In October 2025, Dubai introduced a landmark regulatory update set to transform the way Free Zone companies operate. Traditionally, businesses incorporated in Free Zones were not allowed to directly conduct business within the UAE Mainland. This restriction prevented them from engaging in local contracts, government tenders, or domestic market opportunities. However, that limitation is now changing with the launch of the Free Zone Mainland Operating Permit program.

If you currently own a Free Zone company — or plan to set one up — this is a development you need to understand.

Understanding the Difference: Free Zone vs Mainland Companies

Before exploring Dubai’s recent business reforms, it’s essential to understand the fundamental differences between free zone and mainland companies — two distinct structures that have shaped the UAE’s economic landscape for decades.

Free Zone Companies

Free zone entities are established within specially designated areas created to attract foreign investment. These zones offer:

• 100% foreign ownership, meaning no need for a local partner or sponsor...Read More