Under the Free Zone Mainland Operating Permit framework, eligible companies can use their existing employees for authorised mainland operations without necessarily recruiting a separate mainland workforce.
This does not provide unlimited permission for staff to work anywhere or conduct activities beyond the permit.
The company should maintain:
A mainland customer's site-access approval does not replace the employer's business-licensing obligations.
Mainland business can materially affect a Free Zone company's Imposto corporativo position.
A Free Zone Person is not automatically entitled to the 0% Imposto corporativo rate. It must satisfy all conditions required to be a Qualifying Free Zone Person.
Where a Qualifying Free Zone Person operates through a Domestic Permanent Establishment outside the Free Zone, the profits attributable to that Permanent Establishment can be subject to the 9% Imposto corporativo rate.
The official mainland-permit announcement also emphasises that businesses must maintain separate financial records for their mainland operations. The Imposto corporativo charge is determined on taxable income under the applicable legislation—not simply by applying 9% to gross sales receipts without calculating taxable profit.
Does Mainland Revenue Automatically Destroy Free Zone Tax Status?
A Free Zone company may have mainland-related income without automatically losing Qualifying Free Zone Person status, but the income must be analysed correctly.
The company should determine whether the income is:
The answer depends on:
A mainland permit should therefore be reviewed before—not after—the company prepares its Imposto corporativo return.
Executive Council Resolution No. 11 of 2025 requires establishments operating outside their Free Zones to maintain separate financial records for those activities.
The company should be able to identify:
A separate bank account may not always be legally required, but separate cost centres, ledgers and supporting records can be essential.
The accounting system should be configured before mainland operations begin.
For a EAU-resident business, mandatory IVA (VAT) registration generally applies where taxable supplies and imports exceed AED 375,000 over the preceding 12 months or are expected to exceed that amount in the next 30 dias.
Voluntary registration may be available above AED 187,500, subject to the conditions. Federal Tax Authority Registro de IVA (IVA (VAT))
Certain Free Zones are treated as Designated Zones for limited IVA (VAT) purposes.
This special treatment mainly concerns specific supplies of goods and requires conformidade with the relevant conditions. It does not mean:
A company must distinguish between:
If the group establishes a separate mainland company, transactions between the Free Zone and mainland entities may be Related Party transactions.
Examples include:
The group should document:
Creating a mainland subsidiary does not allow the group to move profits arbitrarily into the Free Zone.
The bank may request:
If the company originally described itself as conducting only international business, a sudden increase in mainland activity may trigger additional due diligence.
The company should update the bank accurately rather than allowing its transaction profile to become inconsistent with the information supplied during onboarding.
Some tenders require a mainland licença, specific activity, operating history or local classification.
A Free Zone Mainland Operating Permit may improve access to certain commercial opportunities, but it should not be assumed to satisfy every tender.
The procuring entity may request:
Tender conditions should be reviewed before selecting the operating route.
Using a distributor does not necessarily mean the distributor must be appointed as a registered commercial agent.
The parties should distinguish between:
A registered commercial-agency relationship can have different legal consequences from an ordinary private distribution contract.
The agreement should address:
Specialist legal advice should be obtained before granting exclusive or registered rights.
A Free Zone company may sell online, but e-commerce does not eliminate licensing, tax or customs requirements.
The company should determine:
Selling through Amazon, Noon, social media or a proprietary website does not automatically convert a Free Zone licença into a mainland licença.
What If the Company Conducts Mainland Business Without Approval?
Operating outside the permitted scope can create:
The appropriate solution is not to disguise mainland transactions as international sales. The business should regularise its operating structure.