A mainland company can transact with a free-zone customer where the activity and transaction are permitted. That does not automatically authorise it to establish premises, operate a branch or perform any on-site activity inside the zone. Identify what the company will do, where people will work and which authority must approve it. Contracting with a customer and conducting business from a location are different decisions. Customs, sector regulation and corporate-tax treatment require separate checks. (U2, L1, L2)
Who this applies to: Mainland businesses supplying free-zone customers or planning a physical operating presence within a particular free zone.
Which type of transaction are you planning?
| Proposed activity | Initial question | Evidence to obtain |
|---|---|---|
| Deliver goods to a customer | Are trade, customs and delivery rules satisfied? | Licence, goods documents and customs route |
| Provide a remote service | Does the licensed activity cover the service? | Contract and activity permissions |
| Perform work on site | Does the zone or sector require access or approval? | Zone and sector confirmation |
| Lease premises or employ staff there | Does the operating presence need a branch or entity? | Written authority requirements |
| Open a permanent branch | Does the zone admit this branch and activity? | Branch conditions and approvals |
The client’s acceptance of a contract is not the same as authority permission to operate at the location.
Can you sell to a free-zone company without opening a branch?
Potentially, if the transaction is within the mainland licence and does not create an unapproved operating presence. Check the service or goods and how the company will deliver them.
A supplier sending goods, a consultant attending a client’s office and a contractor running a permanent site can face different requirements. Do not apply one “no branch needed” answer to all three.
What changes when the company operates inside the zone?
Premises, staff, warehousing and recurring on-site work can require zone-specific approvals. Confirm whether the authority permits a mainland-company branch, requires another form or allows the activity through a particular arrangement.
Ask for the requirements of the actual zone and activity. No universal list of “flexible free zones” settles the legal position. Do not replace authority permission with a joint-venture agreement or memorandum of understanding.
Does the 2025 Dubai framework answer this question?
Dubai Resolution 11 of 2025 concerns eligible free-zone establishments conducting activities outside their zones. It addresses the reverse direction. It does not automatically grant mainland companies permission to operate inside a free zone. (L2)
Keep the two routes separate. If the proposed business is a free-zone company working on mainland, use the free zone versus mainland guide and obtain the relevant DET and zone conditions.
How do goods and customs differ from services?
Goods movement can involve importers of record, customs documentation and the status of the location. Services need their own activity and place-of-supply checks.
A zone’s VAT Designated Zone status does not make every service or supply tax-free. The FTA distinguishes zone definitions for corporate tax, VAT and excise. Verify the relevant classification for the actual transaction. (U12)
Does the transaction change corporate tax?
Assess each party separately. A mainland supplier’s corporate-tax position does not automatically change because its customer sits in a free zone.
For a QFZP customer or group entity, the activity and transaction can affect qualifying-income or PE analysis. Operating permissions do not establish tax eligibility. Related-party prices and support still matter. (U1, U4, U5, U8)
What should you check before signing?
- Define the goods, services and actual delivery location.
- Confirm the mainland entity’s licensed activity.
- Obtain the zone’s operating requirements where relevant.
- Check sector, customs and premises approvals.
- Confirm the entity that will sign and invoice.
- Assess tax and related-party consequences.
- Record the approved operating arrangement in the contract.
Avoid committing to a long premises lease before confirming that the company can lawfully operate there.
When should you use a separate entity?
A separate free-zone entity can be relevant where the business needs a permitted permanent presence, separate ownership or a different licence. It is not automatically necessary for a sale to a free-zone customer.
Compare branch and subsidiary consequences, including liability, staff, banking and recurring costs. If the purpose is group ownership, assess the holding-company structure comparison separately.
Questions businesses ask
Can my mainland company open a free-zone branch?
Check the selected zone's rules for the company form and activity. Approval is not universal.
Does a dual-licence label cover every activity?
No. Confirm the exact participating authorities, permissions and operating scope.
Can my company provide on-site services without new approval?
Assess the activity, premises and sector requirements. A customer contract alone is insufficient.
Discuss your operating model
Tell us your current licence, the named free zone and what work will occur there. Discuss your UAE company structure with GCG.
Use Dubai mainland licensing if the current activity itself needs review.
Applicable period: Company tax statements concern the actual financial tax period. Personal and overseas positions need their own country-specific period assessment.
