Dubai is one of the world’s most dynamic business hubs, offering multiple company structures designed for different commercial objectives. Many entrepreneurs initially establish their companies in a Free Zone due to 100% ownership, fast incorporation, and simplified compliance. However, as businesses grow, expand operations, or want to trade directly within the UAE market, they often need to convert a Free Zone company to a Mainland company in Dubai.
This guide provides comprehensive information on the Free Zone to Mainland conversion process in Dubai, including legal eligibility requirements, procedures, approvals, costs, timelines, and strategic considerations, to ensure a compliant and commercially sound transition.
What Is the Difference Between a Free Zone and a Mainland Company?
Understanding the structural differences clarifies why businesses eventually move to the Mainland.
Free Zone Company
A Free Zone company is registered in one of Dubai’s designated Free Zones and is regulated by that Free Zone Authority.
Key features:
- 100% foreign ownership
- Limited trading within the UAE unless through a local distributor
- Office location restricted to the Free Zone
- Regulated by Free Zone Authority, not DED
Mainland Company
A Mainland company is registered with Dubai’s Department of Economy and Tourism (DET, formerly DED) and can operate anywhere in the UAE.
Key features:
- Can trade freely across the UAE and internationally
- Eligible for government contracts
- Office anywhere in Dubai
- Regulated by the UAE Commercial Companies Law and DET
Before proceeding with a conversion, many founders first evaluate whether Mainland is the right structure for their business. If you are still comparing operational scope, ownership, costs, and regulatory requirements, you may find it helpful to review our detailed comparison of Mainland vs Free Zone company setup in Dubai, which explains the key differences and strategic considerations.
Why Convert a Free Zone Company to the Mainland?
Businesses usually convert when they:
- Want to sell directly to customers in the UAE
- Want to open physical offices or retail outlets outside Free Zones
- Want to participate in government tenders
- Want to expand branch operations across the Emirates
- Want to remove reliance on local distributors
Common scenarios
| Business Type | Reason for Conversion |
|---|---|
| E-commerce | Warehousing and deliveries across the UAE |
| Consulting firms | Onshore client contracts |
| Manufacturing | Local distribution |
| IT services | Government or enterprise clients |
| Trading firms | Import/export directly |
Is It Possible to Convert a Free Zone Company into a Mainland?
Yes, but technically it is not a “conversion”. You cannot directly transfer a Free Zone license into a Mainland license. Instead, the process involves:
- Deregistering or restructuring the Free Zone entity, and
- Registering a new Mainland company, or
- Opening a Mainland branch of the Free Zone company.
The right structure depends on your business goals.
Three Legal Methods to Move from Free Zone to Mainland
Option 1: Close Free Zone Company and Register New Mainland Company
This is the cleanest legal route.
Process:
- Cancel the Free Zone license
- Obtain clearance certificates
- Apply for a Mainland license with DET
- Transfer assets, contracts, visas
Best for: Startups or simple structures.
Option 2: Open a Mainland Branch of the Free Zone Company
You retain your Free Zone entity and open a Mainland branch.
Benefits:
- Same legal entity
- Allows onshore operations
- No need to close Free Zone
Best for: Established companies with contracts and employees.
Option 3: Dual Licensing (Specific Free Zones Only)
Some Free Zones allow dual licensing with DET.
Limitations:
- Not all activities are allowed
- Still under Free Zone regulation
- Limited operational scope
Best for: Service businesses testing onshore expansion.
Step-by-Step Process to Convert Free Zone Company to Mainland Dubai
Step 1: Define Your Business Activity
Mainland licensing depends on approved activity classification.
Some activities allowed in the Free Zone may require special approvals on the Mainland (legal, healthcare, education, finance, etc.).
Step 2: Choose Legal Structure
When you convert a Free Zone company to a Mainland company in Dubai, selecting the correct legal structure is one of the most important decisions, as it determines ownership rules, compliance obligations, and operational flexibility. The legal structure should align with your business activity, expansion plans, and whether you want to keep the Free Zone entity active.
Common Mainland legal structures include:
- Limited Liability Company (LLC): This is the most popular structure for commercial and trading businesses. It allows multiple shareholders and provides limited liability protection.
- Sole Establishment: Suitable for individual entrepreneurs who want to operate a professional or service business under their personal ownership.
- Branch of a Free Zone or Foreign Company: Allows an existing Free Zone company to operate on the Mainland without forming a new legal entity.
- Civil Company: Used mainly by professionals such as consultants, doctors, architects, and auditors offering regulated professional services.
Choosing the right structure ensures regulatory compliance and avoids restructuring costs later.
In most cases, businesses moving to the Mainland opt for an LLC structure due to its flexibility and suitability for commercial activities. You can learn more about the process and requirements in our guide on LLC formation in Dubai.
Step 3: Trade Name Reservation
Reserve the trade name with DET. It must:
- Match activity
- Follow UAE naming rules
- Not in conflict with existing trademarks
Step 4: Initial Approval from DET
This confirms the government’s acceptance of the shareholders, activities, and structure.
Step 5: Office Lease and Ejari
Mainland companies must have a physical office registered through Ejari.
Step 6: External Approvals (if applicable)
Some activities need approvals from authorities, such as:
- KHDA (education)
- Dubai Health Authority
- RTA
- Central Bank
- Telecommunications Authority
Step 7: Submit Final Documents and Obtain License
Once approvals and Ejari are in place, DET issues the Mainland trade license.
Step 8: Cancel or Amend Free Zone Company (if required)
If you’re closing the Free Zone entity:
- Cancel visas
- Settle liabilities
- Obtain clearance certificates
- Deregister license
Documents Required
- Passport copies of shareholders and managers
- Visa and Emirates ID copies
- NOC from Free Zone Authority
- Board resolution (if branch)
- MOA and AOA
- Lease agreement and Ejari
- Clearance certificates
Costs to Convert a Free Zone Company to a Mainland Company in Dubai
The cost to convert a Free Zone company into a Mainland company in Dubai depends on several factors, including the type of business activity, office requirements, government approvals, and whether the Free Zone entity is being closed or retained.
Typically, the costs include:
- Mainland trade license fee: Usually between AED 10,000 and AED 15,000, depending on activity and license type.
- Office rent and Ejari registration: Ranges from AED 8,000 to AED 25,000 or more, depending on location and size.
- Government and external approvals: Certain regulated activities may require approvals costing AED 1,000 to AED 5,000.
- Free Zone company cancellation or amendment: If you close or restructure the Free Zone entity, this can cost between AED 2,000 and AED 6,000.
- Visa transfers and immigration processing: Usually between AED 3,000 and AED 7,000 per visa.
Overall, businesses should budget approximately AED 20,000 to AED 40,000 or more for the full conversion process, depending on complexity.
Total Estimate: AED 20,000 – 40,000+
Timeline
The timeline for converting a Free Zone company to a Mainland company in Dubai depends on the speed of approvals, documentation readiness, and whether any special regulatory approvals are required.
In most cases, the process follows this general timeline:
- Initial planning and approvals: Around 3 to 5 working days to finalise structure, activity, and trade name.
- Department of Economy and Tourism (DET) registration: Approximately 5 to 7 working days once documents are submitted.
- External or special authority approvals: If required, these may take an additional 1 to 2 weeks.
- Free Zone company cancellation or amendment: If applicable, this usually takes 1 to 2 weeks, depending on the Free Zone authority.
In total, the entire process typically takes between two to four weeks from start to finish, assuming there are no regulatory complications.
Tax, VAT, and Compliance Implications
- Mainland companies must register for VAT if turnover exceeds AED 375,000.
- Corporate tax (9%) applies if profits exceed the threshold.
- ESR and UBO filings remain applicable.
- Audits may be required based on activity.
Common Mistakes to Avoid
- Cancelling the Free Zone before securing the Mainland license
- Choosing the wrong activity classification
- Ignoring office requirements
- Not transferring visas and contracts properly
- Overlooking tax and compliance changes
Strategic Considerations Before Converting
Ask yourself:
- Do I need physical presence?
- Will costs outweigh benefits?
- Should I open a branch instead?
- Are government contracts part of my strategy?
How Ease to Compliance Can Help
Ease to Compliance offers structured, end-to-end support to help you convert your Free Zone company into a Mainland company in Dubai smoothly, compliantly, and with minimal disruption to your operations. We combine regulatory expertise with practical execution to ensure the transition is efficient, risk-free, and aligned with your business goals.
We support you with:
- Advising on the most suitable legal structure based on your activity and expansion plans
- Managing all regulatory and government approvals with the relevant authorities
- Handling the complete Mainland company setup and licensing process
- Coordinating Free Zone company closure, amendment, or branch structuring if required
- Managing visa transfers, immigration setup, and employee migration
- Ensuring proper tax and compliance setup, including VAT, corporate tax, ESR, and UBO filings
Our role is to ensure there are no legal, regulatory, or operational gaps during the transition.
If you are planning to convert your Free Zone company to the Mainland in Dubai and want clarity on structure, costs, and timelines, contact Ease to Compliance today for a personalised consultation and end-to-end expert support.
Final Thoughts
Converting a Free Zone company into a Mainland company in Dubai is a strategic step for businesses seeking greater operational flexibility, direct access to the local market, and long-term growth potential. However, the process involves regulatory approvals, structural decisions, and compliance considerations that require careful planning.
Before proceeding, it is important to assess your business objectives, cost implications, legal structure, and regulatory obligations to ensure that the transition aligns with your operational and commercial goals. A well-planned conversion can minimise disruption, avoid compliance risks, and position your business more effectively for future expansion.
Taking the time to evaluate the process properly and execute it in a structured manner will help ensure a smooth and successful move from Free Zone to Mainland operations in Dubai.
Frequently Asked Questions (FAQs)
1. Can I keep my Free Zone company active after setting up a Mainland company?
Answer: Yes, you are not required to close your Free Zone company when you set up a Mainland entity. Many businesses operate both structures simultaneously, for example, using the Free Zone for international operations and the Mainland entity for onshore UAE business.
2. Will my existing contracts automatically transfer to the new Mainland company?
Answer: No, contracts do not automatically transfer. You will need to review and, where necessary, novate or re-execute contracts under the new Mainland entity, especially for clients, suppliers, landlords, and banks.
3. Do I need to change my bank account when moving from the Free Zone to the Mainland?
Answer: Yes, in most cases. A new Mainland company requires a separate bank account in its own name. The Free Zone company’s account cannot legally be used for the Mainland entity.
4. Will my VAT registration carry over to the Mainland company?
Answer: No, VAT registrations are entity-specific. If you set up a new Mainland entity, you will need to either register it separately for VAT or amend registrations based on whether the Free Zone entity remains active.
5. Does converting to Mainland affect my company’s ownership or profit repatriation?
Answer: In most cases, no. The UAE allows 100% foreign ownership for most Mainland activities, and profits can still be fully repatriated. However, certain regulated sectors may have specific ownership or approval requirements.
