DET Permit in the UAE: How Free Zone Companies Can Legally Operate in Mainland Dubai

DET Permit UAE Free Zone Mainland regulation was introduced to legally allow Free Zone companies to conduct selected economic activities in Mainland Dubai without full redomiciliation, provided they comply with licensing, reporting, and compliance requirements.

With the tightening of AML, banking compliance, and regulatory scrutiny across the UAE, the legal structure of business operations has become a critical factor for risk management. Government departments, banks, and regulators increasingly assess how companies actually operate, where their clients are located, and whether their commercial activity matches their license and jurisdiction. 

As a result, the DET Permit framework has become one of the most important regulatory developments for Free Zone companies working with the local UAE market.

Why the DET Permit Became Relevant for Free Zone Companies

In recent years, regulatory pressure in the UAE has significantly increased. Authorities now focus on:

• AML and compliance audits

• Economic substance reviews

• licensing consistency

• real business activity vs formal registration

According to market observations, more inspections are now conducted not only by banks and Free Zones but also by economic departments and regulators, which indicates a shift toward stricter enforcement. 

Therefore, companies must clearly demonstrate:

• what activities they perform

• where they operate

• who their counterparties are

• and whether their operations comply with licensing rules

Previously, Free Zone companies were generally restricted to operating:

• inside the Free Zone

• or outside the UAE

However, direct activity in Mainland Dubai required complex restructuring. This changed after the adoption of a new regulatory resolution.

Executive Council Resolution No. (11) of 2025: Key Legal Framework

The regulatory basis for the DET Permit originates from Executive Council Resolution No. (11) of 2025 regulating the conduct of Free Zone establishments’ activities within the Emirate of Dubai. 

This resolution officially allows Free Zone companies to legally conduct business in Mainland Dubai, provided they obtain the appropriate authorization from the Department of Economy and Tourism (DET).

Importantly, the regulation applies specifically to Dubai and does not automatically extend to other emirates.

The resolution also clarifies that Free Zone entities can now enter the local market legally instead of operating in grey areas or relying on informal commercial structures.

Three Legal Options to Work with Mainland Clients

The resolution outlines three structured and compliant pathways for Free Zone companies.

1. Branch of the Establishment within Mainland Dubai

This option involves opening a fully operational physical branch office in Mainland Dubai.

Key features:

• physical office on Mainland

• Ejari registration

• full operational presence

• higher compliance obligations

This model suits companies planning long-term local operations and large-scale contracts.

2. Branch Operating from the Free Zone

Under this structure, the company keeps its physical office inside the Free Zone while obtaining a license to conduct approved activities in Mainland Dubai.

This option is more flexible and cost-efficient for service-based businesses.

3. Temporary DET Permit for Specific Activities

The Temporary Permit allows Free Zone companies to conduct selected economic activities in Mainland Dubai for a limited period, typically up to six months. 

This is especially useful for:

• project-based work

• short-term contracts

• consulting or implementation services

However, the permit must be obtained through official channels such as the Invest in Dubai portal.

Mandatory Requirements for Obtaining a DET Permit

Regulators introduced strict compliance requirements to prevent misuse of Free Zone licenses.

Physical Office Requirement

Companies must maintain a real physical office within the Free Zone.

Flexi-desks, virtual offices, and business centers are not accepted for DET Permit eligibility. 

Approval and Regulatory Coordination

Businesses must obtain:

• approval from their Free Zone authority

• authorization from relevant Dubai government bodies

This dual approval process ensures that the company’s activities remain transparent and compliant.

Separate Accounting Obligations

One of the most critical compliance elements is segregated accounting.

Companies are required to:

• maintain separate financial records

• distinguish Free Zone and Mainland revenue

• properly document business activities

This requirement directly impacts Corporate Tax calculations and audit readiness.

DUL Number: A Key Element of the DET System

The Dubai Unified License (DUL) number plays a central role in DET Permit applications.

It acts as a unified licensing identifier within the Dubai economic registry and can be verified through the Invest in Dubai platform. 

Notably:

• older Free Zone licenses may already include a DUL number

• newer licenses may receive it after system migration

• the application process depends on DUL activation

Without an active DUL license, the DET Permit process may be delayed or restricted.

Cost Structure and Official Fees

The resolution establishes clear official government fees:

• AED 10,000 for a branch license operating from the Free Zone

• AED 5,000 for a temporary activity permit

These costs are relatively moderate compared to full Mainland company setup, making the permit an attractive compliance tool.

Compliance, AML and Regulatory Risk Considerations

The introduction of the DET Permit is closely linked to increasing AML and compliance scrutiny across the UAE. Regulators now evaluate whether:

• the declared activity matches real operations

• the company has economic substance

• business with Mainland clients is legally structured

If a Free Zone company operates in Mainland without proper authorization, risks may include:

• banking restrictions

• compliance flags

• license complications

• potential penalties

Therefore, the DET Permit is not merely an administrative formality but a strategic compliance mechanism.

Workforce and Operational Flexibility

The resolution allows companies to use employees already registered under the Free Zone entity for Mainland activities.

At the same time:

• employee rights remain protected under Free Zone labor rules

• no mandatory transfer to Mainland employment structure is required

This provides operational flexibility while maintaining legal consistency.

Transition Period and Regulatory Timeline

The regulation officially came into force on 3 March 2025.

Companies that were already operating outside their Free Zone were granted a one-year transition period (until March 2026) to align their structure with the new legal framework. 

Additionally, authorities indicated that the official list of permitted activities would be published within six months of the resolution’s implementation.

Importantly, the rules do not apply to financial institutions licensed under DIFC, which operate under a separate regulatory regime.

DET Permit vs Full Mainland Setup

From a strategic perspective, the DET Permit offers a hybrid model between Free Zone and Mainland operations.

Advantages:

• lower setup cost

• faster market entry

• regulatory compliance

• flexibility for project-based work

Limitations:

• activity restrictions

• time-limited permits

• mandatory compliance documentation

• separate accounting requirements

For companies with long-term UAE market expansion plans, a full Mainland branch may still be the more sustainable option.

Compliance Over Formal Structure

The UAE regulatory environment is clearly shifting toward substance over form. Authorities increasingly analyze how a company actually operates rather than where it is formally registered.

Consequently, the DET Permit framework should not be viewed merely as a licensing tool but as a compliance strategy that aligns:

• operational geography

• licensing scope

• tax reporting

• AML risk management

For Free Zone companies working with UAE clients, obtaining a DET Permit or registering a compliant branch is no longer optional in many cases — it is becoming a regulatory necessity in the evolving compliance landscape of Dubai.