Practical guide
Free zone to mainland
You generally cannot convert a free zone company into a mainland one. The routes are opening a mainland branch of the free zone entity, incorporating a new mainland company, or appointing a mainland distributor — each with different cost, tax and continuity consequences.
In practice
Moving from a free zone to the UAE mainland
Why conversion is not usually available
A free zone company is incorporated under that zone's own regulations and appears on its register. A mainland company is incorporated under the emirate's regime. They are different legal creatures, and while some authorities have introduced migration routes, the common answer remains creating a new mainland presence rather than transforming the existing one.
The three routes
A branch of the free zone company preserves the existing entity and its contracts but brings the branch into the mainland tax and compliance net. A new mainland company is cleaner but starts fresh, with its own bank account, contracts and history. A distributor requires no new entity at all but costs a margin on every sale, forever.
- Branch
- Preserves the entity; requires mainland licensing and a registered tenancy
- New company
- Clean structure; loses the trading history and banking relationship
- Distributor
- No new entity; a permanent margin on domestic sales
- Bank
- A new entity needs a new account and a new onboarding
- Tax
- Mainland activity is taxed at the standard rate; free zone qualifying income is affected
- Contracts
- Novation may be required if the counterparty is contracted with the free zone entity
The sequence
How it runs.
Establish why you are moving
Domestic sales, government tenders and public premises are the usual reasons — each may point to a different route.
Model the tax consequence
Mainland activity affects the free zone company's qualifying income position.
Choose branch, new company or distributor
Continuity versus cleanliness versus cost.
Secure premises and Ejari
Mainland licensing requires it either way.
Migrate contracts and banking deliberately
Novation and a new bank onboarding both take longer than the licence.
Questions
Generally not by conversion. The usual routes are opening a mainland branch of the free zone entity, incorporating a separate mainland company, or appointing a mainland distributor. Some authorities have introduced migration routes — check yours specifically.
To sell directly into the UAE domestic market, generally yes — either through your own mainland entity or branch, or through a mainland distributor.
It can. Mainland-sourced income is generally not qualifying income, and exceeding the de minimis threshold for non-qualifying revenue can cost the free zone company its 0% status entirely.
One question
Who will be paying your invoices?
A free zone, then — full foreign ownership, and qualifying income can sit at 0% corporate tax where the substance tests are genuinely met. Confirm where the work is actually performed as well as where the client sits.
Compare the two routesOr just ask usMainland, then. Full market access is what a mainland licence buys and it is the only thing that buys it. Selling into the UAE from a free zone means a distributor's margin on every transaction, or a branch paying twice.
Compare the two routesOr just ask usThe usual answer, and the one worth a proper conversation. There is normally a sequencing that works — free zone first, mainland branch once domestic revenue justifies it — but it turns on your margins and your timeline.
Answer five questions insteadOr just ask us