Doing Business BRICS+ Guide

Economy

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1. In which sectors of the economy in your country is there currently the largest inflow of foreign investment? In which sectors of the economy is there the greatest presence of foreign business?
2. In which projects do foreign businessmen mainly invest at present?
3. Has there been an increase in the number of M&A transactions with foreign participation in 2022-2024?
4. Which economic sectors in your opinion have the greatest potential for attracting foreign investment? What sectors will be increasingly attractive for foreign business in the future?
5. What support measures for foreign business exist in your country?
6. Please give an assessment of how much the political situation in the country affects the economy/investments/foreign trade/development of projects with foreign participation?
7. What actions of the state in your opinion can limit the activity of foreign business? And what, on the contrary, attracts and promotes the development of projects with foreign participation?
8. How much do state authorities stimulate / support foreign investors?

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1. In which sectors of the economy in your country is there currently the largest inflow of foreign investment? In which sectors of the economy is there the greatest presence of foreign business?

The United Arab Emirates (the “UAE”) has become a prominent destination for foreign direct investment (“FDI”), attracting substantial capital across various sectors. According to the World Investment Report 2024 by the United Nations Conference on Trade and Development (available at: link), the UAE experienced a remarkable 35% increase in FDI inflows, reaching approximately USD 30.69 billion in 2023, up from USD 22.74 billion in 2022.

The UAE positions itself as a global hub for foreign investment and business due to its strategic location, business-friendly policies, and robust infrastructure.

Sectors with the largest inflows of FDI include:

• Real Estate and Construction

The UAE’s real estate market, particularly in Dubai and Abu Dhabi, continues to attract significant foreign investment. High-profile projects have drawn global investors. A key driver
of this sector’s growth and development is the UAE’s approach to foreign ownership. Freehold property laws, which allow 100% ownership in designated areas, play a major role
in the continued growth of this sector.

Habib Al Mulla & Partners has observed an increase in FDI inflows in a number of projects involving M&A deals, unincorporated joint ventures and direct investments without investor’s obtaining equity.

• Tourism and Hospitality

The UAE’s tourism sector is a major driver of foreign investment, with Dubai and Abu Dhabi being top global destinations. The construction of entertainment facilities (e.g., theme parks, resorts, cultural attractions, monuments, etc.) and the development of a wide range of experiences (e.g., sea, snow, desert, skydiving, sports, etc.) have positioned the UAE
as a top destination for tourism with millions of tourists flowing into the country all year long.

• Technology and Innovation

The UAE’s focus on becoming a global tech hub has attracted significant foreign investment
in areas such as artificial intelligence (AI), blockchain, fintech, data centers and smart cities.
The UAE government is steadfast in its approach and continues to launch initiatives to reinforce this positioning.

Habib Al Mulla & Partners has witnessed notableFDI growth in the virtual assets sector
of the UAE economy.

• Financial Services

The UAE’s financial sector, particularly in Dubai (Dubai International Financial Centre – DIFC) and Abu Dhabi (Abu Dhabi Global Market – ADGM), continues to attract foreign investment
in banking, insurance, asset management, and fintech.

• Logistics and Transportation

The UAE’s strategic location as a global trade hub has made it a hotspot for foreign investment in logistics, shipping, and aviation. Dubai’s Jebel Ali Port and Abu Dhabi’s Khalifa Port are key drivers of this sector. Additionally, world-class airports (e.g., Dubai International Airport, Abu Dhabi International Airport) and airlines (e.g., Emirates, Etihad) continue to attract significant foreign investment.

Top sectors with a strong presence of foreign business include:

• Trade and Retail

This domain is dominated by foreign brands and franchises. The UAE’s role as a global trading hub has led to a strong foreign business presence in import/export, wholesale, and retail. Dubai’s Jebel Ali Free Zone and Dubai Multi Commodities Centre (DMCC) are key hubs
for international trade.

This sector also includes various commodities trading companies.

• Technology and IT Services

Foreign tech companies, including multinational giants like Microsoft, Google, and Oracle, have a significant presence in the UAE. The country’s focus on digital transformation and smart cities has created opportunities for IT services, software development, and cybersecurity firms.

• Financial Services

The DIFC and ADGM host a large number of foreign banks, insurance companies,
and investment firms. These financial free zones provide a favorable regulatory environment
for foreign businesses.

• Hospitality and Tourism

International hotel chains (e.g., Marriott, Hilton, Accor) and tourism operators have a strong presence in the UAE, aligned with the country’s growing tourism industry.

• Professional Services

Foreign law firms, consulting companies, and accounting firms are well-established in the UAE, contributing to the country’s expanding business ecosystem.

There are also emerging sectors that have been growing for the past few years and starting
to attract more FDI:

• E-Commerce

Driven by high internet penetration and a young population,e-commerce in the UAE is expanding rapidly. This has attracted global players like Amazon and regional giants like Noon.

• Creative Industries

The UAE is investing in creative industries such as media, film production, and design.
Dubai Studio City and Abu Dhabi’s twofour54 are emerging hubs for foreign media companies.

• Space and Aerospace

The UAE’s ambitious space program, including the Mars Mission (Hope Probe), has attracted foreign investment into aerospace technology and satellite manufacturing.

2. In which projects do foreign businessmen mainly invest at present? 

• Family Wealth Structuring

High-net-worth individuals are increasingly focusing on estate planning, asset protection,
and succession strategies in the UAE, leveraging its favorable regulatory environment
and wealth management infrastructure.

• Renewable Energy & Green Technology

The UAE remains a key destination for sustainability-driven investment. A prime example
is the Mohammed bin Rashid Al Maktoum Solar Park in Dubai—valued at USD 13.6 billion—
the world’s largest single-site solar project, backed by major players such as ACWA Power, Masdar, and several leading Chinese investors.

• Technology & Artificial Intelligence

The UAE’s growing digital economy and pro-innovation policies are driving significant investment in tech infrastructure. Notably, Oracle launched a major data center in 2020,
with further expansion anticipated under the government’s new policy enabling widespread development of data centers across the country.

• Real Estate & Hospitality

Large-scale luxury and tourism projects continue to draw global capital. Examples include
the USD 8.7 billion Marsa Al Arab development and the 2025 expansion of Rixos Hotels, reflecting sustained investor interest in Dubai’s premium real estate and hospitality sectors.

• Industrial Manufacturing

The UAE is positioning itself as a regional manufacturing hub. A recent example is China’s BYD, which established an assembly plant in the UAE in 2023, signaling a growing trend
in foreign-backed industrial ventures.

3. Has there been an increase in the number of M&A transactions with foreign participation in 2022-2024? 

There has been a big increase in M&A transactions with foreign participation in 2022-2024.

This is mainly driven by regulatory reforms, economic diversification, and the UAE’s continuous strive to maintain its position as a regional and global business hub.

According to Reuters, the UAE witnessed a 44% year-on-year increase in M&A deal value
in 2022, with foreign investors leading major acquisitions in tech, energy, and healthcare sectors. Notable examples include:

• G42'sUSD 1.5 billion investment in Microsoft;

• ADNOC’s USD 5 billion gas pipeline stake sales to global funds (KKR, Blackrock);

• Japan Bank of International Cooperation (JBIC)’sUSD 3 billion investment in UAE’s clean energy sector.

4. Which economic sectors in your opinion have the greatest potential for attracting foreign investment? What sectors will be increasingly attractive for foreign business in the future? 

We would highlight the following sectors as having the greatest potential for attracting FDI
in the UAE, both currently and in the future:

Technology and Innovation

The UAE’s strategic shift toward a knowledge-based and innovation-driven economy creates vast opportunities in:

• FinTech and Blockchain: Given recent regulatory developments by Virtual Assets Regulatory Authority(VARA) in Dubai and the Abu Dhabi Global Market(ADGM)’s progressive stance, the UAE is positioning itself as a global hub for digital assets and virtual finance;

• Artificial Intelligence: The national AI strategy is accelerating growth, particularly in healthcare, transport, and smart city infrastructure;

• Cybersecurity: As digital transformation scales, demand for security solutions is intensifying, backed by strong government support.

Renewable Energy and Sustainability

Driven by the UAE’s Net Zero 2050 strategy and its role as host of COP28, foreign investment is being actively channeled into:

• Clean energy (solar, hydrogen, nuclear);

• Sustainable infrastructure; and

• Green finance.

Masdar City and NEOM-type initiatives are drawing international players interested in ESG-compliant portfolios.

Healthcare and Life Sciences

The UAE is developing a robust ecosystem for biotech, pharmaceutical manufacturing, and telemedicine, supported by:

• Government incentives;

• Local demand growth; and

• A vision to become a regional medical tourism hub.

Logistics and Supply Chain
Given the UAE’s geographical position as a gateway between East and West, and post-COVID global shifts in supply chain dynamics:

• Logistics, cold chain infrastructure, and smart warehousing are key magnets for foreign capital; and

• Continued investments in free zones (e.g., JAFZA) and multimodal connectivity fuel this trend.

Tourism, Leisure, and Lifestyle 

The UAE is diversifying its tourism offer, creating space for foreign investment in:

• Luxury and eco-tourism;

• Entertainment and wellness industries; and

• Cultural assets (e.g., Louvre Abu Dhabi model).

The liberalization of personal status laws and increased social openness are further enhancing investor confidence.

Education and Human Capital Development

• International schools, ed-tech platforms, and vocational training aligned with the UAE’s economic vision are gaining traction;

• Demand for private sector partnerships in upskilling initiatives is rising.

Manufacturing and Industrial Diversification

As part of Operation 300bn initiative, the UAE is incentivizing:

• High-value manufacturing (e.g., defense, aerospace, semiconductors); and

• Localization of critical industries (e.g., food, pharma).

This opens up long-term opportunities for joint ventures and FDI under relaxed foreign ownership regimes.

5. What support measures for foreign business exist in your country? 

The UAE government has long invested in the development of the proper infrastructure to attract, retain, and support FDI. Key support measures include:

• Revamped and modernized legislative framework. This includes updated commercial codes, professional codes, tax regimes, competitive initiatives such as 100% ownership of businesses by foreigners, transparency in doing business (UBO and AML regulations). This also includes the signature of bilateral agreements to promote and protect economic relationships and investments with different countries and States. For instance, the UAE has signed and ratified numerous bilateral investment treaties (BITs) and double taxation agreements (DTAs) to promote and protect foreign investment;

• Seamless and fast processes to set up businesses and obtain licenses in the UAE;

• Developed systems and infrastructure to provide the best technical support for businesses;

• Digitized and enhanced government services. For example, the initiative by Dubai Government to become the first paperless government. Any government service needed can now be accessed online or through a mobile application;

• Easy linking of information and fast update of personal identification documents data (IDs, passports, etc.);

• Long-term residency visas (including the Golden visa, Green visa, Remote Work visa, etc.).

6. Please give an assessment of how much the political situation in the country affects the economy/investments/foreign trade/development of projects with foreign participation? 

From the perspective of Habib Al Mulla & Partners, the political situation in the UAE is one of the key stabilizing forces that directly enhances the country’s attractiveness for economic development, FDI, and cross-border projects. The UAE enjoys remarkable political stability in a region known for geopolitical volatility. This is largely due to:

• A centralized, visionary leadership;

• Long-term national strategies (e.g., Vision 2031, Net Zero 2050); and

• Internal security and well-managed societal reforms.

The UAE follows a neutral, multi-vector foreign policy, maintaining strong trade and investment ties with: 

The West (e.g., the US, EU, UK); 

The East (e.g., China, India, Russia); 

Regional actors (e.g., GCC, Africa).

The UAE joined the BRICS bloc as part of a broader strategy to diversify its global alliances and trade partners.

7. What actions of the state in your opinion can limit the activity of foreign business? And what, on the contrary, attracts and promotes the development of projects with foreign participation? 

The political and regulatory environment in the UAE remains a major driver of FDI and economic development. The country’s leadership has built a system that combines long-term political stability with clear economic priorities – particularly the ambition to transform the UAE into a global hub for trade, innovation, and finance.

On the one hand, the UAE authorities have introduced numerous measures to encourage foreign participation in the economy. A cornerstone of this effort has been the establishment of free zones, which were originally created specifically to attract FDI. These zones offer 100% foreign ownership, tax exemptions, simplified customs procedures, and full repatriation of capital and profits. Over time, the free zones have evolved into sophisticated industry clusters – such as Dubai International Financial Centre (DIFC) for financial services, Dubai Multi Commodities Centre (DMCC) for commodities, or Abu Dhabi Global Market (ADGM), each providing dedicated regulatory frameworks and business infrastructure for foreign players.

Beyond the free zones, the UAE has introduced major reforms to allow full foreign ownership of mainland companies in most sectors, doing away with the historical requirement for a UAE national sponsor. This shift, combined with modernizations to corporate law, labor law, and investment regulation, reflects the government’s commitment to aligning with international standards and investor expectations.

However, despite these strong fundamentals, there are certain areas where foreign businesses may face challenges. The UAE’s federal structure means that regulatory frameworks can vary significantly across emirates and between free zones and the mainland. It can be difficult for new entrants to navigate the patchwork of laws, approvals, and licensing requirements, especially when dealing with multiple regulatory bodies or expanding across different jurisdictions within the UAE.

Another constraint comes from the banking and compliance environment. Following the UAE’s inclusion on the FATF grey list (from which it has since been removed), local financial institutions have significantly tightened their KYC and AML procedures. While this move enhances long-term financial transparency, in the short term it has led to longer account opening times and more intrusive compliance checks, which can frustrate foreign investors unfamiliar with regional practices.

At the same time, the UAE’s leadership has taken concrete steps to improve the ease of doing business. The introduction of digital company formation platforms, new long-term residency visas for investors and skilled professionals, and major infrastructure investments in ports, logistics, and renewable energy reflect a coherent national strategy to attract and retain foreign capital.

8. How much do state authorities stimulate / support foreign investors?

The UAE is widely recognized for its proactive approach to attracting and supporting foreign investors. The government has implemented a range of policies, incentives, and initiatives to create a business-friendly environment. Key support measures include:

• Establishment of free zones;

• Full foreign ownership on the mainland. 

  One of the most significant reforms has been the removal of the requirement for a UAE national to hold 51% of company shares. Foreign investors can now own 100% of businesses in most sectors outside of free zones;

• Tax incentives: competitive corporate tax regime, no income tax, and a lot
  of agreements signed to avoid the double taxation;

• Ease of doing business and residency in the UAE (e.g., the new Golden Visa regime, remote working visas, etc.);

• Сountry’s strategic location linking Europe to Aisa: the UAE is a hub connecting travel between the east and west.

Government initiatives that always aim to create a sustainable and innovative-driven economy, offering long-term opportunities for foreign investors.

Legal landscape and international business

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1. What are the opportunities/benefits for foreign investors provided for in the legislation to facilitate market entry/company presence in the country?
2. Are there legal restrictions for foreign investors to operate in the country? For example, what is a foreign company not entitled to do? What activities require local representatives?
3. How friendly is the legal environment in the country in general for foreign business? Are there legal mechanisms in place to protect investments and foreign business? What are these mechanisms and guarantees?
4. In your opinion, what legal specifics should foreign companies take into account when planning to enter the market of your country? And private investors?
5. Currently, there is a trend in the world to relocate business from a number of countries in order to reduce costs/develop new markets/protect business under sanctions pressure. What opportunities are there in the country for transferring business from other foreign jurisdictions (redomiciling), what organizational and legal forms exist for business transfer and company organization? What is more favorable for an investor in terms of legal protection: opening a representative office/joint venture/branch of a company or other?
6. What specific features of the work of public authorities should foreign investors take into account when entering the market? What should be taken into account when building interaction with public authorities? What should be paid special attention to when organizing a business?
7. How would you characterize the situation with the regulatory development in the country? How do the state authorities react to the needs of business? How easy/difficult is it to adopt new legislative initiatives?
8. In which branches of law/economy is the regulation the most rigid?
9. Which branches of law/economy are most prone to turbulence, where are the most frequent legislative changes and how do they affect business?
10. What global legislative changes have occurred recently and how have they affected the business climate in the country?
11. What legislative changes are planned in the short term? What impact will the changes have on the situation of foreign businesses? How positive/negative will these changes be for foreign business?
12. How is the payment system of the state organized? What opportunities do foreign businesses have in organizing financial flows? What restrictions are imposed on foreign businesses when organizing payments?

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1. What are the opportunities/benefits for foreign investors provided for in the legislation to facilitate market entry/company presence in the country?

The UAE’s legal and regulatory framework offers a broad range of opportunities and incentives for foreign investors to facilitate a smooth and efficient market entry. Over the past decade,
the government has enacted a series of pro-investment reforms.

One of the most significant developments is the ability for foreign investors to establish and fully own onshore (mainland) companies without requiring a local Emirati partner.

Foreign nationals can hold up to 100% of shares in mainland companies engaged in a wide range of permitted commercial activities (for further details, refer to the answer to Question 2). 

This marked a fundamental shift from the previous regime, under which a UAE national had to hold at least 51% ownership in most cases. This change has significantly simplified corporate structuring and made onshore operations more accessible and appealing to foreign businesses.

In addition to onshore reforms, the UAE has developed a network of over 40 specialized free zones, each designed to attract foreign investment by offering tailored legal and regulatory environments.

These free zones were initially established as dedicated entry points for foreign business, and they continue to serve as the most popular route for international companies entering the UAE market, particularly for those operating in finance, logistics, commodities, media, and technology.

From a legal perspective, the UAE has also modernized its company law, labor law, and bankruptcy regime to align with international standards and investor expectations. 

Investors can now benefit from:

• A clearly defined legal framework for limited liability companies;

• Digital company formation processes in most Emirates;

• Access to independent common law systems in free zones such as DIFC and ADGM, offering reliable dispute resolution, arbitration centers, and enforceability of judgments; and

• A reformed insolvency law that provides options for restructuring, debt settlement, or protection from creditors.

In addition, the UAE’s extensive network of double taxation treaties and a generally low-tax environment, including 0% personal income tax and a 9% corporate tax rate, makes it a tax-efficient jurisdiction for international operations.

Lastly, specific economic sectors also benefit from targeted support measures, such as incentives for clean energy, high-tech manufacturing, and financial services, as part of the UAE’s long-term economic development plans (e.g., Operation 300bn, UAE Industrial Strategy, and Net Zero 2050). These targeted support measures may include tax incentives, grants, subsidized infrastructure, regulatory exemptions, preferential access to government procurement or subsidized industrial land in free zones.

2. Are there legal restrictions for foreign investors to operate in the country? For example, what is a foreign company not entitled to do? What activities require local representatives? 

While the UAE is one of the most open and investor-friendly jurisdictions in the region, its legal system still contains certain restrictions and regulatory requirements that foreign investors must consider when establishing or expanding their presence in the market.

Despite the liberalization introduced by the amended Commercial Companies Law, which allows 100% foreign ownership of mainland companies in most sectors, certain activities continue
to require UAE national participation or prior government approval. These strategic sectors are determined under Federal Decree-Law No. 32 of 2021 (the Commercial Companies Law)
and include, for example, defense and military manufacturing, upstream oil and gas operations, national security services, utilities (such as water and electricity distribution), and parts
of the telecommunications and media industries. In these areas, foreign investors may only participate through joint ventures with UAE nationals, or in some cases, through public-private partnerships or by obtaining special clearances from competent authorities, such as the Ministry of Economy or the local Department of Economic Development.

In addition, foreign companies seeking to operate in the UAE without incorporating a local entity, such as through a branch or representative office, must appoint a Local Service Agent (“LSA”). This agent, who must be either a UAE national or a company wholly owned by UAE nationals, does not hold any ownership or management stake in the branch. However, the LSA is legally required to act as a liaison with government bodies and assist with licensing, immigration, and administrative matters.

Free zones, which remain a major gateway for foreign investment in the UAE, also come with regulatory distinctions that affect how and where businesses can operate. Historically, companies established in free zones enjoyed significant benefits, such as 100% foreign ownership, customs and tax exemptions, and streamlined regulatory environments, but were generally not permitted to conduct business directly in the UAE mainland unless they established an onshore presence or worked through a locally licensed distributor or agent.

This framework has recently evolved with the issuance of Dubai Resolution No. 11 of 2025, which marks a significant shift in the way free zone companies can operate within the Emirate. Under the new Resolution, free zone entities in Dubai may now carry out activities onshore, provided they obtain the appropriate license or permit from the Department of Economy and Tourism (DET). The Resolution introduces three key licensing options:

• Establishing a physical onshore branch with DET licensing (already permitted in practice);

• Obtaining a DET permit to operate an onshore branch without premises, allowing free zone entities to conduct business onshore without maintaining a physical presence or dedicated onshore staff (similar to prior dual-licensing models);

• Securing a temporary DET permit to operate onshore for up to six months – ideal for short-term projects, events, or contracts.

This reform significantly lowers the operational and cost burden for free zone businesses wishing to access the Dubai mainland market, and reflects the Emirate’s broader strategy to streamline business activity and eliminate duplicative structures. It also creates greater flexibility for foreign investors who previously needed to incorporate multiple entities across jurisdictions.

That said, the Resolution’s implementation remains subject to practical guidance yet to be issued by the DET and other relevant regulators. For regulated sectors such as healthcare, education, or financial services, sector-specific authorities are expected to publish rules on how the Resolution will be applied. Additionally, the DET will issue a list of permitted economic activities for onshore practice by free zone entities—until which, certain restrictions may still apply.

Furthermore, certain regulated professions and business activities remain reserved for UAE nationals or require special licensing. For example, representing clients before UAE courts. Similarly, some commercial agency roles, notary services, and sensitive sectors like Hajj and Umrah travel, education, or social services are subject to nationality restrictions or enhanced scrutiny.

The UAE Commercial Agencies Law also plays a significant role in shaping market access for foreign principals. Under the current regime, foreign companies that wish to sell their products in the UAE via local partners must appoint a registered commercial agent, who must be either a UAE national or a 100% UAE-owned entity. These agencies are typically exclusive and protected by law, meaning they can only be terminated or modified under specific conditions. Although the latest reforms to the agency law have introduced greater flexibility, such as allowing public joint stock companies and certain free zone entities to act as agents, the fundamental framework still favors local intermediaries and can restrict the ability of foreign companies to freely structure their distribution arrangements.

3. How friendly is the legal environment in the country in general for foreign business? Are there legal mechanisms in place to protect investments and foreign business? What are these mechanisms and guarantees? 

In terms of legal mechanisms that protect foreign investments, several are particularly relevant.

First, the UAE Investment Law (Federal Decree-Law No. 19 of 2018 on Foreign Direct Investment) provides certain guarantees to foreign investors. These include protection against expropriation without fair compensation, the right to transfer profits and capital out of the country, and access to dispute resolution through UAE courts. The law also sets out clear procedures for licensing and approvals in sectors open to foreign investment, thereby supporting predictability and transparency.

Second, the Commercial Companies Law now allows for 100% foreign ownership in a wide range of activities across the UAE mainland, which represents a major shift away from the previous requirement for a UAE national sponsor. This reform, along with streamlined procedures for company formation, has made it significantly easier for foreign companies to enter and scale in the market under their own control.

Third, the UAE has an increasingly well-developed framework for dispute resolution. Investors may bring claims before UAE local courts, which have jurisdiction over civil and commercial matters and operate under a codified system of laws. For international investors operating in designated free zones such as the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM), disputes may be resolved in independent common law courts modeled on English law, with proceedings conducted in English. These courts are highly regarded for their neutrality, efficiency, and enforceability of judgments both locally and internationally.

For investors seeking international arbitration, the UAE is party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and hosts major arbitral institutions such as the Dubai International Arbitration Centre (DIAC) and ADGM Arbitration Centre. This gives foreign businesses confidence that they can structure contracts with arbitration clauses and rely on enforceable outcomes.

Moreover, the UAE has signed over 100 bilateral investment treaties (BITs) and more than 135 double taxation treaties (DTTs) with other nations. They offer access to investor – state dispute settlement (ISDS), usually through arbitration under ICSID or UNCITRAL rules. This provides an important safety net for foreign investors who may not wish to rely solely on domestic remedies. Such treaties are particularly valuable for investors from jurisdictions with less developed political or legal relations with the UAE, as they add an extra layer of protection backed by public international law.

 4. In your opinion, what legal specifics should foreign companies take into account when planning to enter the market of your country? And private investors?

When foreign companies and private investors plan to enter the UAE market and set up companies to practice their activities, they should carefully consider several legal specifics
to ensure compliance, mitigate risks, and optimize their operations. Below are key legal considerations for both companies and private investors:

Business Structure and Licensing:

Business structure refers to the form of legal entity to be set up. Deciding on the appropriate legal structure (e.g., Free Zone entity, Limited Liability Company (LLC), or Branch Office) can have various implications on the business in terms of ownership rules, tax implications, and operational restrictions.

Foreign companies or private investors would also need to decide whether the business will be set up in mainland or within a free zone. This decision also has implications,as free zone companies are typically required to appoint a Local Sponsor to operate on the mainland. Although the recent legislative update in the Emirate of Dubai now allows entities established within free zones to operate in mainland Dubai, subject to specific rules and conditions].

In terms of licensing, it is important to obtain the appropriate license (commercial, industrial, or professional) – that applies to the activity or practice of the business. Licenses must be obtained from the competent department or authority in the UAE, which may vary by emirate(e.g., DET in Dubai, DED in Abu Dhabi, etc.), or from the relevant free zone authority.

Regulatory Compliance:

It is mandatory for all businesses to be aware of and monitor industry-specific regulations. Certain sectors (e.g., banking, insurance, healthcare, and education) are subject to additional regulatory requirements imposed by their regulatory authority and an oversight may lead to fines and penalties imposed by the authorities. Examples include:

• Anti-Money Laundering (AML) Laws: Compliance with UAE’s AML regulations, including proper due diligence and reporting procedures, is mandatory.

• Data Protection: Entities must adhere to the UAE’s data protection laws, and regulations of related sectors, including those related to virtual assets.

• Taxation: The UAE has different taxation laws that regulate the Excise Tax], Value Added Tax (rate of 5%), and Corporate Tax (9% on taxable income exceeding AED 375,000) and other applicable tax laws and regulations issued by the Federal Tax Authority. Businesses should plan for tax compliance and reporting.

• Employment Laws: Businesses must comply with the UAE Labour Law in all matters relating to recruitment, working hours, leaves, terminations, labour contracts, Emiratization, and gratuities. In addition, entities planning to set up within financial free zones, such as DIFC and ADGM, must comply with the employment laws of these freezones.

• Intellectual Property (IP) Protection: Businesses are advised to protect their trademarks, patents and copyrights by registering them with the UAE Ministry of Economy.

Dispute Resolution:

Understanding dispute resolution mechanisms in the UAE is essential for businesses entering the market and engaging in commercial contracts (whether inside or outside the UAE). This entails a deep understanding of the UAE’s jurisdiction, the applicable UAE laws, and the means through which disputes can be resolved. Options include:

• Local Courts (such as Dubai or Abu Dhabi Courts). This requires an understanding (overview) of the civil law system that most UAE courts apply; 

• DIFC and ADGM Courts. These are based on the common law system and function similarly to English courts;

• Alternative Dispute Resolution Means such as Mediation, Conciliation, and Arbitration. It’s worth noting here that, while arbitration is a common dispute resolution medium which international parties often refer to, a key challenge to an effective arbitration is the enforcement of the awards. However, the UAE adopts a pro-arbitration approach (even in courts) and is a signatory to the New York Convention of 1985.

In addition to the above, private investors, in particular, should also take into account the following:

• Ownership and Investment Laws: 

  The UAE has enacted legislation that allows 100% foreign ownership of property (freehold vs leasehold) and businesses in certain areas, sectors, and free zones.

• Tax Considerations: 

There is no personal income tax in the UAE, making it an attractive spot for investors.

The UAE is a party to numerous Double Taxation Treaties, which help minimize the tax liabilities on international income.

• Visa and Residency:

Private investors, especially in real estate, may be eligible for a Golden Visa (long-term residency in the UAE, 10 years). Alternatively,they can apply for a regular Property Investor Visa and obtain residency by investing in property, provided they meet the minimum investment thresholds which varies depending on the sector.

5. Currently, there is a trend in the world to relocate business from a number of countries in order to reduce costs/develop new markets/protect business under sanctions pressure. What opportunities are there in the country for transferring business from other foreign jurisdictions (redomiciling), what organizational and legal forms exist for business transfer and company organization? What is more favorable for an investor in terms of legal protection: opening a representative office/joint venture/branch of a company or other?

One of the UAE’s standout features is its legal infrastructure for company migration, also known as redomiciliation – the process by which a foreign company transfers its legal domicile to another jurisdiction while maintaining its legal identity and history.

Several UAE jurisdictions, particularly free zones such as the Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM), and RAK International Corporate Centre (RAK ICC), expressly allow continuation or transfer of a foreign company into the UAE under their respective company laws. This means a company incorporated in another country can relocate its place of registration to the UAE, retaining its corporate personality, contracts, and assets, while becoming subject to UAE law.

This process is particularly attractive to companies leaving jurisdictions facing:

• Geopolitical instability;

• Excessive regulation or taxation;

• Sanctions or reputational risks.

The UAE’s neutral diplomatic posture, robust financial system, and liberal ownership rules make it an appealing jurisdiction to absorb such inbound relocations.

Organizational and Legal Structures Available to Foreign Businesses

Foreign businesses exploring entry or relocation to the UAE have several legal structures to choose from, each with its own advantages, limitations, and implications for legal protection:

Limited Liability Company (LLC) – Mainland

A UAE LLC is a standalone legal entity that can now be fully foreign-owned (subject to activity type and emirate-specific rules). It offers:

• Corporate limited liability protection;

• Ability to operate throughout the UAE mainland;

• Eligibility for local government tenders and full operational access.

It is ideal for investors seeking a permanent, flexible, and independent presence with control over local operations.

Free Zone Company (FZ-LLC or FZCO)

Free zone companies are also limited liability entities but are established within designated free zones. They offer:

• 100% foreign ownership;

• Customs and tax benefits;

• Sector-specific regulation;

• Easy setup and fast licensing.

However, they cannot trade directly with the mainland unless they appoint a distributor or establish a mainland branch.

Branch of a Foreign Company

A foreign company may open a branch in the UAE, either in the mainland or a free zone.
The branch:

• Is not a separate legal entity (it’s an extension of the parent company);

• Can carry out commercial activities (subject to licensing);

• Requires a Local Service Agent (LSA) – a UAE national – when operating
  in the mainland.

Branches are ideal for companies that want to test the market, maintain centralised control, or offer specific services without incorporating a new legal entity.

Representative Office

A representative office is the most limited form – it cannot engage in commercial activities
and is restricted to:

• Marketing;

• Promotion;

• Liaison functions.

It is suitable for companies exploring the market or managing supplier/client relationships without full operational capability.

Joint Venture (JV)

Foreign companies may enter into a JV with UAE nationals or companies through contractual arrangements or equity partnerships. This structure is often used when:

• The activity is restricted to foreign ownership;

• A local partner adds strategic value (e.g., regulatory access, land use, bidding eligibility).

JVs can offer shared liability and local credibility, but require careful drafting of governance, exit, and profit-sharing terms.

6. What specific features of the work of public authorities should foreign investors take into account when entering the market? What should be taken into account when building interaction with public authorities? What should be paid special attention to when organizing a business?  

Foreign investors entering the UAE market should be aware that interaction with public authorities is often formal, document-driven, and can vary significantly between emirates and free zones. The UAE has made major strides in digitalization and streamlining procedures, but investors should still anticipate some bureaucratic steps and occasional delays, especially when approvals from multiple regulators are required (e.g., municipality, the Department of Economic Development (DED), Ministry of Economy, immigration authorities, sectoral regulators).

 When organizing a business, it is essential to: 

• Understand the licensing requirements for your specific activity and whether it falls under mainland, free zone, or offshore jurisdiction;

• Ensure full compliance with corporate governance and KYC requirements, particularly given recent tightening of rules around beneficial ownership and AML/CFT;

• Anticipate the need for Arabic translations of key documents for government use; and

• Build a proactive relationship with local authorities through transparent communication and timely responses, UAE regulators value cooperation and clarity.

 Special attention should be paid to the choice of legal structure, the location of incorporation, and the scope of licensed activities, as these will directly affect tax exposure, regulatory obligations, and market access. Engaging a local legal advisor early in the process is key to navigating the system efficiently and avoiding costly restructuring later.

 7. How would you characterize the situation with the regulatory development in the country? How do the state authorities react to the needs of business? How easy/difficult is it to adopt new legislative initiatives? 

The UAE has undergone significant regulatory evolution in recent years, positioning itself as a pro-business, agile, and future-oriented economy.  

The government has demonstrated a strong commitment to modernizing laws, enhancing the ease of doing business, and responding swiftly to investor needs.  This approach has helped the UAE shift from a conservative, oil-dependent regulatory framework to a dynamic, diversified, and investor-centric legal system.

 In the 2024 Ease of Doing Business Index, the UAE ranked 16th globally in the ease of doing business. For instance, Dubai’s business environment has been described as ideal for entrepreneurs thanks to its supportive policies and ease of setting up companies and establishments. 

The UAE authorities are highly responsive to economic, and investor demands, often acting with unusual speed compared to other countries. If we highlight a couple of examples on such responsiveness, we can see that:

• During the COVID pandemic years, the UAE was among the first countries to adopt new legislation such as the rapid introduction of remote work visas, debt relief, and digital licensing;

• The UAE has aimed (and continues to) to set up a tailored and development framework for blockchains, virtual assets, and AI;

• Many UAE authorities engage in public and private consultations on proposed legislative updates.

8. In which branches of law/economy is the regulation the most rigid? 

Reasons pertaining to national security, cultural, and economic sovereignty may lead to certain branches of law or economic activities being too controlled or not permitted for practice by foreign investors. These include: 

• Oil and gas sector. This sector is typically controlled by the government (at the federal and/or emirate level). Although, certain partnerships with the private sector may be authorized through service contracts or joint ventures, in which the UAE holds the majority of shares 60%+;

• Banking sector. Financial stability is a top priority for the UAE. Therefore, foreign control over this sector is monitored closely by allowing selected foreign banks to operate in the UAE, with increased scrutiny following the introduction of an enhanced AML law in 2018;

• Defense and military. This sector is reserved for state-owned entities only. Due to national security concerns, the UAE has not liberated this sector to include operations by private sector entities;

• Media. New laws have been introduced to regulate Media (as a practice) and the content that is circulated through traditional media outlets and through social media, with a significant focus on anti-discrimination initiatives, and zero tolerance towards defamation, or spreading rumors and content that harms the UAE’s position and image;

• Telecom. A duopoly exists with only two companies dominating the telecom market in the UAE (Du and Etisalat). Restrictions exist on transfer of data and the use of Voice over IP services. This sector prioritizes revenue generation and surveillance for the government.

 9. Which branches of law/economy are most prone to turbulence, where are the most frequent legislative changes and how do they affect business?

Rapid economic diversification in the UAE leads to certain sectors being prone to frequent legislative changes: 

• Taxation. The most recent introduction of the Corporate Tax law in 2022 has a significant impact on businesses, requiring them to hire or engage with tax advisors to ensure their compliance and proper reporting;

• Employment. New work visas and regulations have been introduced to meet the labour market demands. In addition, the UAE’s commitment to implement the Emiratization policy pose a major impact on mainland businesses, which need to meet these quota requirements or face penalties;

• Fintech. Regulation of cryptocurrency is evolving rapidly,with the introduction of Virtual Assets regulations and establishment of local authorities such as VARA in Dubai;

• Data Privacy and Cybersecurity. The constant advancement of technology and introduction of AI into many business models lead to a continuous update of the regulatory framework governing data privacy and cybersecurity. Businesses collecting private or personal data from customers are required to be more agile and vigilant in maintaining and implementing proper and effective data privacy policies. In addition, the PDPL imposes a regulation on businesses to hire a Data Privacy Officer.

 10. What global legislative changes have occurred recently and how have they affected the business climate in the country? 

 Recent global changes have significantly impacted businesses in the UAE: 

• Global Minimum Tax (OECD Pillar Two). The OECD has introduced a 15% global minimum tax (Pillar Two) targeting multinationals (revenues ≥ €750M);

• International Sanctions and AML. The intensified international sanctions on certain countries (like Russia, Iran, etc.) by the USA and certain European countries pose challenge and risks on the UAE (a trade hub) to be more vigilant in compliance issues. Nonetheless, the UAE has been recently removed off the FATF’s gray list – which will promote stricter AML laws and compliance requirements in key sectors (real estate, banking and financial, etc.);

• Sustainability and ESG. The UAE – post COP28 – now mandates listed companies with ESG disclosures and reporting.

 11. What legislative changes are planned in the short term? What impact will the changes have on the situation of foreign businesses? How positive/negative will these changes be for foreign business? 

A major development is the introduction of a 15% minimum top-up tax on large multinational companies, effective January 2025. This tax applies to companies with consolidated global revenues of €750 million or more in at least two of the four financial years preceding the tax's implementation. This measure aligns the UAE with the OECD's global minimum corporate tax agreement, ensuring that large multinationals contribute a fair share of taxes. While this increases the tax burden on qualifying companies, it also enhances the UAE's reputation for fiscal responsibility and transparency, potentially attracting more foreign investment.

Additionally, Abu Dhabi has established the Abu Dhabi Registration Authority (ADRA) to centralize business registration processes. This initiative aims to simplify business operations, attract foreign investment, and support local businesses by streamlining administrative procedures. By reducing bureaucratic hurdles, this measure is expected to make it easier for foreign businesses to establish and expand their operations in Abu Dhabi. 

 Furthermore, the UAE is actively mapping air corridors for air taxis and cargo drones, with plans to integrate advanced air mobility into the nation's infrastructure. This initiative, in collaboration with Abu Dhabi's Technology Innovation Institute (TII) and the research and development organization ASPIRE, is expected to be finalized within the next 20 months, with air taxis anticipated to launch in 2026. This development presents new opportunities for foreign businesses in the aviation and logistics sectors.

12. How is the payment system of the state organized? What opportunities do foreign businesses have in organizing financial flows? What restrictions are imposed on foreign businesses when organizing payments? 

The UAE has a modern, well-regulated payment system supported by the Central Bank of the UAE (CBUAE), integrating both conventional and Islamic finance.

It operates real-time gross settlement (RTGS) systems, digital payment networks (e.g. UAEFTS, ICCS, UAEPASS), and promotes fintech adoption through regulatory sandboxes.

Foreign businesses can freely open corporate bank accounts, manage multi-currency flows, and repatriate capital and profits without restriction. Free zone companies can hold accounts both inside and outside the UAE, and cross-border transactions are generally permitted.

 However, due to enhanced AML/CFT compliance following FATF scrutiny, banks apply strict KYC procedures, especially for high-risk jurisdictions or complex structures. This can cause delays in account opening and increased documentation requirements. Additionally, transactions involving sanctioned entities or jurisdictions (e.g. Russia, Iran) may be restricted or blocked.

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About the firm

 

Habib Al Mulla and Partners is a leading UAE law firm recognized for its legal excellence and deep expertise in the region. Established in 1984 and led by Dr. Habib Al Mulla, the firm provides comprehensive legal services across Dubai, Abu Dhabi, and Istanbul. With a client-centered and proactive approach, Habib Al Mulla and Partners delivers tailored solutions to meet the complex needs of local and international clients, making it a trusted name in the MENA region.

ABU DHABI	+971 4 423 0000
DUBAI	+971 2 6766003

HABIBALMULLA.COM

 

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Foreign investment

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1. What are the rules regulating the activities of foreign investors in the country?
2. What specific features of legal regulation should be paid attention to when planning investment projects?
3. What guarantees exist to protect foreign investments in your country? How can investors insure their risks?
4. What benefits and preferences exist for foreign investors in your country?
5. Are there any restrictions on the activities of foreign investors? In which business sectors are the greatest number of restrictions, and what are they?
6. Please name the most common models of structuring foreign investments (e.g. through free economic zones, involvement of commercial agents, others?)
7. Are there opportunities for foreign investors to enter into projects with state participation? In public-private partnership projects? How are relations with foreign investors structured when implementing such projects?
8. What risks and pitfalls should foreign investors consider when implementing projects in the country? What should they pay special attention to? In your opinion, name the key points.

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1. What are the rules regulating the activities of foreign investors in the country?

On 23 November 2020, the UAE announced amendments to Federal Law No. 2 of 2015 on Commercial Companies, introducing significant changes, including the abolition of the requirement to have 51% local ownership in UAE-mainland companies (i.e., non-free zone companies). This change allowed 100% foreign ownership of such companies, subject to the discretion of governmental authorities at the “emirate” level (the UAE is a federation of 7 individual emirates). The November 2020 changes signalled a major shift in the UAE’s approach to foreign investment.

Despite the November 2020 reforms, certain regulated activities – including banking, payment services, and insurance – still require foreign investors to involve a local shareholder. For instance, under Federal Law No. 6 of 2007 on the Establishment of the Insurance Authority and Regulation of Insurance Operations, insurance companies must have at least 51% of cumulative shareholding, directly or indirectly, held by UAE nationals. Similarly, UAE Central Bank regulations impose a 60% UAE national shareholding (direct or indirect) requirement on banks.

2. What specific features of legal regulation should be paid attention to when planning investment projects?

The choice of company structure in the UAE depends on the type of business activity and whether operations are to be conducted inside or outside the country. For example, importing and selling goods within the UAE requires a mainland company, whereas selling crude oil abroad is best suited for a free zone entity. 

The company registration process in the UAE is generally straightforward, though requirements vary between mainland and free zone jurisdictions – both on an emirate-by-emirate level
and among free zones within a particular emirate. Whether mainland or free zone, companies are generally required to have one or more licenses (commonly referred to as “trade license”
or “service license”, depending on whether the company is engaged in trade or provides services). Companies wishing to operate in multiple sectors may obtain multiple licenses
to reflect the scope of their commercial activities, generally provided that the activities are not too dissimilar.

Mainland company registration involves multiple steps, including selecting a business activity (or activities), choosing a legal structure (e.g., LLC or branch), registering a trade name, obtaining initial approval, notarizing corporate documents, securing a business location, and obtaining sector-specific approvals if required. Additional requirements may include registration with the Chamber of Commerce and the Ministry of Human Resources and Emiratisation (MOHRE) for labor law compliance. Please note that the UAE is not a member of the Apostille Convention, and the authentication of corporate and other documents from outside the UAE for use in the UAE (either with mainland authorities or with free zone authorities) can be a time-consuming process due to the various steps involved. 

The steps are as follows:

• A document must be notarized by a licensed notary in the Russian Federation;

• Following notarization, a document must be attested by the UAE Embassy in the Russian Federation;

• A document must then be physically delivered to the UAE and submitted to the UAE Ministry of Foreign Affairs (MOFA) for final attestation;

• Depending on the nature of the document, additional attestation by the UAE Ministry of Justice (MOJ) may also be required to complete the legalization process.

Additionally, certain business sectors may require certain special approvals – for example, establishing an oil and gas sector company, that would be operate in the UAE, would traditionally require the specific approval of the UAE Supreme Petroleum Council. In December 2020 the Supreme Petroleum Council was subsumed under the new Supreme Council for Financial and Economic Affairs.

Free zone company registration is typically more streamlined and slightly more intuitive to foreign investors. Investors must choose a business activity (or activities), a legal structure (e.g., FZE or FZ-LLC), register a trade name, lease office space (if required), and obtain approval from the Free Zone Authority. Unlike mainland companies, free zone entities are not subject to MOHRE regulations. However, they face certain bankability and trading restrictions, e.g., when trading directly with mainland businesses.

Investing in the UAE requires compliance with key legal frameworks: 

• Federal Law No. 36 of 2021 (Trademark Law); 

• Federal Law No. 31 of 2006 (Patent Law); 

• Federal Law No. 20 of 2018 (AML Law) and Cabinet Decision No. 74 of 2020; 

• Federal Decree-Law No. 47 of 2022 (Tax Law);

• Federal Decree-Law No. 8 of 2017 (VAT Law);

• Cabinet Decision No. 57 of 2020 (Economic Substance Regulations); 

• Dubai Law No. 7 of 2006 (Real Estate Law); 

• Dubai Law No. 4 of 2022 (VARA Law); 

• Federal Law No. 4 of 2015 (Health Regulation Law). 

3. What guarantees exist to protect foreign investments in your country? How can investors insure their risks? 

The UAE protects foreign investments by ensuring the rule of law, providing legal protection against expropriation, offering dispute resolution mechanisms through arbitration and specialized courts, and maintaining bilateral investment treaties (BITs) with numerous countries to safeguard investments (link).

The UAE has entered into over a hundred of BITs, including with BRICS members – Brazil, Russia, India, and China – that guarantee fair and equitable treatment, protection against unlawful expropriation, the right to freely transfer capital, and access to international arbitration in case of disputes with the state (link). 

The UAE has ratified BITs with several BRICS countries, aiming to foster economic cooperation and protect investments: 

• The UAE-Brazil BIT was signed in 2019 and ratified in 2021, covering investor protection and dispute resolution; 

• The UAE-Russia BIT, signed in 2010, ensures legal safeguards for Russian investors; 

• The UAE-India BIT, signed in 2013, was later terminated by India in 2017; a new BIT with India was signed in 2024; 

• The UAE-China BIT, signed in 1993, offers strong investment protections and is complemented by China’s involvement in the Belt and Road Initiative (BRI) in the UAE. 

However, there is currently no BIT between the UAE and South Africa, meaning that such investments are governed by domestic legal frameworks and multilateral agreements.

When dealing with investments from BRICS countries in the UAE, the enforcement of foreign court judgments and arbitral awards plays a crucial role in ensuring investor protection and dispute resolution. 

While the UAE’s BITs with BRICS nations provide guarantees such as fair and equitable treatment, protection from expropriation, and access to arbitration, their practical impact depends on whether court judgments and arbitral awards from these countries can be recognized and enforced in the UAE – and vice versa.

Importantly, unlike the case with India's Reciprocating Territory Declaration (2020), which facilitates the enforcement of judgments between India and the UAE; China, which has adopted the Hague Convention (2005); and bilateral agreements with countries such as France (1992); there is no bilateral treaty between the UAE and Russia specifically governing the recognition and enforcement of court judgments. 

This means Russian judgments must be enforced under UAE domestic law or based on reciprocity (favoris recognitionis). In the absence of a treaty, Federal Decree-Law No. 42/2022 (Civil Procedure Law) governs the enforcement process. Its Articles 222–225 establish the conditions for enforcement in the UAE, including:

• The issuing foreign court must have jurisdiction under its own laws;

• The judgment must align with the laws of the issuing country and UAE public policy;

• The judgment must be final and binding, with no conflicting UAE court decisions; and

• Reciprocity is implicitly required, meaning UAE judgments must also be enforceable in a foreign jurisdiction.

This framework provides clarity and helps ensure that judgments are executed effectively, even in the absence of a treaty.

As for arbitral awards, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) plays a significant role in protecting foreign investments
in the UAE. As a signatory to the New York Convention, the UAE is committed to the recognition and enforcement of foreign arbitral awards. 

This means that if a foreign investor initiates a dispute with the UAE or a UAE entity, and the dispute is resolved through arbitration in a foreign jurisdiction, the resulting arbitral award can be enforced within the UAE. Recognition and ratification of the New York Convention facilitates dispute resolution among international businesses within the global market, and ultimately encourages and attracts foreign investment into the UAE. 

In addition, to further mitigate investment risks, foreign investors can obtain insurance from export credit agencies of BRICS countries, which cover risks such as breach of contract. The five export credit agencies of BRICS countries, namely the ABGF (Brazilian Fund and Guarantee Management Agency), EXIAR (Export Insurance Agency of Russia), ECGC (Export Credit Guarantee Corporation of India Ltd), SINOSURE (China Export & Credit Insurance Corporation), and ECIC (Export Credit Insurance Corporation of South Africa Ltd), are all state‐owned agencies and members of the Berne Union (Association of International Union of Credit & Investment Insurers) (link).

4. What benefits and preferences exist for foreign investors in your country?

The UAE offers one of the most investor-friendly tax environments globally, with no tax on personal income or capital gains. 

This makes it an attractive destination for high-net-worth individuals and corporations. Businesses earning more than AED 375,000 annually are subject to a 9% corporate tax under Federal Decree-Law No. 47 of 2022 (the Tax Law), one of the lowest rates in the world. The 5% Value-Added Tax (VAT), introduced under Federal Decree-Law No. 8 of 2017 (VAT Law), also remains significantly lower than in many global economies. Additionally, the current withholding tax in the UAE is set at 0%. 

Foreign investors benefit from full repatriation of capital, profits, and dividends, with no material foreign exchange restrictions under UAE Central Bank regulations. The UAE dirham (AED) is pegged to the US dollar (USD) at a fixed exchange rate (USD 1 to AED 3.6725 since 1997), ensuring currency stability and reducing foreign exchange risk. The absence of capital controls further enables BRICS investors to freely transfer funds internationally, making the UAE a reliable financial hub for cross-border transactions and investments.

The UAE hosts world-class exhibitions and trade fairs, creating an ideal platform for BRICS investors to build connections and explore market opportunities. Events such as GITEX (technology and fintech), Gulfood (food and beverage trade), IDEX (defence articles) and ADIPEC (oil and gas) attract key players from BRICS economies. For example, Brazilian agribusinesses benefit from Gulfood’s global reach, while Russian energy firms use ADIPEC to expand their oil and gas interests in the Middle East. These networking opportunities provide direct access to potential partners, suppliers, and government stakeholders, facilitating easier integration into the UAE’s thriving economy.

The UAE has over 40 free zones, offering additional tax exemptions, customs incentives, and industry-specific benefits for foreign investors. Key zones include: 

• Dubai International Financial Centre (DIFC) – a hub for fintech and finance activities; 

• Abu Dhabi Global Market (ADGM) – a leading financial free zone recognized for banking and asset management; 

• Jebel Ali Free Zone (JAFZA) – the UAE’s oldest free zone and the largest logistics hub in the Middle East; 

• Dubai Multi Commodities Centre (DMCC) – which facilitates gold, diamond, and tea trade with Russian and Indian businesses. 

These zones operate under special regulatory frameworks, providing ease of business setup and operations for international investors.

5. Are there any restrictions on the activities of foreign investors? In which business sectors are the greatest number of restrictions, and what are they?

Generally, there are no specific requirements or restrictions based on the nationality of the investor in the UAE. In 2021, the UAE Commercial Companies Law (CCL) was amended to waive the traditional requirement of 51% local ownership for UAE-mainland companies (i.e., non-free zone companies), allowing, in practice, 100% foreign ownership of such companies, subject to certain emirate-level restrictions. 

However, some sectors still require 51% or greater direct or indirect ownership by UAE nationals:

• Security and defense activities – 51% Emirati ownership;

• Telecommunications – 51% Emirati ownership;

• Local banks – 60% Emirati ownership;

• Exchange houses – 51% Emirati ownership;

• Financial institutions – 51% Emirati ownership;

• Insurance companies – 51% Emirati ownership;

• Legal advocacy firms – 100% Emirati ownership (foreign lawyers may only operate legal consultancy firms);

• Oil and gas (certain sub-sectors, joint ventures with the Abu Dhabi National Oil Company) – 60% Emirati ownership.

Additionally, activities related to fisheries remain 100% exclusive for UAE nationals. 

These ownership requirements ensure that critical industries remain aligned with UAE national interests, while still allowing foreign investment in non-restricted sectors (link).

6. Please name the most common models of structuring foreign investments (e.g. through free economic zones, involvement of commercial agents, others?)

Foreign investors in the UAE have several models to structure their investments, each offering distinct advantages and considerations. The most common structures include:

• Offshore “holding companies” 

These are typically established in free zone jurisdictions such as the Abu Dhabi Global Market (ADGM), the Jebel Ali Free Zone (JAFZA), or the Ras Al Khaimah International Corporate Centre (RAK ICC). Such entities are primarily used for asset holding, investment management, and facilitating cross-border operations without engaging in active business within the UAE. They offer benefits like tax neutrality, asset protection, and a high degree of confidentiality – especially with regard to ultimate beneficial ownership. However, they are generally restricted from conducting business with the UAE mainland and can face additional scrutiny or hurdles when opening bank accounts within the UAE.

• Foundations

Foundations, particularly those established in the Dubai International Financial Centre (DIFC) or Abu Dhabi Global Market (ADGM), are used for wealth management, asset protection,
and succession planning. They provide a legal framework for managing family wealth and philanthropic endeavours, offering a blend of corporate and trust structures. 

• Mainland companies

Mainland companies are registered with the Department of Economic Development (DED) of the respective emirate and are permitted (unlike free zone companies without a dual license or a branch or a distributor in the UAE mainland) to operate throughout the UAE.

• Free zone companies

Free zones are designated areas that have traditionally offered 100% foreign ownership (e.g., before such was permissible for mainland companies) and are governed by their own regulatory authorities. Companies established in free zones can benefit from additional or specific tax exemptions and can easily repatriate profits. Historically, free zone companies were restricted from conducting business directly with the UAE mainland. However, recent legal developments have eased these restrictions, allowing free zone entities to engage with mainland businesses under certain conditions, such as appointing a local agent or distributor, obtaining a dual license, and/or establishing a mainland branch.

The UAE's corporate tax landscape has evolved in recent years, with a standard corporate tax rate of 9% introduced for certain entities. Companies in specific free zones that meet relevant criteria can benefit from a 0% tax rate on qualifying income. It is essential for investors to assess their business activities against these criteria to determine their tax benefit eligibility.

7. Are there opportunities for foreign investors to enter into projects with state participation? In public-private partnership projects? How are relations with foreign investors structured when implementing such projects?

Foreign investors have opportunities to participate in projects involving state participation in the UAE, primarily through joint ventures and public-private partnerships (PPPs). 

The UAE government often acts through sovereign-backed investment funds to facilitate and manage large-scale investment projects. These funds include the Mubadala Investment Company,
the Abu Dhabi Investment Authority (ADIA), and the Investment Corporation of Dubai (ICD). For investors from BRICS nations, these sovereign funds provide a strategic platform for collaboration, enabling access to key sectors such as energy, technology, and finance.

For example, Mubadala has previously partnered with global firms from Russia and China in sectors such as energy, telecommunications, and real estate. Such partnerships allow foreign investors to leverage the UAE’s extensive networks and resources, providing a competitive advantage in regional and global markets (link). Furthermore, the UAE’s geopolitical alignment (maintaining strong relationships simultaneously with many of the world’s great powers) means that collaboration with federal and emirate-level entities can be surprisingly free of geopolitical concerns / tensions.

The UAE also offers structured frameworks for public-private partnerships (PPPs) to encourage private sector involvement in infrastructure and service delivery projects. Dubai Law No. 22
of 2015 (Dubai Public-Private Partnerships Law) provides a legal foundation for government entities in Dubai to engage in partnership contracts with private investors, aiming to improve public services and infrastructure (link).

At the federal level, Federal Decree-Law No. 12 of 2023 (Federal Public-Private Partnerships Law) expands the scope of PPPs across the UAE. This law regulates projects between federal public entities and the private sector, ensuring structured governance and transparency in state-private collaborations (link). Recent legislation follows in the footsteps of PPPs initiated in the UAE decades ago; the Abu Dhabi Water & Electricity Authority (since subsumed under the Abu Dhabi National Energy Company / TAQA) pioneered the collaboration between public and private sectors for the finance, construction, operation and maintenance of big-ticket infrastructure assets –  initially power generation and water desalination – more than two decades ago. The “Abu Dhabi template” for collaboration has since been emulated in many countries across the Middle East, Africa, and beyond.

Whether in collaboration between a foreign investor and a state-owned entity, or with a purely private sector UAE entity, an “incorporated joint venture” (JV) is a common model for structuring such investments (as opposed to an “unincorporated joint venture”, where the rights and obligations of the participating parties are set out in a JV contract). For high-value incorporated JVs, it is advisable to establish the JV entity within a financial free zone such as the Dubai International Financial Centre (DIFC) or the Abu Dhabi Global Market (ADGM), which operate under legal systems modelled on English law. These systems allow for the interpretation of shareholder rights and obligations of the JV’s shareholders to be interpreted under internationally recognized legal frameworks, and help ensure more predictable outcomes for disputes.

Such structuring is particularly beneficial when enforcing rights and obligations related to an exit event, such as put and call options, given that UAE courts rarely grant specific performance
for such concepts in commercial disputes. Establishing an incorporated JV within a free zone with a common law-based legal system can significantly enhance investor protection and dispute resolution efficiency – and can help produce results consistent with foreign investor expectations.

8. What risks and pitfalls should foreign investors consider when implementing projects in the country? What should they pay special attention to? In your opinion, name the key points.

A significant early hurdle in setting up a business in the UAE is opening a corporate bank account. The UAE is a jurisdiction where corporate bank account opening can be complex, even after a company has been established. To open an account, the company must have a physical office space, either leased or owned. However, it is possible to lease a flexi / shared desk (i.e., a table in a business centre) as an alternative. Once the corporate bank account is successfully opened, the company must appoint an individual as the authorized signatory. This individual must hold a valid UAE residence visa and an Emirates ID (a form of identification that confirms the holder has a UAE residence visa).

Another critical consideration is compliance with UAE banking regulations and international sanctions. Investors from, or dealing with, jurisdictions subject to international sanctions must ensure strict adherence to these regulations. Failure to comply can result in serious consequences, such as the freezing of funds, rejection of bank account applications, or even criminal liability under anti-money laundering (AML) laws.

Economic substance is another key factor to consider. In the UAE, businesses must demonstrate a real and meaningful presence in the country to qualify for certain tax exemptions and regulatory benefits. To meet the economic substance requirements, a company must submit an annual Economic Substance Report to the relevant registrar, proving that it conducts core income-generating activities in the UAE. These activities must be directed and managed from within the UAE, and the company must employ a sufficient number of staff and maintain an appropriate physical presence.

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About the firm

ADG Legal is a distinguished full-service law firm headquartered in Dubai. Known for combining international legal expertise with a strong understanding of local markets, the firm provides high-quality legal services through a team of seasoned professionals across the region. With offices in Dubai, Abu Dhabi (ADGM) and a representative office in London, ADG Legal serves a broad client base, offering seamless, cross-border solutions. Supported by a bespoke network of leading legal professionals worldwide, the firm is well-equipped to deliver exceptional service, meeting the complex needs of businesses and individuals both locally and internationally.

ABU DHABI	+971 4 441 2031
DUBAI	+971 2 565 0010

ADGLEGAL.COM

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Judicial system

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1. General organization of the judicial system; How are cases involving foreign companies handled in court in practice?
2. Is there a special procedure for consideration of cases involving foreign companies?
3. What trends/ specifics of the judicial system should a foreign company/foreign businessman take into account when applying to court?
4. Please name the most striking cases or precedents involving foreigners that have influenced judicial practice?
5. Is there a need to engage local lawyers for judicial defense of foreigners in local courts?
6. What are the time limits for consideration of cases? Are there any cases of delaying cases?
7. How is the choice of jurisdiction for judicial defense made? Is it possible to apply for judicial protection in the courts of the country of origin of the foreign company?
8. Is it possible to enforce a foreign judgment in a court of local jurisdiction? What are the special features of enforcement of foreign judgments? Does the principle of reciprocity apply or is it obligatory to have an agreement between countries on the enforcement of court decisions?
9. How are commercial disputes involving a foreign company defended? What arbitration centers exist in the country? Are there any opportunities to obtain protection in international arbitration?

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1. General organization of the judicial system; How are cases involving foreign companies handled in court in practice?

The UAE is a civil law jurisdiction. Its judicial system is a combination of onshore and offshore court systems. 

The UAE onshore courts consist of four levels of federal and local courts: the Court of First Instance; the Court of Appeal; the Court of Cassation, and the Federal Supreme Court. All court proceedings in the state courts are conducted in Arabic.

In addition to the federal and local courts, the Dubai International Financial Centre (DIFC), a financial free zone based in Dubai, and the Abu Dhabi Global Market (ADGM), the financial free zone in Abu Dhabi, have their own courts, which are modelled on the English judicial system. These are common law courts where proceedings are conducted in English. 

In both court systems foreign parties have equal procedural rights to local parties.

2. Is there a special procedure for consideration of cases involving foreign companies?

The law does not imply special regulation concerning the adjudication of disputes involving foreign parties. 

However, the issue of service of the statement of a claim and other procedural documents is of particular importance for the courts when foreign parties are involved.

Service is governed by UAE Cabinet Resolution No. (57) of 2018, which amended the Civil Procedure Code. 

If the foreign party has any presence in the UAE, such party may, subject to the court’s discretion, be served by the court bailiff or process server, by the claimant or their attorney, or by a private company.

If the defendant has no domicile, address, fax number, email, or other identifiable details, the court may order service by posting notice on its notice board, or by affixing the papers to the defendant's last known address. Failing this, as a last resort, the court may order service by publication in local newspapers.

A claimant may also seek permission to serve the party abroad. This requires the involvement of the UAE Ministry of Justice, the UAE Ministry of Foreign Affairs and/or other diplomatic channels via the UAE embassy abroad – unless service is carried out under other specific agreements or treaties. Since the UAE is not a signatory to the Hague Service Convention, service of process abroad is effected through diplomatic channels, unless otherwise agreed by the parties under Article 9 of the amendment to the Civil Procedure Code, as contained in UAE Federal Law No. 10 of 2014.

3. What trends/ specifics of the judicial system should a foreign company/foreign businessman take into account when applying to court?

Although foreign parties receive equal treatment in legal proceedings, there are nuances they should consider before initiating a claim in UAE courts.

First, it is very common for the court to appoint an expert in the proceedings. Under the procedural law, court-appointed experts are required when a case involves knowledge of technical aspects of a financial transaction, construction or intellectual property issues, or forensic accounting. A recent trend, however, is the involvement of an expert in cases that appear to be purely legal in nature. Once appointed, the expert becomes the central figure in the proceedings, and the final decision is mostly based on the expert’s conclusions.

Second, a foreign party should take into account that the UAE is not a signatory to the 1961 Hague convention implementing the Apostille certifications. As a result, any documents issued abroad would need to go through a complicated process of attestation of the documents – first in the country of origin and then in the UAE – before they can be submitted to the courts. The whole process may take up to 30 business days.

Third, in case of a potential conflict of jurisdiction between the local courts and the DIFC Courts, any party may refer the matter to the special judicial authority – the Conflict of Jurisdiction Tribunal. This additional stage may delay the proceedings and lead to the increase of the fees. 

4. Please name the most striking cases or precedents involving foreigners that have influenced judicial practice?

Given the growing popularity of the UAE as an international investment hub, every third commercial dispute considered by the onshore or offshore courts somehow involves an international aspect. Below are some of the most important precedents affecting jurisprudence.

Carmon Reestrutura-engenharia E Serviços Técnicos Especiais, (Su) LDA v Antonio Joao Catete Lopes Cuenda CA 003/2024

On 26 November 2024, the DIFC Court of Appeal handed down its judgment in this case,  granting the application for a worldwide freezing order ("WFO") against the respondent in support of the proceedings in Hong Kong. The significance of this precedent is undisputed – the DIFC courts extended their jurisdiction over the assets located far beyond the geographical boundaries of the free zone. 

693/2015 Commercial Appeal

This case helpfully clarified at the highest level that a company’s capacity to enter into an arbitration agreement is not limited to its director, but can also extend to its employees, agents, or brokers, as long as it is in compliance with the laws of the arbitration seat (where the arbitration proceedings take place). Even if a signatory was not authorised under UAE law, the court held that authority under foreign law (i.e., the law of the seat) may suffice. The Court interpreted the phrase “the law applicable to them” in article V(1)(a) of the New York Convention as referring to the law governing the arbitration proceedings (i.e. the law of the seat) rather than the law of incorporation of each party. This judgment  demonstrates the Dubai Courts’ supportive attitude towards the enforcement of foreign arbitral awards and reinforces the UAE’s reputation as a pro-arbitration jurisdiction.

DNB Bank ASA v Gulf Eyadah Corporation and Gulf Navigation Holdings PJSC (CA 007/2015)

The approach of conduit jurisdiction was formed in consideration of this case. The DIFC Courts established the path for recognition and enforcement of foreign judgments. The DIFC Courts confirmed their authority to recognize and enforce foreign judgments and then refer the resulting judgments of the DIFC Courts to the onshore Dubai Courts for execution.

TIG v. El Fadil

The DIFC Court of Appeal clarified that English (or other common law) principles and doctrines cannot be automatically imported into DIFC law. If DIFC law is silent on an issue, that lacuna cannot automatically be filled by simply applying foreign jurisdiction’s principles. 

Case No. 339 of 2023

The Dubai Court of Cassation considered whether a foreign judgment could be enforced in the UAE when the defendant resided in the country. Historically, the courts held that if UAE courts had jurisdiction – even if not exclusive – they could refuse enforcement. However, the Court ruled that only exclusive jurisdiction would bar enforcement of a foreign judgment. Referring to Article 85 of Cabinet Resolution No. 57 of 2018 (Implementing Regulations), the Court confirmed that the mere existence of jurisdiction is not enough to deny enforcement; what matters is whether that jurisdiction is exclusive. Since the UAE courts did not have exclusive jurisdiction, enforcement of the Polish judgment was allowed.

Neal v Nadir [2024] DIFC CA 001

On 22 March 2024, the highest court of the DIFC rejected an appeal and held that a provisional award issued by a foreign-seated tribunal providing for interim measures could be enforced as an “award” in the DIFC. The DIFC Court's decision is significant for users of international arbitration in the region. It is encouraging to see the DIFC Court take this view on the interpretation on the term “award”, avoiding an unduly technical distinction and thereby respecting the order of a foreign-seated arbitral tribunal. 

Case No. 756 of 2024 (Commercial)

In this case the Dubai Court of Cassation overturned its previous stance on the recoverability of legal costs following ICC arbitration. The Court  had previously held that such costs were unrecoverable under the UAE law unless expressly permitted in the underlying arbitration agreement. 

Importantly, the Court recognized that Article 38(1) of the ICC Rules provides an "express and clear" stipulation for the recovery of legal costs by a successful party. Consequently, any party agreeing to arbitrate under the ICC Rules has, therefore, expressly accepted the recoverability of legal costs.

5. Is there a need to engage local lawyers for judicial defense of foreigners in local courts?

Only UAE national lawyers holding a valid license are allowed to appear before the UAE courts. The court accepts the authorization of attorneys in accordance with the provisions of the law. The representative must prove his appointment through an official power of attorney attested by a notary public.

If the case is to be considered by the DIFC Courts, any party – irrespective of residency status – may be represented by lawyers registered under:

• Part I, for Law firms to issue and conduct proceedings before the DIFC Courts; and 

• Part II, for individual legal practitioners to obtain Rights of Audience before the DIFC Courts.

ADGM Court regulations do not prescribe nationality requirements for legal representatives. 

6. What are the time limits for consideration of cases? Are there any cases of delaying cases? 

There are no prescribed timeframes for the courts to adjudicate the cases. The duration of proceedings is influenced by several factors, including: 

• The complexity of the subject matter;

• The number of the parties involved; 

• Whether the dispute includes complex technical aspects requiring expert opinion; 

• The number of court hearings.

Notwithstanding these factors, a typical straightforward case before the Court of First Instance may last between 8 to 15 months from case registration to the conclusion of proceedings.

The arbitration proceedings administered by the UAE arbitration institutions do not significantly vary from the other international arbitration centres in respect of the duration of the proceedings. A recent amendment to DIAC procedural rules provides an option for expedited proceedings. The tribunal restricts the evidence filed and must issue an award within three months from the file being transferred from the DIAC Centre to the tribunal.

The DIFC courts do not conduct expedited procedures. If the defendant fails to appear, a claimant may seek a default judgment, which is issued within two months. A party may also apply for immediate judgment. However, the threshold is very high. The court may issue an immediate judgment if it is satisfied with the evidence showing (i) that either the claimant has no real prospect of succeeding on the claim or that the defendant has no real prospect of successfully defending the claim and (ii) that there are no reasons to hold a hearing on the matter. It usually takes around three months for the Court to decide.

7. How is the choice of jurisdiction for judicial defense made? Is it possible to apply for judicial protection in the courts of the country of origin of the foreign company?

State courts in the UAE have broad jurisdiction over cases involving foreign parties.
Thus, the state court will have jurisdiction over a foreign party if:

• The party has an elected domicile in the UAE;

• The action is related to real estate in the UAE, a national's heritage, or an estate opened therein;

• The action relates to an obligation that arose, was performed or was required to be performed in the UAE; to a contract required to be authenticated in the UAE; to an incident that occurred in the UAE; to a bankruptcy declared by a UAE Court;

• The action is brought by a wife domiciled in the UAE against a husband who used to have a domicile in the UAE;

• The action concerns an alimony of a parent, wife, interdicted person, minor, next of kin, or guardianship of a person or property, in case that the claimant of the alimony, wife, minor, or the interdicted person has a residence in the UAE;

• The action involves personal status matters, and the plaintiff is either a UAE national, or a foreigner domiciled in the UAE, where the defendant has no known foreign domicile, or UAE law applies to the dispute;

• One of the defendants has a domicile or residence in the UAE.

Generally, parties may challenge the jurisdiction of a particular court or tribunal on various grounds, including the invalidity of a jurisdiction clause or the exclusive jurisdiction of a foreign court. However, it is crucial to challenge the jurisdiction before taking any procedural steps in the case, so that there is no acknowledgement in the case file that the party accepts the jurisdiction. 

There is general freedom of contract in the UAE, including the right of contracting parties to choose the governing law of their contracts. However, UAE courts will exclusively apply UAE law over the matters concerning real property located in the UAE, security over UAE-based assets, labour matters, and the structuring of UAE entities.

In case the UAE court wrongly admits the claim, the foreign party may apply for an anti-suit injunction in the country of its origin. The conditions to be met are determined by the law of the country where the party seeks such relief.

8. Is it possible to enforce a foreign judgment in a court of local jurisdiction? What are the special features of enforcement of foreign judgments? Does the principle of reciprocity apply or is it obligatory to have an agreement between countries on the enforcement of court decisions?

A creditor seeking to enforce a foreign judgment in the UAE has two options: the application may be filed before the Execution Judge in the Court of First Instance, or alternatively, a creditor may bring an application before the DIFC Courts or the ADGM Courts. 

If a creditor explores the first option and files the petition before the state court, Civil Procedure law will apply. The petition is considered within 5 working days and can be granted if certain conditions are fulfilled. 

First, the Execution Judge must be satisfied that there is reciprocity between the foreign state that issued the judgment and the UAE with respect to the enforcement of foreign judgments.

Second, the Execution Judge verifies the following criteria while considering the application:

• The Courts of the UAE do not have exclusive jurisdiction over the dispute on which the judgment or order has been issued, and the foreign Court that issued the judgment had jurisdiction according to the rules of international jurisdiction prescribed in its law;

• The judgment or order has been issued by a Court in accordance with the law of the state in which it was issued and duly certified;

• The parties to the lawsuit on which the foreign judgment is issued were duly summoned and properly represented;

• The judgment or order has acquired the legal effect of res judicata according to the law of the issuing Court, provided that a certificate is furnished indicating that the judgment has acquired such effect, or where this is already stated in the judgment itself; and

• The judgment neither conflicts with a judgment or an order previously issued by a Court of the UAE, nor involves anything that violates public order or morality.

Accordingly, the onshore UAE Courts may ratify final orders or judgments of a foreign court, including orders by way of summary judgment. However, in practice, the requirement of reciprocity in UAE law for the recognition of foreign judgments often gives rise to insuperable difficulty. In particular, there are often challenges in demonstrating to the satisfaction of the onshore UAE Courts that an equivalent UAE judgment would be enforced in the foreign jurisdiction.

The principle of reciprocity is not at stake if the foreign judgment is issued by a state that is a party either to an international treaty or to a bilateral treaty with the UAE on mutual assistance in legal matters. 

The UAE is a party to two principal multilateral treaties relating to the enforcement of foreign judgments, namely:

• The 1983 Riyadh Arab Convention for Judicial Co-operation; and 

• The 1996 Gulf Co-operation Council (GCC) Convention for the Execution of Judgments, Delegations and Judicial Notifications.

The UAE is also a party to several bilateral treaties covering the enforcement of foreign judgments, such as:

• The 1992 Convention on Judicial Assistance, Recognition and Enforcement of Judgments in Civil and Commercial matters signed between France and the UAE;

• The 2004 Convention on Judicial Assistance in Civil and Commercial Matters between the United Arab Emirates and the People’s Republic of China; 

• The 2009 Agreement between the Republic of Kazakhstan and the United Arab Emirates on Judicial Assistance in Civil and Commercial Matters; and 

• The 2020 Declaration by the Indian Ministry of Law and Justice recognizing the UAE as a reciprocating territory for the enforcement of foreign judgments.

If the application for enforcement of the foreign judgment is filed before the DIFC Courts, the judge will apply general common law principles for the recognition and enforcement of foreign judgments and will not require proof of reciprocity between the foreign court and the DIFC Courts. The DIFC Courts have jurisdiction to ratify any judgment of a foreign court pursuant to Article 24 of the DIFC Court Law. For the judgment or order to be recognized, it must be final within the meaning of common law rules.

The ADGM Courts apply a combined approach if an application for recognition and enforcement is filed. The procedure itself is similar to that exercised by the DIFC Courts. However, the application may be allowed only if the UAE has entered into an applicable treaty with the country in which the foreign award was rendered. In the absence of such a treaty, recognition and enforcement are possible only if the Chief Justice of the ADGM Courts is satisfied that the foreign courts which rendered the judgment agree to provide reciprocal treatment for ADGM judgments.

9. How are commercial disputes involving a foreign company defended? What arbitration centers exist in the country? Are there any opportunities to obtain protection in international arbitration?

The UAE has recently become one of the major dispute resolution centers.

His Excellency Justice Omar Al Mheiri, Director, DIFC Courts, said: “Following a record-year for the DIFC Courts in 2023, we have continued to record strong uptake of core and ancillary services of the DIFC Courts for the first six months of 2024. We have also committed to further research and development of new innovative, efficient and cost-effective mechanisms in 2024 to assist our court users, whilst also maintaining core judicial excellence through our case management and skilled bench of judges.

The UAE’s recently confirmed top-ten position with the global competitiveness ranking is a testament to the dynamism of our shared economy, with the report specifically noting the UAE's stellar and effective dispute resolution mechanisms as the underpin of its competing economic segments”.

His Excellency Dr. Tariq Al Tayer, Chairman, Dubai International Arbitration Centre: “It is heartening to see that not only are more and more parties using the Centre, but they are also trusting us to deal with their most valuable disputes, claiming more than AED 5.5 billion in cases registered in 2023”.

There are seven arbitration venues that administer international arbitrations in the UAE.

The major local arbitral institutions are the Dubai International Arbitration Centre (DIAC) and the recently launched Abu Dhabi International Arbitration Centre (arbitrateAD), which replaced the previous Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC), with effect from 1 February 2024.

Parties can also refer their disputes to the Sharjah International Commercial Arbitration Centre (Tahkeem), the Ras Al-Khaimah Centre for Reconciliation and Commercial Arbitration or the International Islamic Centre for Reconciliation and Arbitration.

In addition, the ICC has established a case management office in the ADGM in 2021. Within the DIFC, the Saudi Center for Commercial Arbitration (SCCA) and the Russian Arbitration Center (RAC) of the Institute of Modern Arbitration both opened their first office outside their home jurisdiction in 2023.

Onshore and offshore tribunals have broad discretion with respect to the types of interim relief they can order. Broadly speaking, these measures cover any steps necessary to support the arbitration and its outcome, and to preserve the status quo.

Such measures can also be requested from the state courts, provided that they have jurisdiction in relation to the measure at hand (which includes jurisdiction over non-signatories or arbitrations with a foreign seat), without constituting a waiver of the arbitration agreement.

In support of the domestic arbitration, both the onshore and offshore courts may grant anti-suit injunctions.

It is worth to note that the UAE acceded to the New York Convention on 21 August 2006 by Federal Decree No. 43 of 2006. The Convention entered into force on 19 November 2006.

Since then, the UAE has made no declarations or reservations about its application. The Convention applies to enforcement proceedings in the UAE, including before the DIFC courts (DIFC Arbitration Law, Article 42) and before the ADGM courts (ADGM Arbitration Regulations, Section 60)

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How business is organized

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1. Are there restrictions for foreign companies by type of business? Which business sectors are “closed” to foreigners?
2. What organizational-legal form can a foreign company choose to operate in the country depending on the type of business/activity chosen?
3. Company/branch or permanent establishment/joint venture – what are the specifics of each organizational-legal form that should be taken into account when choosing?
4. How complicated/easy is the process of company registration? What should be taken into account by representatives of foreign business?
5. How long does it take to register a company in practice?
6. How is business structuring in free economic zones carried out?

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1. Are there restrictions for foreign companies by type of business? Which business sectors are “closed” to foreigners?

There are sector-specific restrictions for foreign companies. Among others, the following apply:

• Security and defense activities – 51% Emirati ownership required;

• Telecommunications – 51% Emirati ownership required;

• Local banks – 60% Emirati ownership required;

• Exchange houses – 51% Emirati ownership required;

• Financial institutions – 51% Emirati ownership required;

• Insurance companies – 51% Emirati ownership required;

• Legal advocacy firms – 100% Emirati ownership required (foreign lawyers may operate only legal consultancy firms);

• Oil and gas (certain activities, JVs with ADNOC) – 60% Emirati ownership required;

• Fisheries – 100% exclusive for UAE nationals. 

2. What organizational-legal form can a foreign company choose to operate in the country depending on the type of business/activity chosen?

In the mainland, regulated by Federal Decree-Law No. 32 of 2021 on Commercial Companies, the most common legal form for foreign investors is the Limited Liability Company (LLC).
This form is suitable for a broad range of commercial and industrial activities, such as trading, services, and manufacturing. LLCs can now be wholly foreign-owned in many sectors pursuant to Federal Law No. 19 of 2018 (Foreign Direct Investment Law) and Cabinet Resolution No. 16 of 2020, provided the activity does not require UAE national participation. An LLC must clearly define its permitted activities in the trade license issued by the relevant Department of Economic Development (DED) and is restricted from engaging in unlicensed activities.

In free zones, companies are incorporated under the authority of the respective Free Zone Authority and benefit from 100% foreign ownership, customs exemptions, and sector-specific advantages. The appropriate legal forms include a Free Zone Limited Liability Company (FZ-LLC) or a Free Zone Establishment (FZE). These entities are suited to businesses aligned with the focus of the free zone, for instance, financial services in the Dubai International Financial Centre (DIFC) or media production in Dubai Media City (DMC).

While free zone entities enjoy operational and tax benefits, they were historically restricted from directly conducting business in the UAE mainland. Recent legal developments have eased these restrictions, allowing free zone entities to engage with mainland businesses under certain conditions, such as appointing a local distributor or obtaining a dual license.

For businesses intended to operate internationally without conducting activities in the UAE mainland, an offshore free zone company may be the most appropriate form. Free zone jurisdictions such as RAK International Corporate Centre (RAK ICC) or JAFZA Offshore allow companies to be incorporated for purposes such as international trade, asset holding, and intellectual property management. However, offshore companies are expressly prohibited from conducting business within the UAE.

Regulated sectors such as banking, insurance, healthcare, education, and telecommunications require companies to operate under specific legal forms, often subject to approval by competent regulatory authorities (e.g., the Central Bank, the Securities and Commodities Authority, the Dubai Health Authority, or the Knowledge and Human Development Authority). In these sectors, foreign companies may need to establish either a branch or a specially licensed entity, and must meet additional compliance obligations. 

For example, foreign companies seeking to list shares on UAE stock exchanges, such as the Dubai Financial Market (DFM) or Abu Dhabi Securities Exchange (ADX), must comply with the regulations set by the Securities and Commodities Authority (SCA). Typically, this requires setting up a Public Joint Stock Company (PJSC) and ensuring transparency, corporate governance compliance, and adherence to minimum free float requirements
for shareholding.

3. Company/branch or permanent establishment/joint venture – what are the specifics of each organizational-legal form that should be taken into account when choosing?

When structuring a foreign investment in the UAE, investors can choose between several legal forms, each with distinct legal, tax, and operational implications. 

The most common structures include:

• companies;

• branch offices;

• permanent establishments; and

• joint ventures.

A UAE company, whether incorporated on the mainland or in a free zone, is a separate legal entity from its owners and provides limited liability protection to shareholders. This means that the financial risks and liabilities of the company are confined
to the business itself, protecting the personal assets of shareholders.

• Mainland companies (LLCs, PJSCs) can conduct business across the UAE and internationally but may require local ownership in certain sectors;

• Free zone companies (FZ-LLCs, FZEs) enjoy 100% foreign ownership and tax benefits but are restricted from direct mainland operations without a local distributor or special authorization.

This structure is best suited for long-term investment where the investor seeks full legal separation between their business operations in the UAE and their personal or parent company’s assets.

A branch office of a foreign company is not a separate legal entity but is considered an extension of its parent company. It operates under the same name and engages in the same business activities as the parent entity. In more detail:

• Under Article 314 of Federal Decree-Law No. 32 of 2021 (the UAE Commercial Companies Law), a branch office must operate within the scope of the parent company’s activities;

• Since a branch is not a separate entity, the parent company retains full liability for all debts and obligations of the branch;

• Some industries (e.g., financial services) require regulatory approval from authorities like the Central Bank or Securities and Commodities Authority (SCA);

• In some cases, a branch must appoint a UAE national as a local service agent (LSA), but the LSA has no ownership stake.

A branch office is one of the ways foreign companies can establish a direct presence in the UAE without incorporating a new legal entity, particularly in regulated sectors where full foreign ownership is restricted.

A permanent establishment tax status is relevant for businesses that operate in the UAE without formally incorporating a company but are still generating taxable revenue from local activities.

A joint venture (JV) in the UAE is usually structured as a company (LLC, PJSC, or a free zone entity), where two or more parties agree to collaborate on a specific business project or investment. In more detail:

• The most common model is an LLC or PJSC, where partners contribute capital and share ownership;

• In certain cases, JVs operate through contractual agreements rather than creating a separate entity (common in construction and energy projects);

• JVs between foreign investors and UAE government entities are common in strategic industries, such as infrastructure, healthcare, and technology.

JVs are suitable for foreign investors seeking local expertise, regulatory support, or government partnerships, particularly in highly regulated or strategic sectors.

4. How complicated/easy is the process of company registration? What should be taken into account by representatives of foreign business?

In the uae, the company registration process is generally straightforward, with the government continuously streamlining procedures to attract foreign investment. However, the complexity of registration depends on whether the business is established as a mainland company or within a free zone.

Registering a mainland company involves multiple steps to ensure compliance with the UAE’s commercial regulations. The first step is determining the business activity, as the company’s chosen field must align with the permitted commercial, industrial, or professional activities outlined by the authorities. Following this, the company must select a legal structure, such as a limited liability company (LLC) or a branch of a foreign company, each of which has specific regulatory requirements.

Once the legal structure is chosen, the business must register a trade name, ensuring that it complies with UAE naming conventions and is approved by the Department of Economic Development (DED). After securing initial approval, the company must prepare and notarize its Articles of Association (AOA) or, where applicable, a Memorandum of Association (MOA).

Another crucial step is securing a business location, as a physical office or workspace is mandatory for all mainland businesses. The lease agreement must be registered through Ejari in Dubai or equivalent platforms in other emirates. Certain industries, such as healthcare, construction, or food services, may require additional sector-specific approvals before proceeding with incorporation.

Once all necessary approvals are obtained, the business must submit the required documents, pay the applicable government fees, and collect the trade license. In some cases, registration with the Chamber of Commerce and Industry may be mandatory, particularly for businesses engaged in trade, as it provides access to commercial benefits and trade facilitation services. Additionally, businesses intending to hire employees must register with the Ministry of Human Resources and Emiratisation (MOHRE) to issue labor cards and comply with employment regulations.

Setting up a company in a free zone is typically a quicker and more streamlined process, requiring fewer steps. The first step is selecting the business activity, ensuring that it aligns with the permitted sectors within the chosen free zone. Next, the investor must determine the company’s legal structure, with common options being a Free Zone Establishment (FZE) or a Free Zone Limited Liability Company (FZ-LLC).

The business must then register a trade name with the Free Zone Authority and select a workspace within the free zone, as some free zones require companies to lease office space within their jurisdiction. Once these preliminary steps are completed, the company applies for initial approval, followed by submission of the required documents and payment of incorporation fees. Once approved, the Free Zone Authority issued the business license, allowing operations to commence.

Unlike mainland companies, free zone entities are not required to register with MOHRE, as they follow employment regulations set by the Free Zone Authority. However, companies planning to hire employees must comply with the free zone internal labor rules.

While free zone registration offers the benefit of 100% foreign ownership and a more efficient setup process, mainland registration allows businesses to operate directly in the UAE market without restrictions on trading with mainland entities. Foreign investors should carefully consider their business goals before deciding on the most suitable incorporation structure (link).

5. How long does it take to register a company in practice?

The standard timeframe for registering a non-regulated company in the United Arab Emirates – whether on the mainland or within a free zone – is typically 7 to 10 working days. However, in cases where enhanced regulatory due diligence or compliance checks are triggered (such as KYC/AML verifications or approvals from specific government authorities), the registration process may be extended, potentially taking up to 21 to 28 working days.

6. How is business structuring in free economic zones carried out?

Business structuring in the UAE’s free zones is designed to be straightforward and investor-friendly, offering a range of benefits to foreign investors. The process is streamlined, with minimal paperwork required, which allows businesses to be established quickly and efficiently. 

In terms of legal structure, business operations in free zones are tailored to the type of activity the investor chooses. Each free zone caters to specific industries such as logistics, media, technology, and commodities, which influences the legal structure and type of business license required. Depending on the activity, investors can opt for various business structures, including Free Zone Establishments (FZE) for single-owner companies, Free Zone Companies (FZC) for multi-shareholder entities, or branch offices for foreign businesses seeking to establish a local presence. These structures provide flexibility and are aligned with the needs of the investor.

Another crucial aspect of structuring a business in free zones is the availability of specialized infrastructure. Free zones are equipped with tailored facilities, including office spaces, warehouses, and manufacturing units, which support a business’s operational needs.
This infrastructure is designed to streamline workflow and ensure that businesses have the resources they need to function effectively from day one. Logistical support within free zones also facilitates access to the global market, allowing businesses to benefit from the UAE’s strategic location at the crossroads of international trade routes.

The UAE’s free zones contribute significantly to the country’s economic performance.
For example, the Dubai Multi Commodities Centre (DMCC) has been ranked as the top free zone for nine consecutive years, housing over 24,000 companies and contributing substantially to Dubai’s foreign direct investment (FDI). JAFZA (Jebel Ali Free Zone) is another major player, sustaining over 130,000 jobs and generating billions in trade value. In 2020, free zones were responsible for more than half of the UAE's total re-exports, highlighting the critical role they play in the nation’s economic activities.

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About the firm

ADG Legal is a distinguished full-service law firm headquartered in Dubai. Known for combining international legal expertise with a strong understanding of local markets, the firm provides high-quality legal services through a team of seasoned professionals across the region. With offices in Dubai, Abu Dhabi (ADGM) and a representative office in London, ADG Legal serves a broad client base, offering seamless, cross-border solutions. Supported by a bespoke network of leading legal professionals worldwide, the firm is well-equipped to deliver exceptional service, meeting the complex needs of businesses and individuals both locally and internationally.

ABU DHABI	+971 4 441 2031
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ADGLEGAL.COM

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Foreign trade regulation

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1. What are the country's export/import control requirements/restrictions that foreign companies need to consider?
2. Are there any restrictions/export/import barriers in the country for foreigners?
3. What specifics of interaction with customs when organizing foreign trade activities in the country could you abolish? What does a foreign business need to consider?
4. What are the specifics of international contracts, what should be taken into account in practice when concluding a contract?
5. How is the system of settlements in foreign currency built? Name the specifics of currency regulation in the country, if any?
6. What measures of responsibility are stipulated in your country in case of violation of customs legislation?
7. How are disputes with customs authorities resolved in your country? Are there special authorities responsible for customs disputes?

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1. What are the country's export/import control requirements/restrictions that foreign companies need to consider?

Foreign companies engaging in trade with the United Arab Emirates (UAE) must navigate a comprehensive framework of export and import regulations. These requirements apply both at the federal level and within the various jurisdictions of the country, including its numerous free trade zones. It is important for foreign entities to understand that the UAE treats the movement of goods between the mainland and free zones as import/export transactions. This means that even domestic logistics may fall under customs regulation.

To legally import goods into the UAE, a company must either be registered locally or operate through a licensed intermediary, such as a local agent or distributor. Direct imports are not permitted without a trade licence and customs registration through the UAE Federal Customs Authority. Additionally, companies must obtain a specific import-export licence, which is separate from the standard trade licence.

2. Are there any restrictions / export/import barriers in the country for foreigners?

While the UAE is known for being one of the most business-friendly countries in the region, there are still trade-related restrictions and barriers that foreign companies and individuals must consider. 

In the UAE mainland, Emirati nationals enjoy certain advantages. They may fully own trading businesses without restriction, and some trade licences and government contracts are reserved exclusively for UAE citizens. Foreign companies operating in the mainland are often required to engage a local sponsor or partner, especially when dealing with strategically sensitive goods or sectors. 

By contrast, companies established in free zones are allowed 100% foreign ownership and generally benefit from streamlined processes. However, to trade with businesses located in the mainland, they must appoint a locally licensed commercial agent or distributor – reintroducing a layer of local partnership.

Beyond ownership, there are additional trade-related requirements that can act as practical barriers. These include obtaining the appropriate import/export licences, registering specific products with local authorities, and complying with customs duties and procedures. Overall, foreign-owned businesses may face longer processing times and greater scrutiny from authorities compared to their local counterparts.

3. What specifics of interaction with customs when organizing foreign trade activities in the country could you abolish? What does a foreign business need to consider?

When engaging in foreign trade activities in the UAE, customs interactions form a critical part of the operational process. Fortunately, the UAE has made significant strides in simplifying and modernizing its customs procedures, as part of its broader vision to position itself as a global business hub – including serving as a natural transit point between different parts of the world and a key destination for foreign direct investment (FDI). One of the most notable advancements is the ability to file customs declarations electronically, reducing paperwork and speeding up clearance times.

Customs regulations in the UAE are unified across the country, regardless of the specific point of entry. However, the customs authority responsible for processing will vary depending on the location where the goods arrive. 

Foreign businesses should also take note of the UAE’s participation in the Gulf Cooperation Council (GCC) Customs Union. Under this arrangement, goods that enter any one GCC country are treated as having cleared customs across all member states – similar to the European Union's single customs entry principle. This provides a significant advantage for companies interested in regional trade, as it eliminates the need to repeat customs procedures when moving goods between GCC countries.

While the current system is already favorable to trade, some aspects –particularly those involving physical inspections or overlapping approvals – could still be further streamlined in the future, depending on the evolving priorities of UAE trade authorities. 

4. What are the specifics of international contracts, what should be taken into account in practice when concluding a contract?

When concluding an international contract in the UAE, it is crucial to carefully consider the applicable law chosen to govern the contractual relationships between the parties.

The UAE legal system comprises local laws, Sharia law (Islamic law principles), and civil law influence. 

For international contract, it is advisable to select a neutral governing law and refer any eventual claims or disputes to international arbitration or the courts of the freezones, such as DIFC or ADGM courts. 

It is equally important to agree on the language of the proceedings – preferably one both parties understand – in order to avoid difficulties arising  from legal translation into Arabic. If a dispute is brought before local courts, there is a probability that the court may apply UAE laws, including Sharia principles, on the basis of ordre public. This could result in interest rates being struck down or reduced, penalties being revised and other contractual terms being interpreted differently from what was intended by the parties in the contract.

There are no specific requirements as to the form of the contracts, unless they concern property transfers, commercial agency or long-lasting sponsorships, all of which must be notarised. However, for high-value contracts, it is advisable to have the agreement signed before a notary public or, at least, a witness.

It should also be noted that the UAE are not a party to the Hague Apostille Convention. As a result, international contracts concluded elsewhere – or documents issued in other jurisdictions – are subject to the full official attestation. This typically involves certification by various authorities in the country of issuance, including local courts, the Ministry of Foreign Affairs, and the Ministry of Justice, as well as the UAE embassy in the country of issuance and further re-attestation by the UAE Ministry of  Foreign Affairs.

5. How is the system of settlements in foreign currency built? Name the specifics of currency regulation in the country, if any?

At the core of the UAE's settlement infrastructure is the UAE Funds Transfer System (UAEFTS), operated by the Central Bank of the UAE (CBUAE). This system enables real-time gross settlement (RTGS) of interbank transfers, ensuring secure processing of both domestic and international payments.

Complementing the UAEFTS, the UAE actively participates in regional initiatives:

• Buna, a cross-border payment system operated by the Arab Monetary Fund. Buna facilitates payment-versus-payment (PvP) settlements in multiple currencies (AED, EGP, SAR, USD, EUR, JOD) across the Middle East and North Africa, thereby streamlining foreign currency transactions and bolstering economic integration
  within the region; 

• The Arabian Gulf System for Financial Automated Quick Payment Transfer (AFAQ) operated by the Gulf Payment Company. AFAQ implements GCC's RTGS
  that connects such systems of each GCC member state, facilitating fund transfers between them in all included local currencies (AED, BHD, SAR, OMR, QAR, and KWD) with the same-day settlement. 

Most cross-border transfers beyond GCC region are processed via SWIFT between correspondent banks.

The UAE's currency regulations are notably liberal, with no foreign exchange controls or restrictions on capital movements, except to the extent necessary for enforcing anti-money laundering (AML) rules or comply with international sanctions. 

The CBUAE has issued specific regulations, such as the Regulations Regarding Licensing and Monitoring of Exchange Business, which set out requirements for entities engaged in currency exchange and remittance services. These include licensing criteria, capital requirements, and operational standards (see CBUAE Rulebook).

6. What measures of responsibility are stipulated in your country in case of violation of customs legislation?

The UAE, as a member of the  Gulf Cooperation Council (GCC) Customs Union, applies the Common Customs Law of the GCC. Articles 139-145 of the Common Customs Law address the penalties for the violations of customs rules, including fines, confiscation of smuggled goods and means of their transportation, and imprisonment.

Article 141 of the Common Customs Law provides a non-exhaustive list of the customs offences resulting in fines. These include, inter alia, offences related to import and export procedures, customs declarations, goods in transit, warehouses, zones under customs control, temporary admission, and re-exportation. The specific list of fines for customs offences is set out in Chapter VII of the Interpretative Annex. 

Article 142 defines smuggling as bringing or attempting to bring goods into or out of the country in contravention to the applicable laws without payment of the customs taxes and duties, in whole or in part, or contrary to the prohibition or restriction provided for in the Common Customs Law or other laws. Smuggling is criminalised under the Common Customs Law and to constitute a crime, the intention (mens rea) is required. 

Pursuant to Article 143, the following acts or omissions  shall qualify as smuggling, inter alia:

• Failing to proceed with the goods to the first port of entry; 

• Not following the routes specified for getting the goods into or out of the country;

• Unloading or loading ships contrary to customs regulations or beyond the marine customs zone; 

• Illegally unloading or loading aircraft cargo outside official airports or dropping goods during flight; 

• Producing false, fraudulent or fabricated documents or lists, or affixing false marks, in order to avoid customs duties in whole or in part, or bypass prohibitions and restrictions; 

• Transporting or acquiring prohibited or restricted goods without proof of their legal importation.

Article 145 specifies the penalties for smuggling, with fines and imprisonment terms varying according to the type of goods involves:

• High-duties goods: a fine shall not decrease double customs duties payable but not increasing double value of the goods; imprisonment from one month to one year;

• Duties-exempt goods: (e.g., destined for Free Trade Zones): fine shall not decrease 10 % of the value of the goods but not increasing its value; imprisonment from one month to one year;

• Prohibited goods: fine shall not decrease the value of the goods but not increasing its triple value; imprisonment from six months to three years;

• Other commodities: fine shall not decrease double customs duties payable but not increasing value of the goods; imprisonment from one month to one year.

The smuggled goods, as well as the means of transportation, the tools and materials used for smuggling, are subject to confiscation. If confiscation is not possible, a fine equal to their value is imposed. Upon a repeated offence, the penalties may be doubled.

7. How are disputes with customs authorities resolved in your country? Are there special authorities responsible for customs disputes?

Objection to orders for the collection of customs duties may be submitted through administrative proceedings to the customs administration of the relevant emirate. These include: 

• Ports, Customs and Free Zone Corporation - Dubai;

• General Administration of Customs - Abu Dhabi; 

• Department of Seaports and Customs - Sharjah; 

• Department of Ports and Customs - Ajman; 

• Customs Department - Ras Al Khaimah; 

• Fujairah Customs Department; 

• Ports, Customs and Free Zone Corporation – Umm Al Quwain.

These bodies often coordinate with the Federal Customs Authority (FCA).

The deadline for filing an objection is 15 days from the date of notification (Article 147 (a) of the Common Customs Law). As a general rule, filing an objection does not suspend the execution of the customs order, unless the concerned person provides a bank guarantee or a cash deposit.

Orders by customs authorities imposing fines for smuggling of goods (under Article 145 of the Common Customs Law) may be appealed to either the UAE Minister of Economy and Commerce or the competent customs authority, that has an authority to confirm, amend or cancel the penal order. The deadline for filing such an appeal is also 15 days from the date of notification (Article 149 of the Common Customs Law).

In cases involving smuggling of goods, a conciliatory settlement may be reached between the person concerned and the director general of the competent customs authorities of each emirate in order to avoid imprisonment. A written request must be submitted by the person concerned either before the initiation of criminal proceedings or – prior to the issuance of the judgment of the first instance court. 

Such a settlement may result in a compromise with the following financial penalties (Article 152 of the Common Customs Law):

• High-duties goods: fine shall not decrease double customs duties payable but not increasing double value of the goods;

• Duties-exempt goods: (e.g., destined for Free Trade Zones): fine shall not decrease 10 % of the value of the goods but not increasing 50 % of its value; 

• Prohibited goods: fine shall not decrease the value of the goods but not increasing its triple value;

• Other commodities: fine shall not decrease customs duties payable but not increasing 50 % of value of the goods. 

Regardless of settlement, confiscation of the smuggled goods, as well as the meansof transportation, the tools and materials used in smuggling may apply. Alternatively, release or re-exportation may be permitted, if specified in the terms of the settlement.

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About the firm

LGP Middle East

LGP Middle East is a member of LGP Group, an international law firm headquartered in Austria with a cross-border team of 100 lawyers and offices in Vienna, Bratislava, Skopje, Astana, Ras Al Khaimah, Dubai, Istanbul and Prague. Respondents highlighted the firm's extensive network of European universities, which enables it to involve European researchers in the preparation of legal opinions.

As for the Dubai office, one of its partners is an ex-consultant to the Government of Ras al Khaimah in the UAE on direct investment issues.

Bridging the gap between Europe, BRICS+ and MENA, LGP Group is known for its expertise in international and European Union law, sanctions, trade restrictions, compliance and sanctions-related litigation (including representation before the Court of Justice of the EU), as well as cross-border dispute resolution including international arbitration and investor-state disputes. The team of LGP Middle East, operating in Ras al Khaima and Dubai, comprises lawyers from Europe and the BRICS+ countries, who are admitted to practice in their home jurisdictions, as well as have full admission in the DIFC Courts and included in the lists of arbitrators of prominent regional arbitral institutions.

DUBAI	+971 42 873 200
RAS AL KHAIMAH	+971 42 873 200

LANSKY.AT

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Banking operations

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1. What legislative requirements exist for the organization of banking operations for foreign companies/non-residents?
2. What requirements exist for opening accounts of foreign companies and individuals? How are foreign companies and individuals checked when opening accounts? What documents/guarantees/confirmations of origin of capital should be provided?
3. Is it obligatory for a foreign company to have an office in the country and company registration with state authorities to open a bank account?
4. Does a private investor have to obtain a residence permit or other documents to open a bank account?
5. Can a foreign company get a loan from a bank for business development? What are the requirements for obtaining a loan?
6. How can settlements from a foreign company with local partners be organized?
7. Are there restrictions for bringing foreign currency into the country in cash/cashless form?
8. Are cash payments permissible?
9. How to organize non-cash settlement? What documents are required?
10. Is it possible to open a foreign currency account in the country? Are there any restrictions in the country?
11. Is it possible to make settlements with counterparties in foreign currency? Are there any restrictions in the country?
12. How is it possible to make withdrawals from the account of a foreign company? Is withdrawal of funds in foreign currency allowed?
13. How can funds be transferred abroad? What is required for this?
14. How is financing of transactions, trade and business operations of a foreign company done? Are special authorizations required? Are any additional deposits required in the accounts?
15. How are the financial statements of the foreign company structured? What documents/confirmations of financial transactions need to be submitted? To which authorities?

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1. What legislative requirements exist for the organization of banking operations for foreign companies/non-residents?

In the UAE, opening a bank account is subject to strict regulatory requirements. As mandated by the UAE Central Bank, only companies or individuals holding a valid UAE trade licence or residency visa are eligible to open a bank account. Non-residents and foreign companies without these credentials are generally prohibited from doing so. 

For foreign entities seeking to engage in banking operations, compliance with a range of legislative requirements is essential. These include the submission of core corporate documents such as the Articles of Association and Memorandum of Association, which define the company’s structure and business activities. A valid Trade Licence must also be presented to verify the company’s legal standing, along with audited financial statements – typically from the previous three years – to demonstrate financial stability and operational transparency. 

These measures are fundamental in upholding regulatory oversight and ensuring that the UAE’s banking sector remains secure and compliant when dealing with international stakeholders.

2. What requirements exist for opening accounts of foreign companies and individuals? How are foreign companies and individuals checked when opening accounts? What documents/guarantees/confirmations of origin of capital should be provided? 

As outlined by UAE banking regulations, only companies registered within the UAE are permitted to open local bank accounts. Foreign companies are not eligible to do so directly; however, they may establish a local branch, which then becomes eligible to receive and manage funds through a UAE-based account. 

The documentation required for account opening is relatively standard and includes copies of the company’s trade licence, Memorandum of Association (MOA), Certificate of Registration, and passport copies of shareholders. If a shareholder is a corporate entity, copies of that entity’s trade licence must also be submitted. Proof of physical address is required in the form of an Ejari certificate (lease agreement) and recent utility bills.

In addition, shareholders must provide personal bank statements for the last six months. These may be reviewed in detail by compliance teams, who often request supporting documents – such as invoices or Bills of Lading (BoL) – to verify the legitimacy of transactions.

Non-resident individuals and foreign companies that qualify for account opening are typically limited to savings accounts; checking accounts and cheque books are not issued. A rigorous Know Your Customer (KYC) process is mandatory prior to account approval, involving both internal bank checks and external screenings. World Check is the primary tool used to flag potential risks, and if any concerns arise, due diligence firms such as Kroll may be consulted for further investigation.

To validate the origin of funds, capital must be transferred via standard international wire transfers. Upon receipt, the bank provides a certificate to the Economic Department confirming the capital has been deposited. This certification is essential for obtaining a trade licence, and the capital must remain in the account until the licence is officially issued. 

These layered procedures reinforce the UAE’s commitment to regulatory compliance and financial transparency in its banking sector.

3. Is it obligatory for a foreign company to have an office in the country and company registration with state authorities to open a bank account? 

Foreign companies aiming to open a bank account in the UAE must first ensure they are formally registered within the country. This is a fundamental requirement, particularly for onshore or mainland companies, which are typically obligated to maintain a physical office space as part of their incorporation process. Full registration with the relevant government authorities is also essential, as these elements form the backbone of eligibility for accessing the UAE banking system.

For companies incorporated in one of the UAE’s many free zones, the process offers slightly more flexibility. Instead of a full office setup, these entities can often meet the office requirement through "flexi desk" or shared workspace options provided by the free zone authorities. However, despite this leniency, many banks remain cautious. Even though there are no specific regulatory restrictions, institutions often hesitate to open accounts for companies with only minimal physical setups. This reluctance stems not from legal mandates, but from internal risk management policies and due diligence standards practiced by most banks.

4. Does a private investor have to obtain a residence permit or other documents to open a bank account?

In most cases, private investors are required to obtain a UAE residence permit in order to open a bank account. Residency helps streamline the process and aligns with the regulatory expectations of local banks. However, there are exceptions to this rule. A private investor may still open a non-resident bank account, which does not require a residence visa.

That said, banks typically impose strict internal controls and self-regulated restrictions when dealing with non-resident clients. Even if an account is approved, it is generally limited to a basic savings account. Cheque books are not issued under non-resident status, although in some cases, a debit card may be provided. These limitations reflect the cautious approach UAE banks take in mitigating risks associated with non-resident banking relationships.

5. Can a foreign company get a loan from a bank for business development? What are the requirements for obtaining a loan?

Foreign companies are eligible to obtain business development loans from banks in the UAE, provided they meet specific requirements. Typically, UAE banks extend loans primarily to companies that are registered and operating within the country. For a foreign entity to qualify, it is usually necessary to establish a local branch or subsidiary in the UAE. These entities are then assessed much like local companies, using standardized credit evaluation procedures.

To begin the loan application process, the foreign company must submit all statutory documents. Additionally, audited financial statements for the past three years are required to demonstrate the company's financial health. The bank's credit committee will conduct a formal credit assessment, evaluating criteria such as account turnover, asset strength, and a minimum of one year of operational history within the UAE. 

Although foreign ownership does not inherently disqualify a company from receiving credit, meeting these key benchmarks is essential for securing loan approval.

6. How can settlements from a foreign company with local partners be organized?

Settlements between foreign companies and local partners in the UAE can be structured through various compliant and practical methods. Most commonly, payments are made based on formal agreements or issued invoices between the involved parties. These settlements are typically executed via international wire transfers from the foreign company’s country of origin.

Alternatively, if the foreign company maintains a UAE-based account, payments can also be made locally through bank transfers or issued cheques. For smaller transactions, cash settlements are permitted, though they are capped at a daily limit of AED 50,000.

7. Are there restrictions for bringing foreign currency into the country in cash/cashless form?

Bringing foreign currency into the UAE is generally permitted, though the method of transfer determines the level of scrutiny applied. Cashless transfers are the most straightforward option, with foreign currency easily wired into the country via SWIFT. There are no legal limits on the amount that can be transferred electronically, provided the source of the funds is clearly documented and can be verified.

In addition to traditional banking channels, foreign currency can also be moved through informal systems such as Hawala, often facilitated by licensed exchange bureaus. While legal and widely used in the region, these transactions are still subject to regulatory oversight.

Cash transfers are also allowed but attract greater attention, particularly when the amount exceeds AED 50,000 in a single day. In such cases, questions regarding the origin and purpose of the funds are likely. While some banks may exercise a degree of discretion or flexibility, most follow strict internal guidelines to ensure compliance with anti-money laundering and financial transparency regulations.

8. Are cash payments permissible? 

Cash payments are legally permissible in the UAE for any amount, and many businesses – depending on the nature of their activity – do accept cash transactions. However, when a local company receives a cash payment, especially in large amounts, banks may request documentation verifying the source of the funds from the paying client. The Rulebook of the Central bank of the United Arab Emirates advises that licensed financial institutions be particularly vigilant while dealing with cash-intensive businesses and, therefore, apply enhanced due diligence and monitoring. Such businesses include, inter alia:

• Convenience stores;

• Retail stores;

• Restaurants;

• Wholesale or general trading businesses;

• Travel agencies and tour operators; and

• Car dealers.

While paying in cash is allowed, depositing those funds into a bank account can present challenges. Banks typically require supporting documents – such as invoices or contracts – to confirm the legitimacy of the cash. Without such documentation, the deposit may be delayed, questioned, or even rejected. Furthermore, when depositing foreign currency in cash, banks usually charge a fee of 1% of the total amount. 

9. How to organize non-cash settlement? What documents are required?

Non-cash settlements in the UAE can be efficiently organized through standard banking instruments such as wire transfers and letters of credit. 

To facilitate such transactions, supporting documentation is typically required. This may include a master agreement between the parties, a formal sale contract, acquisition documents, or any other legally binding agreement outlining the nature and terms of the transaction. These documents serve as proof of the transaction’s legitimacy and are often requested by banks as part of their compliance and due diligence procedures. 

10. Is it possible to open a foreign currency account in the country? Are there any restrictions in the country? 

Opening a foreign currency account in the UAE is fully permitted under both local laws and banking regulations. Most banks in the country offer multi-currency account options, with U.S. Dollars (USD) and Euros (EUR) being the most commonly available currencies.

There are no formal restrictions imposed by authorities on maintaining accounts in foreign currencies. However, the availability and specific terms may vary slightly depending on the policies of individual banks. While some banks readily support foreign currency accounts with full functionality, others may apply certain conditions or require additional documentation based on internal procedures. 

11. Is it possible to make settlements with counterparties in foreign currency? Are there any restrictions in the country?

Settlements between counterparties in foreign currencies are fully permitted in the UAE and are a common practice in both domestic and international business transactions. Whether dealing with foreign or locally based entities, parties are free to conduct payments in currencies such as AED, USD, or EUR, depending on the nature of their agreements and the currency preferences of their respective accounts.

There are no official restrictions limiting the use of foreign currencies for settlements. However, the execution of such transactions may vary slightly depending on the bank's internal policies. 

12. How is it possible to make withdrawals from the account of a foreign company? Is withdrawal of funds in foreign currency allowed?

Foreign companies registered in the UAE and holding local bank accounts are permitted to withdraw funds freely, including in foreign currencies. However, withdrawals - particularly of large amounts - often require coordination with the bank and may involve advance notice, especially if the requested currency is not widely circulated.

In terms of availability, U.S. Dollars (USD) are the most accessible foreign currency and are readily available for both cash withdrawals and transfers. Euros (EUR) are also accessible but to a lesser extent, while British Pounds (GBP) are more limited in circulation and may not support high-volume withdrawals without prior arrangements.

Cash withdrawals can be made by authorized persons from bank branches, typically ranging from AED 50,000 to AED 150,000. For larger sums, banks may request justification for the withdrawal and require advance notice to prepare the funds. Amounts under AED 50,000 can generally be withdrawn from ATMs without issue. 

13. How can funds be transferred abroad? What is required for this? 

Funds can be transferred abroad from the UAE with relative ease, primarily through the globally recognized SWIFT banking system. There are no legal limits on the amount that can be transferred, provided that the source of funds is legitimate and clearly documented. Banks typically require supporting documents such as invoices, Bills of Lading (BoL), and copies of contracts or agreements to validate the purpose and origin of the transaction.

In addition to SWIFT transfers, many individuals and businesses also utilize licensed exchange bureaus operating under the traditional Hawala system. 

Cash transfers abroad are technically possible but can prompt additional scrutiny, especially for large sums. Banks and regulatory bodies may request explanations and supporting documentation before allowing significant cash exports. 

14. How is financing of transactions, trade and business operations of a foreign company done? Are special authorizations required? Are any additional deposits required in the accounts? How can payment be guaranteed? 

The financing of transactions, trade, and general business operations for foreign companies in the UAE follows standard banking practices and poses no unusual requirements. Foreign companies can access financing in line with customary banking rules and procedures.

No special authorizations are required to initiate such financing, nor are additional deposits mandated in the accounts. Payments and transaction guarantees are handled through well-established mechanisms, including SWIFT transfers and Letters of Credit, ensuring secure and reliable execution of financial obligations. 

15. How are the financial statements of the foreign company structured? What documents/confirmations of financial transactions need to be submitted? To which authorities?

Foreign companies operating in the UAE are required to maintain audited financial statements that accurately reflect their business activities. The audits can be conducted by firms classified as Tier 1, Tier 2, or Tier 3, depending on the size and complexity of the company’s operations. 

These audited statements serve as official confirmation of the company’s financial position and transaction history. Auditors are responsible for ensuring accuracy and can issue the necessary documentation to validate the legitimacy of financial transactions when required by regulatory or banking authorities.

On an annual basis, foreign companies must submit their audited balance sheets to the Economic Department in the Emirate where the company is registered and where its Trade Licence was issued. This filing is a standard compliance measure, aimed at promoting financial transparency and aligning business practices with UAE regulatory frameworks.

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About the firm

LGP Middle East

LGP Middle East 

LGP Middle East is a member of LGP Group, an international law firm headquartered in Austria with a cross-border team of 100 lawyers and offices in Vienna, Bratislava, Skopje, Astana, Ras Al Khaimah, Dubai, Istanbul and Prague. Respondents highlighted the firm's extensive network of European universities, which enables it to involve European researchers in the preparation of legal opinions.

As for the Dubai office, one of its partners is an ex-consultant to the Government of Ras al Khaimah in the UAE on direct investment issues.

Bridging the gap between Europe, BRICS+ and MENA, LGP Group is known for its expertise in international and European Union law, sanctions, trade restrictions, compliance and sanctions-related litigation (including representation before the Court of Justice of the EU), as well as cross-border dispute resolution including international arbitration and investor-state disputes. The team of LGP Middle East, operating in Ras al Khaima and Dubai, comprises lawyers from Europe and the BRICS+ countries, who are admitted to practice in their home jurisdictions, as well as have full admission in the DIFC Courts and included in the lists of arbitrators of prominent regional arbitral institutions.

DUBAI	+971 42 873 200
RAS AL KHAIMAH	+971 42 873 200

LANSKY.AT

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Taxation

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1. What are government agencies responsible for tax control?
2. What are the types of taxes and fees in the country that foreign companies are required to pay?
3. Are there specifics of VAT calculation for a foreign company?
4. What is transfer taxation on transactions of a group of foreign companies structured?
5. What are the indirect taxes/excise taxes in the country?
6. What tax strategy would you recommend for a foreign company? What are the most favorable tax regimes for corporations, businesses and foreign trade firms?
7. What specifics of taxation and tax reporting of foreign companies could you note? How is the tax reporting of a foreign company structured? What specifics should an investor consider?
8. What is taxation in free economic zones?
9. Are there agreements on exchange of financial and tax information? What are government agencies responsible for tax control?

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1. What are government agencies responsible for tax control?

The Federal Tax Authority (FTA) and the Ministry of Finance (MoF) are the primary government agencies responsible for tax control in the UAE.

2. What are the types of taxes and fees in the country that foreign companies are required to pay?

Currently, the UAE tax system provides for the following taxes that may be applicable to foreign companies:

Corporate Tax

Corporate Tax came into effect on 1 June 2023, at a rate of 9% for taxable profits exceeding AED 375,000. It applies to accounting periods starting on or after 1 June 2023 to UAE-based businesses, including foreign branches and permanent establishments (PEs) of foreign companies in the UAE.

Every taxable person must register electronically for UAE Corporate Tax (CT) with the Federal Tax Authority (FTA) within the specified timeframe (generally, no later than 3 months from the date of incorporation or establishment) and obtain a Tax Registration Number. The Corporate Tax return and  any tax due should be filed and paid no later than nine months after the end of the relevant tax period. 

Foreign companies may fall under the UAE Corporate Tax regime in the following instances:

• They are effectively managed and controlled from the UAE (i.e., place of effective management, or POEM, is in the UAE);

• They have a Permanent Establishment (PE) in the UAE;

• They derive UAE-sourced income (current withholding tax rate is 0%);

• They have a nexus in the UAE by virtue of earning income from immovable property located in the UAE.

For UAE-based businesses located in Qualifying Free Zones, a 0% Corporate Tax rate is available provided all the requirements for the Qualifying Free Zone Person are met (see Chapter 8 for more detail). 

Several exemptions may apply, making an entity an exempt person. These exemptions mainly apply to government entities, extractive businesses, qualifying public benefit entities and qualifying investment funds.

Additional tax incentives include: 

• A Small Business Relief, available to small businesses with revenue below or equal to AED 3,000,000 in a relevant tax period (valid until 31 December 2026);

• An unconditional exemption for dividends derived from UAE companies;

• A Participation Exemption for dividends and capital gains derived from foreign investments.

From 1 January 2025, the UAE introduced a Qualifying Domestic Minimum Top-Up Tax (QMDTT) under Pillar 2, applicable to UAE-based entities which are part of a Multinational Enterprise Group (MNE Group with annual revenue of EUR 750 million or more in at least two of the four fiscal years immediately preceding the tested fiscal year. The QMDTT provisions mostly follow the OECD Model Rules with some variations.

Value Added Tax (VAT)

VAT was introduced on 1 January 2018 and is currently set at the standard rate of 5% on most goods and services. Some sectors (e.g., international transport, healthcare, education) are zero-rated or VAT-exempt.

The supply of goods within several free zones (which qualify as Designated Zones for VAT purposes) may fall outside the scope of VAT, if specific conditions are met.

A business must register for VAT if the total value of its taxable supplies and imports exceeds the mandatory registration threshold of AED 375,000 over the past 12 months, or is expected to do so in the next 30 days. 

A common oversight for UAE-based businesses is neglecting the value of imported goods or services, which are subject to reverse charge mechanism, for the purposes of the mandatory registration threshold.

The threshold for voluntary registration is AED 187,500.A business may apply to register for VAT if the total value of its taxable supplies and imports or taxable expenses have exceeded this threshold in the past 12 months, or is anticipated to do so in the next 30 days. VAT registration is separate from Corporate Tax registration.

Businesses can claim input VAT credit for VAT incurred on expenses, subject to standard VAT recovery rules. If the VAT paid on purchases exceeds the VAT due on sales, the business can request a refund from the FTA.

Excise Tax

Excise tax was introduced in 2017 to discourage the consumption of harmful products and is currently levied as follows:

• 50% on carbonated drinks;

• 100% on tobacco products;

• 100% on energy drinks;

• 100% on electronic smoking devices;

• 100% on liquids used in such devices and tools;

• 50% on product containing added sugar or other sweeteners.

Customs Duties

The UAE is a Member State of the Gulf Cooperation Council (GCC) and part of the GCC Customs Union.

Customs duties are typically imposed on the import of goods into the UAE and are levied at 5% on most imported goods on the CIF (Cost, Insurance and Freight) value. Exceptions include: 

• Alcohol: 50% duty;

• Cigarettes: 100% duty.

Certain imports may benefit from customs duty exemption. No customs duties apply to exports.

Withholding Tax (WHT)

Currently, the WHT rate is 0%. No tax is withheld on dividends, interest, or royalties paid abroad.

Other types of taxes

• Oil & Gas Sector: Companies engaged in oil and gas exploration and production are subject to specific tax terms under concession agreements or fiscal letters signed with the government, often at progressive rates of up to 55%.

• Foreign Bank Branches: Branches of foreign banks operating in the UAE (i.e. in Dubai) are subject to a flat income tax rate of 20%.

• Personal Income Tax: There is no personal income tax in the UAE. 

• Social Insurance: Social insurance contributions are applicable only to UAE nationals. 

Real Estate Transfer Tax: Known as “registration fees” this is levied on the transfer of ownership of real estate in the UAE – including indirect transfers in a company holding real estate in the UAE). In Dubai, the current rate is 4%.

3. Are there specifics of VAT calculation for a foreign company?

Local entities conducting business in the UAE must register for VAT if their taxable supplies and other qualifying supplies exceed AED 375,000 (approximately USD 100,000) within a 12-month period or are expected to exceed this threshold within the next 30 days. Registration must be completed within 30 business days of reaching or anticipating this threshold.

For non-resident entities, VAT registration is mandatory if they make any taxable supplies in the UAE, unless a UAE-based party is responsible for accounting for VAT under the reverse charge mechanism. Unlike local entities, non-resident suppliers have no registration threshold and must register for VAT regardless of turnover.

4. What is transfer taxation on transactions of a group of foreign companies structured? 

The UAE does not impose direct transfer taxes on intercompany transactions. However, Transfer Pricing (TP) rules apply and follow the OECD’s arm’s length principle, meaning that transactions between related parties must reflect market value.

Every Taxable Person must meet the arm’s length standard in determining Taxable Income, transactions and arrangements between Related Parties and maintain the Transfer Pricing Documentation. 

For Free Zone Persons, compliance with TP requirements is one of the conditions for maintaining a Qualifying Free Zone Person (QFZP) and benefiting from the 0% Corporate Tax rate. If a Taxable Person fails to meet any of the QFZP conditions at any point during the tax period, it loses the right to the 0% Corporate Tax rate for that period and the subsequent 4 years (a five-year ban).

The FTA is authorized to adjust the Taxable Income to achieve the arm’s length result that best reflects the facts and circumstances of the transaction or arrangement where the result of the transaction or arrangement between Related Parties does not fall within the arm’s length range. 

Depending on various conditions, taxpayers in the UAE may be required to maintain the following TP documentation:

• Transfer Pricing Disclosure Form (as a part of the Corporate Tax Return);

• Master File;

• Local File;

• Country-by-Country Report.

Additional supporting information, which may be requested by the FTA, including reasonable records substantiating compliance with the arm's length principle.

5. What are the indirect taxes/excise taxes in the country? 

The UAE tax legislation provides for excise taxes and customs duties.

Excise tax is levied at 50% or 100% rates depending on the product (as outlined in Question 2).

Businesses engaged in the following activities are required to register for excise tax in the UAE:

• Production of excise goods;

• Import of excise goods into the UAE;

• Release for consumption in the UAE from a Designated Zone;

• Stockpiling of excise goods in certain cases;

• Warehousing of excise goods by warehouse keepers, where applicable.

Custom duties are imposed at a rate of 5% on most imported goods. Exceptions include higher rates for alcohol (50%) and tobacco products (100%).

Certain imports may benefit from customs duty exemptions, for instance goods originating from GCC countries or industrial exemptions for raw materials and equipment.

Additionally, goods originating in the UAE may benefit from preferential customs duty treatment within the Greater Arab Free Trade Area (GAFTA) under the free trade agreement signed by member states of the League of Arab States.

6. What tax strategy would you recommend for a foreign company? What are the most favorable tax regimes for corporations, businesses and foreign trade firms?

The UAE offers a highly favorable tax environment supported by several innovative incentives.

For example, holding companies can benefit from the Participation Exemption, while qualifying free zone persons (QFZPs) may access a 0% Corporate Tax regime. Additionally, special tax treatments are available for unincorporated partnerships, family foundations, and other entities.

The 0% Corporate Tax regime for QFZPs is particularly attractive, as it aligns with OECD best practices and can apply to income from a wide array of activities, including trading qualifying commodities, distributing goods from designated zones, providing logistics and headquarters services, holding investment securities, and deriving income from qualifying intellectual property. While strict compliance requirements and several conditions must be met to qualify, the potential benefits of this regime are substantial.

Ultimately, the optimal tax strategy for a foreign company in the UAE will depend on its specific business activities.

For instance, a foreign company looking to invest in real estate may consider channeling these investments through the ultimate beneficial owner or through transparent entities, such as trusts or family foundations. In such cases, the income generated from personal and real estate investments can be exempt from Corporate Tax.

For holding companies, achieving a 0% Corporate Tax is possible either through the Participation Exemption or by utilizing the 0% Corporate Tax regime for QFZPs.

7. What specifics of taxation and tax reporting of foreign companies could you note? How is the tax reporting of a foreign company structured? What specifics should an investor consider?

The UAE applies the concept of the place of the effective management and control in determining tax residency. A company incorporated outside the UAE may still be considered a UAE tax resident if its key strategic decisions – the center of effective management – are made in the UAE. This includes the location where:

• The board of directors or senior management regularly meets;

• Strategic, financial, and operational decisions are made;

• Day-to-day business activities and administrative functions are controlled.

Therefore, particular attention should be paid to these questions when considering the tax implications in the UAE.

There are no special compliance rules specific to foreign companies. However, foreign entities may fall under UAE Corporate Tax obligations depending on their POEM, the existence
of a Permanent Establishment (PE), or a nexus in the UAE.

Corporate Tax Compliance

If a foreign company is subject to Corporate Tax based on the POEM, or PE existence
or a nexus in the UAE, it should register with the FTA, in particular:

• If it is managed and controlled from the UAE: registration required within 3 months from the end of the company’s financial year; 

• If it has a PE in the UAE:  If the PE existed before 1 March 2024: registration must be completed within 9 months from that date;  If the PE was created after 1 March 2024: registration must be done within 6 months from its date of establishment.

• if has a nexus in the UAE: If the entity existed before of 1 March 2024: register within 3 months from that date; If the nexus was created after 1 March 2024: register within 3 months from the date of establishment.

The Corporate Tax return must be submitted and the tax due paid before 9 months from the end of the relevant tax period. 

VAT Compliance

VAT-registered entities must file monthly or quarterly VAT returns, as determined by the FTA. As mentioned earlier, VAT registration is mandatory for foreign companies if they make any taxable supplies in the UAE (e.g. streaming platforms), unless a UAE-based party is responsible for accounting for VAT under the reverse charge mechanism. The reverse charge mechanism serves as a simplification tool that eliminates the requirement for non-resident suppliers (those based outside the UAE) to register for VAT when providing goods or services to VAT-registered individuals or businesses within the UAE. Where the reverse charge mechanism applies, the non-resident supplier will not charge VAT to the recipient. Instead, the recipient must self-account for the VAT in respect of the goods and services receivedIn such cases, there is no registration threshold, and the VAT registration is required regardless of turnover.

VAT returns and any VAT liability payments, must be submitted to the FTA by the 28th day of the month following the end of the VAT return period.

Transfer Pricing (TP) Compliance

UAE taxpayers, except for those claiming Small Business Relief, are required to file a Transfer Pricing disclosure form as part of their Corporate Tax return.

In addition: 

• Taxpayers with a turnover exceeding AED 200 million; or 

• Those belonging to a multinational group with a global turnover above AED 3.15 billion must prepare both a local file and a master file annually.

Key Reporting Requirements:

• Corporate Tax Reporting: Annual tax return must be submitted to the FTA; Large businesses may need audited financial statements For QFZPs audited financial statements are obligatory to ensure the 0% Corporate Tax rate.
  
  

• VAT Reporting: VAT-registered businesses must file VAT quarterly or monthly via the FTA portal; VAT invoices must comply with UAE regulations.
  
  

• Excise Tax Reporting: Businesses dealing in excise goods must submit periodic excise tax returns.

Key Considerations for Investors:

• Understanding Free Zone vs Mainland Taxation – Free zones offer tax benefits, but operating in the mainland can trigger tax obligations;

• Transfer Pricing Compliance – Required for multinational groups;

• Double Taxation Treaties – The UAE has over 100 DTAs that can reduce tax exposure for foreign businesses.

8. What is taxation in free economic zones?

A 0% Corporate Tax is available to entities that qualify as Qualified Free Zone Persons, provided all the applicable conditions are met.

Entities established in the qualifying free zone would be considered as a QFZP eligible for the 0% Corporate Tax rate if all the following conditions are satisfied:

• Deriving Qualifying Income. Qualifying Income includes: Income from transactions with a Free Zone Person, provided it is a Beneficial Recipient of the goods/services (except for income derived from Excluded Activities); Income from Qualifying Activities (manufacturing of goods or materials, processing of goods or materials, trading of Qualifying Commodities, holding of shares and other securities for investment purposes, ownership, management and operation of Ships, reinsurance services, fund management services, wealth and investment management services, headquarter services to Related Parties , treasury and financing services to Related Parties, financing and leasing of Aircraft, distribution of goods or materials
  in or from a Designated Zone, logistics services);  Income from the ownership or exploitation of Qualifying Intellectual Property (e.g. patents, copyrighted software and any right functionally equivalent
  to a patent);  Any other income provided the de minimis requirements are met.

• Meeting the de minimis requirements: non-qualifying revenue should not exceed a lower of 5% of total revenue or AED 5 million per the taxable period;

• Maintaining adequate substance in the UAE free zone;

• Not electing to be subject to Corporate Tax;

• Complying with the requirements under the Arm’s Length Principle and transfer pricing documentation; 

• Preparing audited financial statements.

Not all free zones in the UAE publicly announced their status for Corporate Tax purposes. As was clarified by the FTA, it is advised for each taxpayer to check with the free zone’s authorities whether that free zone is a qualified free zone.

Failure to meet any of the above conditions will result in the loss of 0% Corporate Tax rate for 5 years – in the tax period of non-compliance and for four subsequent years. The literal interpretation of these requirements suggests that a person may lose the 0% Corporate Tax rate if any of these conditions are violated at least once. 

A foreign company that transfers its place of incorporation to a Free Zone in the UAE, for instance in the case of redomiciliation, could also benefit from the QFZP regime. 

UAE branches of foreign companies registered in the qualified free zone could also benefit from the QFZP regime. However, if the foreign company is subject to Corporate Tax based
on POEM, it will not be able to benefit from the QFZP regime.

9. Are there agreements on exchange of financial and tax information?

The UAE is a signatory to over 100 Double Taxation Treaties (DTTs) worldwide. Additionally, the UAE has signed the BEPS Multilateral Instrument (MLI), modifying 114 selected DTTs to prevent tax avoidance.

In 2015, the UAE became a Foreign Account Tax Compliance Act (FATCA) partner with the United States by signing an intergovernmental agreement to establish guidelines for UAE-based financial institutions to comply with FATCA regulations.

Following FATCA’s implementation, the UAE also introduced Common Reporting Standard (CRS) legislation, under which financial institutions are required to collect and automatically exchange information on foreign tax residents' financial accounts with relevant tax authorities.

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About the firm

PGP Tax & Legal

PGP Tax & Legal delivers in-depth tax and legal advisory services across the UAE and GCC. The firm specializes in international tax planning, transfer pricing, corporate structuring, and VAT, as well as tax dispute resolution and prevention. Recognized for technical excellence and client-centric solutions, PGP serves multinational corporations, regional enterprises, and high-net-worth individuals. The firm is committed to global tax excellence, thought leadership, and helping clients navigate evolving regulations with practical, innovative solutions.

DUBAI

+971 50 258 9570

pgp-legal.ae

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M&A and securities transactions

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1. Are there any restrictions on the purchase of assets (business and securities) for non-residents?
2. How is the purchase of business by non-residents regulated by law in practice? What should an investor stipulate?
3. How is the securities market regulated in your country? How can securities be acquired?
4. How can one invest in stocks and securities? What are the main stock exchange instruments in your country?
5. How are public and private investments regulated by law?
6. What should a non-resident stipulate when investing in securities?
7. Is it possible to relocate business from other jurisdictions to your country?

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1. Are there any restrictions on the purchase of assets (business and securities) for non-residents?

Under the UAE Commercial Companies Law, non-residents are generally permitted to own up to 100% of UAE mainland companies, subject to activity-specific restrictions. Although the UAE has significantly liberalised its foreign direct investment (FDI) regime, residual restrictions remain in sectors designated as strategic.

These strategic sectors include:

• Defence and military manufacturing;

• Oil and gas exploration;

• Banking and insurance;

• Telecommunications.

In such cases, foreign ownership may be subject to:

• Capped equity percentages (commonly 49%);

• Local partner or UAE national shareholding requirements;

• Regulatory approval from competent authorities such as the Central Bank, Securities and Commodities Authority (SCA), or Telecommunications and Digital Government Regulatory Authority (TDRA).

Public Securities:

Foreign ownership of shares in public joint stock companies (PJSCs) listed on Abu Dhabi Securities Exchange (ADX), Dubai Financial Market (DFM), or Nasdaq Dubai is:

• Regulated under the UAE Securities Law and SCA Resolution No. 13 of 2021;

• Subject to foreign ownership caps set in each issuer’s Articles of Association,
  often ranging between 20% and 49%;

• Acquisitions exceeding 30% may trigger a mandatory takeover offer under UAE SCA Takeover and Merger Regulation No. 18 of 2017.

Asset Transactions:

While asset deals are generally unrestricted, complications may arise where:

• The assets are tied to regulated business licenses (e.g., healthcare, education, energy);

• The target holds real estate in non-designated zones, particularly in emirates like Dubai or Sharjah where freehold rights are limited to certain nationalities or areas (per Dubai Law No. 7 of 2006);

• Transfers involve customs-regulated goods, strategic commodities, or state-tied assets.

Common Structuring Approach:

To navigate ownership constraints, foreign investors often set up the in UAE’s numerous free zones. Furthermore, foreign acquirers often utilize Limited companies (similar to LLCs)
or Special Purpose Vehicles (SPVs) incorporated in:

• Abu Dhabi Global Market (ADGM); or

• Dubai International Financial Centre (DIFC).

These SPVs benefit from:

• 100% foreign ownership;

• English common law governance;

• International dispute resolution via ADGM and DIFC Courts;

• Tax-efficient rules and cross-border structuring through and UAE’s 140+ double tax treaties.

In both the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), investors benefit from investment-friendly, internationally-aligned corporate structures that offer:

• 100% foreign ownership;

• English common law frameworks;

• No restrictions on capital repatriation;

• Zero withholding taxes and no capital gains taxes (in most cases);

• Access to the UAE’s double tax treaty network.

To optimise tax efficiency, investors typically deploy SPVs in ADGM or DIFC that qualify
as Free Zone Persons,allowing for a 0% corporate tax rate on eligible income, no withholding
on dividends, interest, or royalties, and treaty access, which reduces friction on cross-border payments, capital repatriation, and exit proceeds.

2. How is the purchase of business by non-residents regulated by law in practice? What should an investor stipulate? 

The acquisition of businesses by non-residents in the UAE is governed by a multi-tiered legal and regulatory regime, integrating federal law, emirate-specific licensing frameworks, and sectoral approvals. The key regulatory pillars would include the Commercial Companies Law, which establishes shareholding and governance rights; Cabinet Decision No. 55 of 2021, which lists sectors where foreign ownership remains restricted; the UAE Corporate Tax Law, introducing new tax planning considerations and dimensions; and Cabinet Decision No. 58 of 2020, which mandates Ultimate Beneficial Ownership (UBO) disclosures. 

Pre-Closing Requirements:

• Licensing Clearance: Non-residents must ensure that the relevant licensing authority, whether the Department of Economic Development (DED) in the applicable Emirate for mainland companies, or the competent free zone authority (e.g., ADGM, DIFC, DMCC), approves the company’s activity code, foreign ownership structure, trade name, and licensing framework prior to completion.

• Sectoral Consents: Where the target operates in a regulated sector, non-resident investors must obtain prior approval from the relevant competent authority before completing the transaction. These consents are mandatory and vary by industry, for example: The UAE Central Bank for financial institutions, fintech platforms, and insurance entities; The Ministry of Health and Prevention (MOHAP) or local health authorities (e.g., DHA, DoH) for clinics, hospitals, and healthcare facilities;  The Knowledge and Human Development Authority (KHDA) in Dubai or ADEK in Abu Dhabi for education providers, training institutes, and private schools; The Telecommunications and Digital Government Regulatory Authority (TDRA) for telecom, IT, and digital infrastructure providers.

Failure to secure sector-specific approvals may invalidate the share or asset transfer under UAE law and can delay licensing post-closing.

• Due Diligence: Investors should also consider conducting comprehensive pre-closing legal and tax due diligence to ensure regulatory compliance and identify contingent liabilities. Key areas of focus include: Tax and Economic Substance: While the Economic Substance Regulations have recently been abolished, the UAE Corporate Tax Law requires economic substance, which would be even more critical in relation to acquisitions of shares in companies that qualify as qualified free zone persons (QFZPs). In share acquisitions, the preservation of valuable tax attributes, such as carried-forward tax losses, VAT credits, and grandfathered contractual rights, is contingent on satisfying the continuity of ownership test under the UAE Corporate Tax Law, which requires that no more than 50% of the entity’s ownership has changed compared to the year in which the losses were incurred, and that the same or a similar business is carried on for at least three years following the end of the tax period in which the ownership change took place.

  In UAE M&A transactions, legal due diligence should go beyond corporate records, and should include licensing compliance and sectoral approvals. Particular attention should be given to change-of-control clauses in key contracts, intellectual property ownership and registration (especially for tech-driven targets), as well as ongoing litigation and regulatory enforcement history. Investors should assess real estate rights, including freehold restrictions in non-designated zones, and labour law compliance, including visa transferability, gratuity liabilities, and WPS records. Free zone entities in ADGM or DIFC also require GDPR-aligned data protection review, board resolution integrity, and adherence to common law governance norms. Where the target operates in a regulated industry,such as financial services, education, or healthcare, prior clearance from the relevant authority (e.g., Central Bank, KHDA, MOHAP) is mandatory. 

In cases where either of the tests is not met, the carry-forward of historical losses may be disallowed, unless the transaction qualifies under the group restructuring relief or meets the criteria for intra-group transfers and continuity within a qualifying group. In contrast, asset purchases allow buyers to ring-fence liabilities but typically do not benefit from a step-up in tax basis unless the assets are integrated into a taxable business. UAE VAT at 5% may apply unless the transaction qualifies as a Transfer of a Going Concern (TOGC). 

Pre-closing tax due diligence must rigorously also confirm group structuring accuracy, that the target entity is properly registered with the Federal Tax Authority (FTA) for VAT and Corporate Tax purposes, that the target is compliant with all customs and excise requirements and verify that all historical filings, payments, and refund claims are in good standing. Alignment with OECD guidelines is mandatory for related-party transactions. Documentation must include Local and Master Files, with disclosure obligations triggered for certain revenue thresholds. 

Buyers should also verify Ultimate Beneficial Ownership (UBO) disclosures and Anti-Money Laundering (AML) compliance, as deficiencies may impact licensing and banking. 

Ultimately, risk allocation must be documented in the SPA through robust warranties, indemnities, and completion conditions addressing tax exposure, contract portability, licensing continuity, and undisclosed liabilities.

What are the most frequently used forms of structuring M&A transactions in practice? 

M&A transactions are generally structured in four ways:

• Share Purchase Agreements (SPA):

In the UAE, Share Purchase Agreements (SPAs) remain the most commonly adopted structure for mergers and acquisitions, particularly when the objective is to acquire the entire equity interest in a company. This structure facilitates the seamless transfer of ownership by preserving the company’s legal identity, regulatory licenses, employment contracts, and commercial relationships. Importantly, in this form of transaction, the buyer assumes the target company’s historical commercial obligations, and financial liabilities, including contractual and tax exposures. From a tax perspective, one key advantage of a share purchase is the ability to retain the target’s tax attributes, such as carried-forward tax losses, provided that the continuity of ownership threshold and business continuity conditions as discussed above are met.

• Asset Purchase Agreements (APA):

By contrast, Asset Purchase Agreements (APAs) are typically preferred where the buyer seeks to ring-fence liabilities or acquire specific business lines, rather than the entire entity. Asset deals allow acquirers to pick valuable assets, such as intellectual property, inventory, customer contracts, or equipment, without assuming unrelated or contingent liabilities. However, each individual asset transfer usually requires the prior consent of third parties, including landlords, counterparties, regulators, and licensors. From a tax standpoint, asset purchases do not generally result in a step-up in tax basis, unless the acquired assets are used in a UAE taxable business generating qualifying income. As such, buyers must evaluate the trade-off between transactional flexibility and the potential loss of tax continuity.

• Statutory Mergers:

Statutory mergers and consolidations are permitted under the UAE Commercial Companies Law (CCL) and are primarily utilised in highly regulated sectors or in the context of intra-group corporate restructurings. These mergers involve the legal consolidation of two or more UAE-incorporated entities into a single surviving entity, often requiring formal approvals from both shareholders and creditors. Additionally, the process mandates the reissuance or revalidation of commercial licenses and regulatory consents, particularly where the merged entities operate in sectors such as financial services, healthcare, or telecommunications. This route is more unused in the UAE, and is procedurally more complex than share or asset deals. However, it does provide a viable route for achieving full legal integration in circumstances where operational synergies or group simplification are strategic priorities.

• Cross-Border SPV Acquisitions:

In parallel, cross-border acquisitions via Special Purpose Vehicles (SPVs) established in the ADGM or DIFC are widely favoured for their structural flexibility and investor protection features. These SPVs are incorporated under English common law, offering enhanced contractual enforceability, access to independent judicial systems, and confidentiality in ownership arrangements. They are commonly used in private equity roll-up strategies, venture-backed acquisitions, and dual-track exit processes (e.g., simultaneous trade sale and IPO readiness). The SPV structure also facilitates tax-efficient holding, fund syndication, and streamlined capital raising, making it an optimal vehicle for cross-border M&A and institutional investment flows into the UAE and wider GCC region.

3. How is the securities market regulated in your country? How can securities be acquired? 

The UAE has a dual regulatory framework:

Onshore Regulation – SCA:

• Securities and Commodities Authority (SCA) oversees: IPOs, tender offers, market conduct; DFM, ADX, and Nasdaq Dubai.

Financial Free Zones – DFSA and FSRA:

• Dubai Financial Services Authority (DFSA) in the DIFC and Financial Services Regulatory Authority (FSRA) in the ADGM regulate: Private placements; Fund formations (Exempt Funds, QIFs); Tokenized and digital securities.

Securities Acquisition Process:
Public Markets:

• Register for a National Investor Number (NIN) via exchange CSD;

• Trade through SCA-licensed brokers;

• Comply with AML/KYC and UBO regulations.

Private Markets:

• Limited to Professional Clients under DFSA/FSRA rules;

• Often structured via SPVs or feeder funds;

• Minimum subscription amounts (AED 500,000+ or USD 150,000+).

Foreign Ownership Limits:

• Imposed at issuer level via constitutional documents;

• Automatically enforced through exchange systems.

4. How can one invest in stocks and securities? What are the main stock exchange instruments in your country? 

Both resident and non-resident investors can access the UAE’s capital markets, which are regulated by the Securities and Commodities Authority (SCA) for onshore markets, and the Dubai Financial Services Authority (DFSA) and Financial Services Regulatory Authority (FSRA) for the DIFC and ADGM, respectively. These authorities oversee a diverse marketplace comprising conventional and Sharia-compliant instruments.

How to Invest:

• Investor Registration: 

Investors trading on ADX, DFM, or Nasdaq Dubai must obtain a National Investor Number (NIN) via a licensed broker or directly through the exchange’s clearing system. The NIN is a prerequisite for shareholding
and settlement;

• Regulatory Compliance: 

Investors must complete Know Your Customer (KYC) and Anti-Money Laundering (AML) checks in accordance with Federal Law. Institutional investors may also be subject to Ultimate Beneficial Ownership (UBO) disclosure;

• Custodial Services: 

High-net-worth and institutional investors often engage licensed custodians for nominee holdings and post-trade settlement.

Main Exchange Instruments:

• Equities: Shares of UAE-listed and dual-listed companies on ADX, DFM, and Nasdaq Dubai;

• Sukuk and Bonds: Traded fixed-income instruments, both conventional and Islamic;

• ETFs and REITs: Offer diversification across sectors or asset classes;

• Derivatives: Equity futures listed on Nasdaq Dubai;

• Private Placements: Conducted under DFSA/FSRA rules in DIFC/ADGM, primarily for VC and PE.

The UAE continues to deepen market liquidity, aligning offerings with global investment norms.

5. How are public and private investments regulated by law?

Public and private investments in the UAE are governed by distinct legal frameworks, depending on the type of offering, investor classification, and jurisdiction – mainland versus financial free zones.

Public Investments (SCA-Regulated):

Public offerings, including IPOs and secondary offerings, fall under the oversight
of the Securities and Commodities Authority (SCA) pursuant to, the UAE Securities Law, Commercial Companies Law, and the IPO Regulations.

Key requirements include filing a SCA approved prospectus, meeting free float thresholds (typically 25%), and complying with ongoing disclosure, corporate governance, and market conduct obligations. Foreign investors are permitted to participate subject to foreign ownership caps, which are embedded in the company’s Articles of Association and enforced by ADX and DFM trading platforms.

Private Investments (DIFC/ADGM and Contract-Based):

Private placements are exempt from full SCA prospectus rules when offered to Professional Clients and meet investor number and minimum subscription thresholds (AED 500,000+). In the DIFC and ADGM, the DFSA and FSRA regulate:

• Exempt Funds and Qualified Investor Funds (QIFs);

• Private equity, VC, and family office structures;

• SPV-based vehicles for investment holding.

These free zones offer a common law environment, fast-track fund establishment, and cross-border enforceability, making them ideal for sophisticated, non-retail investments.

6. What should a non-resident stipulate when investing in securities? 

The UAE capital markets are accessible to both resident and non-resident investors, subject to compliance with federal and free zone securities laws.

Regulatory Overview:

• The Securities and Commodities Authority (SCA) regulates public offerings and trading on ADX, DFM, and Nasdaq Dubai;

• The Dubai Financial Services Authority (DFSA) and Financial Services Regulatory Authority (FSRA) govern private markets in DIFC and ADGM, respectively, under common law.

How to Invest:

• NIN Registration: Investors in public markets must obtain a National Investor Number (NIN) from the Central Securities Depository via a licensed SCA broker;

• AML/KYC Compliance: All participants must comply AML and relevant UBO disclosure rules;

• Custodial Services: Institutional and HNW investors often use licensed custodians for nominee holdings, compliance, and settlement.

Key Instruments:

• Equities: Listed UAE and dual-listed shares (ADX, DFM, Nasdaq Dubai);

• Fixed Income: Government and corporate bonds/sukuk;

• ETFs/REITs: Listed funds providing diversified exposure;

• Derivatives: Futures and options on indices and large-cap stocks;

• Tokenized/Digital Securities: Subject to regulation by VARA, FSRA, or DFSA;

• Private Placements: Accessed via Exempt/QIFs in ADGM and DIFC, limited
  to Professional Clients.

Foreign Ownership Restrictions

Investors should ascertain whether the target entity, particularly public joint stock companies (PJSCs) listed on the Abu Dhabi Securities Exchange (ADX), Dubai Financial Market (DFM), or Nasdaq Dubai, has instituted foreign ownership caps within its Articles of Association. These caps, typically ranging from 20% to 49%, are enforced through the exchanges' electronic trading systems and must be thoroughly examined during due diligence, especially when contemplating significant share acquisitions.

Disclosure Obligations Under SCA Regulations

Acquisitions surpassing specific thresholds, such as 5%, 10%, or 30%, may trigger mandatory disclosures under the Securities and Commodities Authority (SCA) Takeover and Merger Regulations. Notably, acquiring 30% plus one share necessitates a mandatory tender offer. It is imperative to conduct a legal review to ensure compliance with pre-notification and tender offer requirements in transactions that may lead to a change of control.

Compliance with KYC, AML, and UBO Regulations

Non-resident investors are required to comply with stringent Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols, including the disclosure of Ultimate Beneficial Ownership (UBO). Non-compliance can result in delays in account opening, regulatory sanctions, or reputational damage.

Custodial and Post-Trade Arrangements

Institutional investors typically engage licensed custodians to manage nominee holdings, facilitate trade settlements, collect dividends, and handle regulatory reporting. These arrangements are vital for maintaining operational continuity and aligning with the UAE’s investor protection standards.

Governing Law and Dispute Resolution Mechanisms

In private placements, pre-IPO transactions, or convertible instruments, it is advisable for investors to ensure that contracts are governed by the laws of the Abu Dhabi Global Market (ADGM) or Dubai International Financial Centre (DIFC). Dispute resolution should be stipulated through the respective courts or recognized arbitration centers, such as the DIFC-LCIA or ADGM Arbitration Centre, to ensure enforceability and legal certainty.

7. Is it possible to relocate business from other jurisdictions to your country? 

The United Arab Emirates permits the re-domiciliation (also referred to as continuation or inward migration) of companies from foreign jurisdictions into the UAE, without the need for liquidation or loss of legal identity. 

This mechanism allows a foreign-incorporated entity to relocate its statutory seat and continue as a UAE-registered entity, retaining its corporate history, contractual relationships, and banking facilities. Re-domiciliation is particularly streamlined in the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC), both of which offer internationally harmonised, common law corporate frameworks.

Redomiciliation into ADGM or DIFC is typically permitted where the foreign jurisdiction:

• Allows outward continuation;

• Is not on a UAE sanctions or restricted jurisdiction list; and

• Has a legal system that supports corporate migration and comparable corporate governance standards.

Eligible jurisdictions often include the British Virgin Islands, Cayman Islands, Jersey, Guernsey, Singapore, and certain U.S. states such as Delaware.

The redomiciliation process involves several corporate and regulatory steps, including:

• Board and shareholder resolutions authorising the continuation;

• Provision of constitutional documents, financial statements, and a certificate of good standing from the original jurisdiction;

• Submission of redomiciliation and licensing applications to the ADGM or DIFC Registrar;

• Deregistration from the original jurisdiction (post-approval).

Issuance of a Certificate of Continuation by the receiving Regist

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About the firm

Hourani & Partners

Hourani & Partners is a leading Middle East law firm known for its seamless, integrated approach to navigating the region's complex legal landscape. With senior attorneys as dedicated local contacts and support from a multi-office team, the firm ensures efficient, high-quality service tailored to each client's needs. This collaborative model allows Hourani & Partners to deliver exceptional results while optimizing cost and maintaining a strong client focus.

DUBAI

+971 4 205 2000

HOURANIPARTNERS.COM

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Venture capital

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1. Where should a foreign investor start a startup project in your country? What should be considered first of all? What legal form should be chosen?
2. How are venture capital funds regulated?
3. How is funding for startup projects raised?
4. What are the specifics of structuring venture deals in the country?
5. How is Intellectual Property (IP) Protected?

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1. Where should a foreign investor start a startup project in your country? What should be considered first of all? What legal form should be chosen?

For foreign founders, venture capital (VC) sponsors, and strategic investors seeking to launch startup ventures in the UAE, the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC) offer the most sophisticated platforms for formation, financing, and international scaling.

These jurisdictions provide:

• 100% foreign ownership without the need for a local sponsor;

• A common law legal framework aligned with English company and contract law;

• Internationally enforceable shareholders’ agreements, convertible instruments, and IP licensing arrangements;

• Zero % corporate tax for eligible activities conducted by Qualifying Free Zone Persons (QFZPs) under Federal Decree-Law No. 47 of 2022 (UAE Corporate Tax Law);

• Access to UAE banking infrastructure, dispute resolution via DIFC and ADGM Courts, and global capital markets.

Key Legal and Strategic Considerations

• Legal Framework and Enforceability ADGM and DIFC adopt bespoke company laws modelled on the UK Companies Act, enabling: Use of advanced legal instruments such as Simple Agreements for Future Equity (SAFEs) and convertible notes;

• Contractual protections for minority investors, including drag-along and tag-along rights; IP holding and licensing structures governed by common law. 

• Startup Ecosystem and Access to Capital Both financial centres serve as innovation hubs: Hub71 (ADGM) and FinTech Hive (DIFC) provide accelerators, subsidised office space, and connections to investors; Government-affiliated investors such as Mubadala Ventures, ADQ’s DisruptAD, and the Dubai Future District Fund actively co-invest in early-stage and growth companies; Regulatory pathways for tokenized fundraising, fintech, and AI are supported under ADGM and DIFC digital asset regimes.

• Optimal Legal Structure Most startup structures adopt a two-tier configuration: An Operating Company (OpCo) established in a UAE mainland or free zone jurisdiction to perform revenue-generating activities; A Holding Company (HoldCo) in ADGM or DIFC, which: Owns the IP and brand; Serves as the issuer of shares, SAFEs, and convertible notes to investors; Facilitates royalty flows and capital repatriation through intra-group licensing or service agreements.
  
  

• Legal Form: In the UAE’s ADGM and DIFC jurisdictions, the Private Company Limited by Shares (Ltd) is the preferred legal form for venture capital-backed startups. It provides the structural flexibility to: Issue founder equity and enter into early-stage financing instruments such as SAFEs and convertible notes; Create multiple classes of shares supporting convertible securities and liquidation preferences aligned with venture capital term sheets; Establish Employee Stock Option Plans (ESOPs) through board and shareholder approved option pools, allowing for structured employee equity participation under clear vesting terms; Implement critical VC protections including drag-along, tag-along rights,
  and anti-dilution mechanisms.

The Ltd structure also facilitates future financings, secondary sales, and exit transactions, making it optimal for scalable startup growth within internationally recognised legal frameworks.

2. How are venture capital funds regulated? 

Venture capital fund formation in the UAE is governed by three distinct regulatory frameworks, each offering varying levels of flexibility, compliance intensity, and international alignment. While the mainland regime administered by the SCA remains procedurally intensive, the ADGM and DIFC frameworks have become the preferred venues for global venture capital structures.

Mainland UAE: SCA-Regulated Funds

Funds established outside of free zones are regulated by the Securities and Commodities Authority (SCA) under Federal Law No. 4 of 2000 and Cabinet Decision No. 13 of 2021.
Key features include:

• Prospectus Approval: Prior SCA approval is mandatory for all fund formation and marketing materials;

• Capitalisation Thresholds: Minimum subscribed capital and net asset value (NAV) thresholds apply, varying by fund type;

Licensing Requirements: Fund managers, custodians, and administrators must be licensed. Due to the high compliance burden and longer approval timelines, SCA-regulated vehicles are rarely used for early-stage venture capital or international LP syndications.

DIFC – Dubai Financial Services Authority (DFSA) Regime

The DIFC operates under a common law system, and its funds are regulated by the Dubai Financial Services Authority (DFSA). The DFSA authorises:

• Exempt Funds – Available to a maximum of 100 Professional Clients, with a minimum subscription of USD 50,000;

• Qualified Investor Funds (QIFs) – Open-ended in size but with higher minimum subscription thresholds (commonly USD 500,000+). Fund managers must obtain a Category 3C licence, and must comply with DFSA’s strict rules on conduct
  of business, AML/CFT compliance, risk management, and corporate governance. The DIFC regime also supports the use of umbrella fund structures, feeder vehicles, and Special Purpose Companies (SPCs) for co-investments and carried interest mechanisms. Fund managers must be licensed as Category 3C Firms, subject to DFSA’s conduct of business rules, Anti-Money Laundering (AML) requirements, governance protocols, and risk management oversight. The DIFC also allows
  for umbrella structures, feeder vehicles, and Special Purpose Companies (SPCs) to facilitate co-investment and carried interest distribution.

ADGM – Financial Services Regulatory Authority (FSRA) Regime

The Abu Dhabi Global Market (ADGM) offers a streamlined and highly specialised framework for venture capital through the FSRA’s Venture Capital Fund Manager Regime. It features:

• Reduced Capital Requirements – Lower financial thresholds for both GPs and LPs;

• Simplified Reporting – Proportionate regulation tailored to venture risk profiles;

• Flexible Structuring Options – Including standalone, master-feeder, umbrella, and segregated portfolio structures. SPVs may be used for asset holding, IP ownership, or equity warehousing, and ADGM permits innovative tools such as foundation structures and carried interest distribution vehicles.

The ADGM regime permits the use of SPVs for asset holding, equity warehousing, and intellectual property (IP) ring-fencing, while also allowing foundation structures and fund-linked carried interest models.

3. How is funding for startup projects raised?

The UAE’s venture financing ecosystem mirrors global capital stack conventions, progressing from pre-seed to late-stage growth rounds, while offering unique access to sovereign investors, common law frameworks, and digitally enabled capital-raising instruments. Fundraising is typically structured through either equity-linked instruments or convertible securities, governed by enforceable English law in the Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC).

Pre-Seed and Seed Rounds

Early-stage funding is generally sourced from:

• Angel investors and high-net-worth individuals (HNWI);

• Government-affiliated accelerators such as Hub71 (ADGM) and In5 (Dubai);

• Family offices and regional micro-VCs.

These rounds are often executed through:

• SAFE notes (Simple Agreements for Future Equity): Deferred equity instruments providing conversion at a valuation cap and/or discount (typically 10%–30%);

• Convertible notes: Short-term debt instruments convertible into equity at the next financing round, usually with interest accrual, discounts, and valuation caps;

• Founder equity and option pool frameworks: Incorporating reverse vesting schedules (four-year vesting with a one-year cliff) and early ESOP allocations.

Institutional Rounds (Series A–C)

As startups scale, institutional VCs enter the cap table. Term sheets are commonly aligned with NVCA or BVCA standards, and include:

• Preferred shares with 1x non-participating liquidation preferences;

• Anti-dilution clauses, usually weighted-average;

• Board representation, reserved matters, and investor veto rights on strategic decisions.

Strategic and Sovereign Participation

UAE sovereign wealth and government-backed entities are active VC participants, particularly in climate tech, AI, healthtech, and fintech. Key institutional sponsors include:

• Mubadala Capital Ventures;

• DisruptAD (ADQ);

• Dubai Future District Fund.

Their involvement often includes co-investment rights, grant funding, and convertible debt instruments, adding credibility and non-dilutive capital to the venture’s cap table.

Digital and Tokenized Fundraising

The UAE is among the global pioneers in enabling Security Token Offerings (STOs) and digitally native fundraising, governed by:

• VARA in Dubai for virtual assets;

• FSRA (ADGM) and DFSA (DIFC) for digital securities and tokenized equity offerings.

These structures remain limited to Professional Clients and are subject to bespoke AML, custody, and disclosure requirements.

4. What are the specifics of structuring venture deals in the country?  

Venture capital transactions in the UAE, particularly within the Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC), follow globally accepted investment conventions while offering additional flexibility and legal certainty under English common law. Deal structuring reflects international best practices drawn from NVCA and BVCA templates, with adjustments for regional regulatory considerations and exit strategies.

Equity Instruments and Deal Terms

Venture rounds are typically executed through Preferred Shares (Series Seed, Series A
and beyond), incorporating standard investor rights such as:

• 1x non-participating liquidation preference, safeguarding downside protection;

• Automatic conversion into ordinary shares upon a qualified financing event or IPO;

• Non-cumulative dividends, generally declared at board discretion.

Investment rights packages usually include pro-rata participation, pre-emptive rights,
and weighted-average anti-dilution protections to mitigate dilution risk.

Founder Incentives and Employee Equity Plans

Cap table alignment and talent retention are achieved through:

• Reverse vesting schedules for founder equity.

• Employee Stock Option Plans (ESOPs) implemented via shareholder and board resolutions, with option pools.

Depending on investor preferences and structuring considerations, ESOPs may be structured as true equity grants or as phantom option schemes replicating economic outcomes without immediate dilution.

Governance and Protective Rights

Investor rights are safeguarded through:

• Board representation or observer rights;

• Reserved matters, requiring investor consent for material actions such as M&A, issuance of new securities, or fundamental corporate changes;

• Drag-along and tag-along rights, facilitating coordinated exit strategies while protecting minority shareholders.

Such terms are embedded within the Shareholders’ Agreement, supported by Subscription Agreements and Cap Table Management documentation.

Downside Protection and Information Rights

Risk mitigation measures typically include:

• Anti-dilution protections using a broad-based weighted-average formula (full ratchet protections applied only in distressed rounds);

• Right of First Refusal (ROFR) and Right of First Offer (ROFO) mechanisms;

• Founder lock-in covenants, restricting early founder departures or unauthorized share transfers.

Legal Framework and Enforcement

All venture instruments, such as SAFEs, Convertible Notes, Preferred Share Agreements, Shareholders’ Agreements, are governed by ADGM or DIFC law, benefiting from:

• English common law foundations;

• Access to internationally respected courts and arbitration forums, including the DIFC Courts, ADGM Courts, DIFC and the ADGM Arbitration Centres.

This framework ensures that investor rights are enforceable and aligned with global standards for venture financing and cross-border exits.

5. How is Intellectual Property (IP) Protected?

In the UAE’s venture capital ecosystem, particularly across tech-driven sectors such as fintech, SaaS, AI, and health tech, intellectual property (IP) is a critical value driver and often one of the most scrutinized components of due diligence. Proper structuring, assignment, and legal governance of IP assets are essential for investor confidence, valuation integrity, and exit scalability.

Legal Framework and Statutory Protection

IP rights in the UAE are protected under a dual system comprising federal legislation and international treaty adherence, alongside robust recognition under ADGM and DIFC common law systems:

• Federal Law No. 11 of 2021 governs patents, industrial designs, utility models, and trade secrets;

• Federal Decree-Law No. 38 of 2021 provides copyright protection over software, source code, and digital assets;

• Trademarks are regulated by the Ministry of Economy and may be registered internationally through the Madrid Protocol, to which the UAE is a signatory;

• ADGM and DIFC recognize IP contracts and enforcement actions under English common law, enhancing cross-border enforceability.

IP Holding and Group Structures

Best practice involves a dual-entity structure:

• Operating Company (OpCo), incorporated in mainland UAE or a free zone, runs business operations;

• Holding Company (HoldCo), established in ADGM or DIFC, retains legal title to IP and issues equity to investors.

This structure:

• Enables royalty-based monetization of IP through intra-group licensing;

• Secures IP in a jurisdiction with international enforcement capacity;

• Preserves IP value in exit events through clean chain-of-title and tax-efficient planning.

Contractual Safeguards and Internal Governance

To mitigate IP leakage and establish ownership, founders and startups must execute:

• IP assignment agreements with all founders, employees, consultants, and vendors;

• Invention assignment clauses and confidentiality (NDA) provisions in employment and advisory contracts;

• License agreements between OpCo and HoldCo for commercial use of IP;

• Source code escrow arrangements, particularly for enterprise software or SaaS platforms where technology is integral to valuation.

Investor Expectations and Due Diligence Requirements

VC investors routinely conduct rigorous IP diligence, including:

• Review of IP asset schedules, registration certificates, and filing statuses;

• Chain-of-title verification to ensure the startup holds enforceable rights;

• Non-infringement warranties in the term sheet and SPA;

• Restrictions on IP assignment or sublicensing without investor consent;

• Analysis of any prior open-source use, license encumbrances, or competing claims.

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About the firm

Hourani & Partners

Hourani & Partners is a leading Middle East law firm known for its seamless, integrated approach to navigating the region's complex legal landscape. With senior attorneys as dedicated local contacts and support from a multi-office team, the firm ensures efficient, high-quality service tailored to each client's needs. This collaborative model allows Hourani & Partners to deliver exceptional results while optimizing cost and maintaining a strong client focus.

DUBAI

+971 4 205 2000

HOURANIPARTNERS.COM

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Real estate

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1. What are the requirements of your country's legislation for the purchase and sale of real estate by non-residents? Are there any differences if the transaction is concluded on behalf of a company or a private person?
2. Can a non-resident become the owner of a real estate object in the country? How is the registration of rights to the real estate object carried out?
3. In case a non-resident plans to build an object, what should be stipulated? How is the construction industry regulated by law in case of participation of non-residents in projects? Private individuals or companies?
4. What should be stipulated when concluding construction contracts? Are there any unified forms accepted in the country?
5. What real estate taxes should be paid by companies or individuals (when buying/owning a property)?
6. If a non-resident plans to file a real estate object, what is the tax burden? How many years is it necessary to own a real estate object to reduce the tax burden (if there is such a practice)?

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1. What are the requirements of your country's legislation for the purchase and sale of real estate by non-residents? Are there any differences if the transaction is concluded on behalf of a company or a private person?

When it comes to real estate transactions in the UAE, UAE nationals, and Gulf Cooperation Council (GCC) nationals can own property anywhere in onshore Dubai (Article 4 of Dubai Law No. 7/2006).

However, for non-UAE and non-GCC national buyers, whether resident or non-resident, ownership is confined to designated areas where foreign investment is permitted. Otherwise, they are limited to leasehold arrangements or usufruct rights, which grant long-term usage
of the property without full ownership. 

Individuals 

Dubai’s property market is open to non-resident investors, meaning that a residence visa is not necessary when buying property. However, certain requirements must still be met:

• A valid passport (with at least six months’ validity) to confirm identity;

• Valid UAE entry visa;

• The buyer mu be at least 21 years old;

• Proof of funds, such as bank statements or a loan pre-approval letter; 

• The property must be registered with the Dubai Land Department, making
  the ownership official and legal; 

• Payment of fees, including a 4% transfer fee to the Dubai Land Department
  and registration fees based on the property value. 

When selling a property as a non-resident, the seller must provide:

• A Title Deed (for completed properties) or Oqood (for off-plan properties), as proof
  of ownership;

• A Non-Objection E-certificate (E.NOC) from the developer for properties in freehold areas;

• A copy of the owner’s passport;

• A Power of Attorney, if the seller is not present in the UAE and is represented
  by another party.

Companies

UAE-registered companies fully owned by UAE or GCC nationals can own property anywhere in onshore Dubai. 

However, companies owned by non-GCC nationals may only own a freehold, leasehold (up to 99 years), or usufruct (up to 99 years) in the designated areas in onshore Dubai via establishing one of the following companies in Dubai:

• Jebel Ali Free Zone Authority Offshore company;

• Dubai Multi Commodities Centre company;

• A company incorporated in the Abu Dhabi Global Market free zone;

• RAK International Corporate Centre offshore company;

• DIFC company, partnership, foundation, real estate investment trust or real estate fund, subject to the approval of the DIFC Registrar of Companies (granted on
  a case-by-case basis);

• A Limited Liability Company (LLC).

Under the DIFC regime, for instance, all foreign nationals, foreign companies and GCC nationals have the right to acquire real estate anywhere within the DIFC without restriction.

2. Can a non-resident become the owner of a real estate object in the country? How is the registration of rights to the real estate object carried out? 

In Dubai, foreign ownership – by residents or non-resident – is permitted in areas designated as freehold. Non-nationals, including both residents and non-residents, may acquire freehold ownership rights to property without restriction – usufruct rights or leasehold rights for up to 99 years.

Article 3 of Regulation No. 3 of 2006 on Determining Areas for Ownership by Non-Nationals of Real Property in the Emirate of Dubai identifies the land plots designated as freehold properties. 

Some of the designated areas include: Palm Jumeirah, Downtown Dubai, Old Town, Burj Khalifa, Business Bay, Dubai Marina, Emirates Hills, Jumeirah Lakes Towers, Jumeirah Beach Residence, Zabeel First, and Arabian Ranches.

The property ownership registration for non-residents usually involves the following steps: 

• Non-Objection Certificate (NOC): Obtaining an NOC from the developer, confirming all service charges and fees have been paid. This step usually takes up to 7 working days, depending on the developer;

• Transfer of Ownership: In Dubai, the ownership transfer takes place at the Dubai Land Department (DLD) the real estate registration authority. The ownership transfer can be completed on the same day; and

• Title Deed Issuance: Once the transfer is complete, a new title deed is issued in the buyer’s name, officially recognizing them as the property owner. The Title Deed issuance is usually completed on the same day as the ownership transfer at the DLD. 

Fees Incurred:

• NOC Fee (charged by the developer): AED 500 – AED 5,000, depending on the developer;

• DLD Transfer Fee: 4% of the property purchase price; and

• Administrative Fees (Title Deed issuance): Approximately AED 580. 

3. In case a non-resident plans to build an object, what should be stipulated? How is the construction industry regulated by law in case of participation of non-residents in projects? Private individuals or companies? 

In case a non-resident plans to undertake a construction project 

Non-residents seeking to undertake construction projects in the UAE must obtain approvals from municipal authorities, such as the Dubai Municipality, and from the relevant Real Estate Regulatory Authorities. 

Before starting construction, non-residents must secure a Non-Objection Certificate (NOC) from the landowner (if applicable) and relevant authorities, ensuring compliance with zoning laws. In addition to an NOC, construction approvals such as building permits must be obtained from the Dubai Municipality and the Real Estate Regulatory Agency (RERA). 

 Non-residents must engage licensed contractors who hold valid construction permits. 

Construction Industry Regulation for Non-Residents

All construction projects in the UAE require licensing from the relevant emirate’s authorities. Non-residents planning to develop property must register with the appropriate entity, such as the Dubai Land Department for projects in Dubai. 

The UAE’s Foreign Direct Investment Law (Federal Law No. 19 of 2018) permits foreign investors to hold up to 100% ownership in certain sectors, including construction. This reform allows foreign companies, for instance, to engage in real estate development without the need of a local partner in most cases. 

For Private Individuals and Companies 

While non-residents can buy property, developing a real estate project independently is more complex. Most non-residents invest in off-plan developments by licensed real estate developers, rather than engaging in direct construction. 

However, foreign investors looking to engage in construction in the UAE have two options: 

• Establish a subsidiary or a branch in the UAE, allowing them to participate directly in real estate projects by setting up a Limited Liability Company (LLC) on the mainland; 

• Partner with a UAE-licensed developer or contractor registered with the relevant authorities. 

4. What should be stipulated when concluding construction contracts? Are there any unified forms accepted in the country? 

In March 2021, Dubai Municipality introduced indicative contract forms for engineering consultancy and building contracting services. These templates aim to guide parties – especially for private villa projects – ensuring that technical standards and responsibilities are articulated. 

Moreover, the International Federation of Consulting Engineers (FIDIC) contract forms are widely adopted in the UAE construction industry. 

When dealing with government agencies, there may be restrictions on the types of contracts allowed. For example, the Abu Dhabi Government Conditions of Contract, which are based on the FIDIC Red and Yellow books but significantly altered, must be used for Abu Dhabi construction projects involving governmental entities.  

Additionally, standard and internationally recognized forms are commonly used:

• Scope of Work: Defines the project’s parameters, including a detailed description of tasks, materials, and specifications; 

• Payment Terms: Outlines the contract price, payment schedule, milestones, and mechanisms for handling variations or additional works; 

• Duration and Completion: Specifies project timelines, completion dates, and any penalties or incentives related to delays or early completion; 

• Risk Allocation: Details the distribution of risks between the employer and contractor, covering aspects such as site conditions, design responsibilities, and unforeseen events;

• Variations and Changes: Establishes procedures for managing changes to the project scope, including approval processes and cost implications; 

• Termination Conditions: Defines the circumstances under which the contract can be terminated by either party and the associated consequences; 

• Dispute Resolution: Includes mechanisms for resolving disputes, such as negotiation, mediation, arbitration, or litigation, specifying the governing law and jurisdiction; 

• Force Majeure: Addresses unforeseen events beyond the control of the parties (e.g., natural disasters, pandemics) and their impact on contractual obligations; 

• Liability and Insurance: Specifies the extent of each party’s liability and the required insurance coverages to mitigate potential risks. 

5. What real estate taxes should be paid by companies or individuals (when buying/owning a property)? 

The UAE offers a favorable environment for real estate ownership. However, individuals and companies are subject to certain fees. 

Property Taxes: The UAE does not impose property tax on real estate holdings at the time of purchase. 

Corporate Tax: Property developers are required to pay a 9% tax on business profits exceeding AED 375,000. 

Rent VAT: An individual renting out property and earning more than AED 375,000 per year is required to pay a 5% VAT on the rental income. 

Transfer Fees: When purchasing property, buyers are subject to transfer fees, which vary by emirate. For instance, in Dubai, the transfer fee is usually 4% of the property’s purchase price. However, certain transfers may benefit from a reduced fee of 0.125%, for example, when real estate is gifted between parents and children or transferred between a company and its 100% shareholder. 

Registration Fees: All property transactions must be registered with the relevant land department, incurring registration fees. 

Service Charges: Property owners are responsible for annual service charges covering maintenance and communal services. These fees vary depending on the property type and location.

Municipal Fees: Some emirates levy municipal fees on property owners, typically calculated as a percentage of the property’s annual rental value. These fees may vary by emirate and are used to fund local infrastructure and services:

• In Dubai, a 5% municipal housing fee is applied to the annual rental value of residential properties and is usually collected monthly through the Dubai Electricity and Water Authority (DEWA) bills;

• In Abu Dhabi, a municipal fee of 5% is imposed on expatriate tenants, collected via the Abu Dhabi Distribution Company (ADDC) bills; and

• Sharjah imposes a municipal fee of 2% of the annual rent, similarly reflected in utility billing. 

6. If a non-resident plans to file a real estate object, what is the tax burden? How many years is it necessary to own a real estate object to reduce the tax burden (if there is such a practice)?

Recent developments in the UAE have introduced certain tax obligations for property investors.

Tax Obligations for Non-Resident Real Estate Investors

Corporate Tax on Real Estate Income: As of June 1, 2023, the UAE has implemented a 9% corporate tax on income generated from real estate and immovable property within the country. This tax applies to non-residents, including foreign companies, on income derived from properties held as investments or used for business purposes. 

Capital Gains Tax: The UAE does not impose a capital gains tax on the profit earned from the sale of real estate properties. 

This exemption applies to both individuals and companies, making the UAE an attractive destination for property investors seeking to maximize returns without the burden of capital gains taxation. 

Holding Period Considerations 

There is no mandated holding period in the UAE required to reduce the tax burden on real estate investments. 

The absence of capital gains tax means that investors are not incentivized through tax policy
to hold properties for extended periods to qualify for tax reductions. About the firm

Therefore, investment decisions can be made based on market conditions and investment strategies, without concern for holding period tax implications.

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About the firm

TA Advisory

TA Advisory is a law firm based in Geneva, with offices in Zurich, Belgrade, and Dubai. The firm specializes in international litigation and dispute resolution, and cross-border corporate transactions, including venture capital.

With a team of experienced attorneys from top-tier firms and law schools, TA Advisory provides expert legal services across diverse industries, including banking and real estate. Known for its client-focused approach, the firm offers tailored solutions to address complex legal and business challenges globally.

DUBAI

TAADVISORY.LAW

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Labor and migration law

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1. How can a foreign citizen obtain a work permit? What is required for this?
2. How is the relationship-labor contract between the local company and foreign employees formalized?
3. Are there any restrictions on the hiring of local staff by a non-resident company?
4. What should a foreign employer consider when structuring a relationship with local employees? Are there any specifics of employment contracts? What are the nuances?
5. What compensation and benefits, payments and remuneration of employees are accepted in your country?
6. What does the employer usually pay besides wages (tax payments, insurance payments, pension plans, insurance)? What compulsory contributions are made to various funds?
7. How influential are labor unions in your country? How are the employer's relations with trade union organizations regulated in practice?
8. How and on what grounds can an employee be dismissed? What benefits are payable to the employee in case of different forms of dismissal?

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1. How can a foreign citizen obtain a work permit? What is required for this?

A foreign citizen can obtain a work permit in the UAE through their employer. 

A foreign national must first secure employment with a company based in the UAE. The employer acts as the sponsor and initiates the work permit process.

For Mainland companies, the employer applies for a work permit through the UAE Ministry of Human Resources and Emiratisation (MOHRE). Once approved, the employee receives an entry permit (valid for 60 days) to enter the UAE, if they are not already in the country.

The employee must undergo a mandatory medical examination at an approved UAE health center. A biometric scan is also required for the Emirates ID application.

The employer sponsors the employee for a residence visa, allowing them to legally stay and work in the UAE. This is processed through the General Directorate of Residency and Foreigners Affairs (GDRFA).

Once the residence visa is issued, the employer secures the work permit (Labor Card) from MOHRE. This permits the employee to work legally under that employer. The process usually takes 2–4 weeks.

To work legally for a Free Zone company in the UAE, a foreign citizen must obtain a work permit (employment visa) issued by the Free Zone Authority where the company is registered.
In general, the procedure is similar to that for Mainland companies, with the following key differences:

• The regulatory authority is the Free Zone Authority, which also issues employment regulations (customized per each zone);

• The visa sponsor is the Free Zone Authority (on behalf of the company);

• Health insurance is often arranged by the Free Zone.

2. How is the relationship-labor contract between the local company and foreign employees formalized? 

In the UAE, the employment relationship between a local company and foreign employees is formalized through a labor contract, which is regulated by the UAE Labor Law (Federal Decree-Law No. 33 of 2021 on the Regulation of Labor Relations) and overseen by the Ministry of Human Resources and Emiratisation (MOHRE). 

Every foreign employee must sign an employment contract with their employer, which must be registered with MOHRE.

MOHRE provides standard contract templates, but companies may add additional clauses, provided they comply with UAE labor laws.

As of February 2023, all private-sector contracts must be fixed-term (with a maximum duration of 3 years, renewable). However, the UAE Labor Law ensures job security through clear termination rules and end-of-service gratuity payments for long-term employees.

The probation period can be up to 6 months. During this time, the employer can terminate the contract without notice. After the probation period, notice periods apply – ranging from 30 to 90 days, depending on the contract.

3. Are there any restrictions on the hiring of local staff by a non-resident company? 

Non-resident companies face certain restrictions when hiring local staff in the UAE. A non-resident company (i.e., one without a physical presence or trade license in the UAE) cannot directly hire local or expatriate employees.

To legally employ staff in the UAE, a company must establish a registered local entity, such as:

• A Mainland Company (LLC or branch);

• A Free Zone Company;

• An Offshore Company (note: cannot hire local employees directly).

Alternative options include:

If a non-resident company needs to hire in the UAE, it may:

• Partner with a local sponsor or entity to employ staff under their license;

• Use an Employer of Record (EOR) or Professional Employer Organization (PEO) service to legally hire and manage payroll in the UAE.

Employees must be sponsored by a UAE-registered company to obtain a work permit and residence visa. A non-resident company cannot sponsor work permits directly. Hiring Emirati nationals is only possible if the company is registered with MOHRE and complies with UAE labor laws.

4. What should a foreign employer consider when structuring a relationship with local employees? Are there any specifics of employment contracts? What are the nuances?

A foreign employer must consider several legal, contractual, and operational factors to ensure compliance with UAE labor laws. 

A foreign company without a legal entity in the UAE cannot directly employ staff. To hire local employees, the employer must:

• Establish a legal presence (Mainland LLC, Free Zone, or Branch);

• Use an Employer of Record (EOR) or Professional Employer Organization (PEO) to act as the legal employer;

• Partner with a UAE-based company that hires employees on their behalf.

All employment contracts must be:

• In writing and registered with the UAE Ministry of Human Resources and Emiratisation (MOHRE) for Mainland companies;

• Fixed-term (maximum of 3 years, renewable), as unlimited-term contracts are no longer permitted;

• In Arabic and English (with additional languages as needed).

Companies with 50 or more employees must comply with Nafis Emiratization quotas, which mandate a minimum percentage of UAE nationals in the workforce.

Free zone companies operate under their own labor regulations but must still comply with UAE federal labor laws. Free zones and small businesses are often exempt from Emiratization requirements.

5. What compensation and benefits, payments and remuneration of employees are accepted in your country? 

In the UAE, employee compensation, benefits, and payments are regulated by Federal Decree-Law No. 33 of 2021 (UAE Labor Law) and industry standards. 

Key compensation and benefit elements include:

• Salaries must be paid via the Wage Protection System (WPS) for Mainland companies. Payment must be made in UAE Dirhams (AED), unless otherwise agreed;

• End-of-Service Gratuity (ESG) (for employees with 1+ year of service): 1-5 years of service: 21 days’ basic salary per year; Over 5 years of service: 30 days’ basic salary per year.

• Annual Leave: 30 calendar days per year;

• Public Holidays: Paid leave for UAE national holidays;

• Sick Leave: 90 days per year (first 15 days at full pay, next 30 days at half pay,
  next 45 days are not paid);

• Maternity Leave: 60 days (45 days at full pay + 15 days half pay);

• Paternity Leave: 5 days.

Health Insurance mandatory in Abu Dhabi & Dubai (provided by the employer). In other Emirates, employers are generally responsible for arranging it.

Emirati employees must be registered with the General Pension and Social Security Authority (GPSSA).

Employers must contribute 12.5% to 15% of the employee’s salary to the pension fund.

In the UAE Free Zones, employee compensation and benefits follow the UAE Labor Law framework, though individual Free Zones may apply customized employment regulations. Core standards are broadly consistent across Free Zones and often reflect national UAE employment practices. The key differences are:

• The Governing body is the relevant Free Zone Authority;

• Employment contracts follow a customized format approved by the Free Zone;

• Employment disputes are resolved through Free Zone’s internal dispute resolution system.

6. What does the employer usually pay besides wages (tax payments, insurance payments, pension plans, insurance)? What compulsory contributions are made to various funds?

In the UAE, employers have certain mandatory financial obligations beyond wages, including insurance payments, pension contributions, and work permit costs. However, the UAE does not impose corporate payroll taxes or income tax on salaries. 

Mandatory Employer Contributions:

• Social Security & Pension (for UAE Nationals Only) – Paid to the General Pension and Social Security Authority (GPSSA).

Contribution: 12.5% - 15% of the employee’s salary (varies by Emirate).

Expat employees are not entitled to pensions but instead receive an End-of-Service Gratuity (ESG).

• End-of-Service Gratuity (ESG) (for Expats) – Paid as a lump sum when an employee leaves the company. ESG serves as a retirement benefit for expat employees. 1-5 years of service → 21 days’ basic salary per year; 5+ years of service → 30 days’ basic salary per year.

• Health Insurance (Mandatory in Abu Dhabi & Dubai): In Dubai, employer must cover the employee only (not dependents); In Abu Dhabi, employer must cover both the employees and their family (spouse and up to 3 children under 18); In other Emirates, there is no legal requirement, but most employers provide coverage voluntarily.

• Visa-related costs – Employers must pay for all visa-related costs, including the Work Permit (Labor Card), Residency Visa, Emirates ID, and Medical Test.

• Wage Protection System (WPS) is mandatory for mainland companies (not free zones). Employers must pay salaries through WPS, incurring bank or exchange house fees.

7. How influential are labor unions in your country? How are the employer's relations with trade union organizations regulated in practice?

Labor unions are not legally recognized in the UAE. The country has strict regulations on labor movements, and collective bargaining, strikes, and trade unions are prohibited under UAE labor laws.

However, the UAE government has implemented alternative mechanisms to protect workers’ rights and resolve disputes between employees and employers. Employees can file complaints against employers with the Ministry of Human Resources and Emiratization (MOHRE), which acts as a mediator in cases related to unpaid wages, wrongful termination, or working conditions. If mediation fails, disputes go to the UAE Labor Courts.

Some UAE free zones allow worker councils or grievance committees that act as a bridge between employees and management. These are not formal unions but may assist in resolving internal disputes.

Strikes and work stoppages are illegal. Employees are not permitted to collectively bargain or engage in union-backed protests. Unauthorized strikes can result in deportation for foreign workers.

The UAE government enforces salary payments through Wage Protection System (WPS) to prevent wage disputes.Employers who fail to pay salaries on time may face penalties.

8. How and on what grounds can an employee be dismissed? What benefits are payable to the employee in case of different forms of dismissal?

Employee termination in the UAE is regulated by Federal Decree-Law No. 33 of 2021 (UAE Labor Law). 

Employers must follow legal procedures when dismissing an employee to avoid potential compensation claims. Termination must comply with the terms agreed upon in the employment contract. 

Either party can terminate the contract at any time, provided they respect the notice period specified in the contract – typically between one and three months. 

An employee may be dismissed without notice in cases of serious misconduct, as outlined in Article 44 of UAE Labor Law (e.g., fraud, assault, or prolonged absence without justification). 

If dismissed with notice, the employee is entitled to notice period pay (30-90 days, depending on contract), unpaid leave salary, and any pending wages. 

If the employees worked for more than a year, they are also entitled to End-of-Service Gratuity (ESG) based on their basic salary:

• 1 to 5 years of service: 21 days’ basic salary per year; 

• more than 5 years of service: 30 days’ basic salary per year. 

If dismissed without notice for cause, the employee may forfeit gratuity, notice pay, and other benefits. 

After dismissal, employers are also responsible for canceling the employee’s work permit and residence visa.

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About the firm

BSA Ahmad Bin Hezeem & Associates LLC

BSA Law is a prominent law firm with eight offices across five countries in the Middle East. The firm offers clients globally-informed perspectives and comprehensive legal solutions. Known for its client-focused approach, the firm combines actionable advice with strategic insights, fostering long-term partnerships and driving sustainable, forward-thinking growth for businesses.

DUBAI	+97145285555
ABU DHABI	+97126444474
SHARJAH	+97165371166
RAS AL KHAIMAH	+97172273106

BSALAW.COM

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Intellectual property protection

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1. What government agencies are responsible for IP administration and enforcement?
2. What are the principal statutes and international treaties?
3. How are trademarks protected and registered?
4. How are patents, utility models and industrial designs protected?
5. How are other IP objects protected?
6. How is copyright protected?
7. What is protected by copyright in the UAE?
8. Do I need to register copyrights?
9. Who owns the rights when entering into a service contract: the customer or the contractor?
10. Who owns the rights in labor relations: the employee or the employer?
11. Are there specific rules for software, databases and AI?
12. How are trade secrets (“undisclosed information”) protected?
13. Practical considerations for foreign companies

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1. What government agencies are responsible for IP administration and enforcement?

The Ministry of Economy (MoE) maintains the federal registers of trademarks, patents, utility models, industrial designs, and voluntary copyright recordals. Certain free zones introduce complementary rules; for example, the DIFC Commissioner for Intellectual Property can hear infringement complaints and, in serious cases, revoke the infringer’s DIFC licence.

2. What are the principal statutes and international treaties?

• Federal Decree‑Law No 36/2021 on Trademarks (“Trademarks Law”).

The law governs the registration and protection of trademarks and geographic indications
in the UAE. Trademarks can include logos, slogans, sounds, smells, holograms, three-dimensional trademarks, and brand names used in commercial activities. The law sets out the requirements for trademark registration and the procedures for enforcing trademark rights.

• Federal Law No 11/2021 on the Regulation and Protection of Industrial Property Rights

The law provides protection for the ornamental or aesthetic aspects of products,
such as their shape and appearance. It outlines the conditions under which industrial designs and models as well as the rights of owners can be protected.

• Federal Decree‑Law No 38/2021 on Copyright and Neighbouring Rights (“Copyright Law”)

The law protects literary and artistic works, including books, music, and software. It defines
the conditions of protection, the rights of authors and owners, and the penalties for infringement.

• DIFC Intellectual Property Law No. 4 of 2019 (“DIFC IP Law”)

The law recognizes IP rights registered in the UAE under relevant federal laws and regulates the full spectrum of IP rights, including patents, utility certificates, industrial designs, copyright, trademarks, trade names and trade secrets. Together with the DIFC Intellectual Property Regulations of 2021,it introduces concepts such as IP ownership in employment relationships, well-known trademarks, trademark licensing, conflicts between trademarks and trade names, fair use of trademarks, and copyright ownership.

• Federal Law No. 17 of 2009 on the Protection of New Plant Varieties

The Law aims at regulating the rights and obligations pertaining to the invention of new botanical species. The provisions apply to the species and botanical types and kinds, including the breed, origins, tissues, cells and genetic material.

As a member of the General Agreement on Tariffs and Trade (GATT), the UAE adheres
to all IP-related provisions, including the principle of reciprocity. This ensures that IP rights granted in the UAE are recognized and respected by other member countries, facilitating international trade and cooperation.

In addition to its obligations under GATT, the UAE is a signatory to several key international IP treaties and agreements. Notably, it is a member of the Madrid Agreement and the Madrid Protocol, which together form the Madrid System for the international registration of trademarks. This system allows businesses to protect their trademarks in multiple countries through a single application, simplifying the process and reducing costs.

The UAE is also a member of the Paris Convention for the Protection of Industrial Property,
the Berne Convention for the Protection of Literary and Artistic Works, the Patent Cooperation Treaty (PCT), TRIPS Agreement, Gulf Cooperation Council (GCC) and others.

3. How are trademarks protected and registered?

Trademark protection follows a single‑class filing system: one class = one application. 

Key points:

• Applications are filed online with the Ministry of Economy (MoE);

• Official fees are approximately  USD 1,800 per class (payable in three stages: filing, publication, registration); a pre‑filing clearance search official costs amount to USD 96;

• The Nice Classification applies, but certain goods and services are refused on Sharia grounds;

• Both verbal and device marks are allowed, but certain graphics is refused on Sharia grounds;

• A legalised power of attorney in the name of the local trademark attorney is required (the UAE is not an Apostille country);

• Examination includes both absolute and relative grounds; a 30‑day opposition period follows publication;

• Registration time frame: 3–12 months from filing;

• Registration lasts for 10 years and is renewable;

• A mark may be cancelled if unused for five consecutive years;

• It is necessary to register amendments and disposal of rights (transfer, license);

• Continuous monitoring of similar filings and use by third parties is recommended.

4. How are patents, utility models and industrial designs protected?

Applications are filed online with the Industrial Property Department of the Ministry of Economy (MoE):

• Patents: 20‑year term; PCT route and priority claims are recognised;

• Utility models: 10‑year term;

• Industrial designs: 20‑year term.

Filing and examination fees vary depending on the procedure and Applicant’s type (companies, small businesses, academic institutions, individuals).

The required details about the invention, utility model and industrial design vary depending on the type of the Applicant (company or individual)

Annuity fees apply to all types of patents.

A notarized Deed of assignment signed by the inventor, if the applicant is not the inventor(s)/designer(s).

A notarized extract from the Commercial Register or from the Memorandum of Association if the applicant is a company or body corporate. 

A legalised power of attorney in the name of the local trademark attorney is required (the UAE is not an Apostille country).

Service inventions generally belong to the employer; if an employee creates an invention outside their assigned duties, the rights remain with the employee – unless the employer claims the invention within four months and pays appropriate compensation.

5. How are other IP objects protected?

The relevant UAE IP Laws also allow protection of less common IP assets, such as Integrated Circuit Layouts, New Plant Varieties, and Geographical Indications (GI), the latter being recently introduced in May, 2025.

While Integrated Circuit Layouts, New Plant Varieties, and Geographical Indications (GI) are registered by the Ministry of Economy (MoE), New Plant Varieties are processed by the Ministry of Climate Change and Environment (MoCCaE). 

6. How is copyright protected?

In the UAE, copyright protection arises automatically upon the creation of an original work, without the need for registration, in line with the Berne Convention. This applies to literary, artistic, musical, and software works, among others. 

7. What is protected by copyright in the UAE?

The UAE follows the internationally recognized approach: any original work, regardless of its description, form of expression, meaning, or purpose, is subject to protection.
The Copyright Law also refers specifically to smart applications. While there is no dedicated regulation for them, all provisions applicable to computer programs apply to such applications.

8. Do I need to register copyrights?

No, as a party to the Berne Convention, the UAE does not require any additional action for the creation or validation of copyrights. Registration is not mandatory, and its absence does not restrict authors or right holders in any way. 

However, registration provides practical advantages when dealing with third parties and contractors by simplifying the proof of rights. There are several options for copyright registration depending on jurisdiction, recognition needs, and time constraints:

• UAE Copyright Office (Material Copyright Registration) – The UAE's national registry allows registration of software and other works. Certificates are typically issued within 10 working days. However, it requires extensive documentation and is often not recognised by foreign websites or contractors, limiting its utility in international dealings.

• U.S. Copyright Office – One of the most internationally recognised authorities. A certificate from the U.S. office is widely accepted by major platforms and clients. The main drawback is the long processing time, which may take up to 8 months.

• International Commercial Registers (e.g., INTEROCO) – These platforms issue certificates valid in 181 Berne Convention countries, including the UAE. They offer a practical middle ground, as registrations are generally accepted by major platforms and international contractors. Average processing time is approximately 15 working days.

9. Who owns the rights when entering into a service contract: the customer or the contractor?

Under UAE law, the general rule is that the customer owns the rights to any object created under a contract, if it is made in their interest and for their benefit. This default rule can be modified by agreement between the parties.

10. Who owns the rights in labor relations: the employee or the employer?

Ownership depends on the context in which the work was created.

Right holder	When rights vest in this party
The employer	The work is created within the employee’s official duties;  The employer specifically assigns or instructs the employee to create the work;  The employee uses the employer’s resources (equipment, software, data, funding) to create the work.
The employee	The work is unrelated to the employer’s business; and No employer resources are used in its creation.

11. Are there specific rules for software, databases and AI?

Software, mobile apps and databases are expressly covered by the Copyright Law.

Technical IT solutions may qualify for patent or utility model protection, while algorithms and AI models are generally protected as trade secrets.

Current law attributes authorship of AI‑generated content to the human developer or the employing company – there is no recognition of autonomous AI authorship.

12. How are trade secrets (“undisclosed information”) protected?

Information is protected if it is:

• Not generally known; 

• Has commercial value because it is secret; and 

• Subject to reasonable protective measures.

Remedies for misappropriation mirror those available for patent infringement.

13. Practical considerations for foreign companies

• File trademark and design applications before launching products or services;

• Use NDAs and robust IP clauses in employment and vendor contracts, including provisions on service inventions and software code;

• Budget time and costs for legalisation of powers of attorney and certified translations;

• Conduct clearance searches and watch services to mitigate refusal or cancellation risks;

• For sensitive marks, review Sharia compliance early to avoid objections.

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About the firm

 

Futura Legal is an international legal and strategic consulting firm headquartered in Dubai. Founded in 2016 by Alexandra Kurdyumova and Gennady Kurdyumov, the firm supports ambitious companies scaling globally in fast-moving and high-risk industries. Futura’s 100+ specialists operate directly in 20+ countries, delivering clear and actionable legal support in dynamic regulatory environments. With deep expertise in tech, gaming, fintech, and blockchain, Futura protects clients from legal risks, hidden costs, and reputational threats — helping them grow as category leaders on the global stage.

Operational Presence: UAE, Hong Kong, Cyprus, Singapore, USA, India, Oman

futura.law 

contact@futura.law

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Data protection and privacy

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1. Main Law Governing the Processing of Personal Data in the UAE, Scope of Application
2. ADGM personal data protection regulation
3. DIFC personal data protection regulation

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1. Main Law Governing the Processing of Personal Data in the UAE, Scope of Application

Federal Decree by Law No. (45) of 2021 Concerning the Protection of Personal Data applies to both:

• Companies registered in the UAE; and 

• Multinational companies outside the UAE that process the personal data of UAE residents.

Executive regulations to the Law were expected within six months of its enactment. However, as of 26 May 2025, they have not yet been published.

Entities subject to the Law must ensure compliance within six months from the date the Executive Regulations are issued (this period may be extended).

The regulator

The UAE Data Office is designated as the regulator.

However, it cannot exercise its functions until the Executive Regulations come into effect.

Separate Regulation of Personal Data Protection in Free Zones and Specific Sectors:

• Free Zones. Three Free Zones have enacted their own data protection regulations, namely: ADGM data protection regulations (analysis provided below); DIFC data protection regulations (analysis provided below); Dubai Healthcare City (DHCC) Health Data Protection Regulation. Applies to all healthcare professionals processing patient health information, regardless of where such information is stored.
  
  

• Sectors. The UAE also has sector-specific regulations on personal data protection, including: The banking sector; The telecommunications sector (for entities licensed by the Telecommunications and Digital Government Regulatory Authority); The healthcare sector.

Cross-Border Transfer of personal data from the UAE

The UAE classifies other countries based on the level of adequacy of personal data protection.

Adequate level of protection

Personal data may be transferred without restrictions.

Inadequate level of protection

Personal data may be transferred in specific circumstances: A binding agreement is in place requiring the recipient to implement safeguards consistent with UAE Law; The data subject has provided consent to the transfer, and the transfer does not conflict with public interests or national security interests; The transfer is necessary for the conclusion or performance of a contract between the controller and the data subject (or between the controller and a third party for the benefit of the data subject).

A list of jurisdictions recognized as providing an adequate level of personal data protection will be issued by the Regulator in the future.

Registration requirements

The UAE law does not impose an obligation to register as a controller or to notify the Regulator. Further details on this matter may be provided in the Executive Regulations.

Accountability

The company must report only contact details of the organization’s Data Protection Officer (DPO) to the Regulator.

Not all companies are required to appoint a DPO.

Currently, the Law requires companies to appoint a DPO only in the following cases:

• The processing entails a high risk to the confidentiality of personal data due to the use of innovative technologies or the large volume of data being processed;

• The processing involves systematic and comprehensive assessment of sensitive personal data, including profiling and processing carried out solely by automated means;

• The processing involves a large volume of sensitive personal data.

Notification about Personal Data Breaches (in case of incidents)

The Regulator must be notified immediately once the controller becomes aware of a personal data breach.

Information retaining

The controller/processor is required to retain additional information that must be provided to the Regulator upon request at any time (i.e., not proactively):

• The data of both the Controller and the Data Protection Officer; 

• A description of the categories of Personal Data; 

• Details of the persons authorized to access the Personal Data; 

• Processing times, limitations and scope; 

• The mechanism for erasing, modifying or processing Personal Data; 

• The purpose of processing;, 

• Any data related to the cross-border movement and processing of such data; and 

• The technical and organizational measures related to information security and processing.

Liability

Currently, the UAE law does not specify sanctions or their amounts; these are expected to be introduced later through the Executive Regulations. However, sanctions under other legislative acts may theoretically be applied.

Under UAE civil law, an individual may file a claim for compensation for damages resulting from a violation.

The UAE law does not mention potential criminal sanctions. Nevertheless, other legislative acts contain provisions on violations related to privacy breaches: 

Legislative Act	Violation	Penalty	Article
UAE Penal Code	Unlawful disclosure of information about an individual's personal or family life without legal authorization or consent of the data subject	Imprisonment and fine	431
	Unlawful copying, dissemination, or transfer of information accessed by virtue of one’s employment	Imprisonment	434
UAE Cybercrime Law	Use of IT to collect, store, or process information about UAE citizens or residents in violation of the law	Fine from AED 50,000 to AED 500,000	13
	Use of IT to collect, store, modify, destroy, disclose, copy, or disseminate information without authorization	Imprisonment of not less than 6 months and/or fine from AED 20,000 to AED 100,000	6

No rules on localization of personal data within the UAE

There are no general personal data localization requirements in the UAE. However, there are specific obligations regarding the storage of data on server infrastructure located within UAE territory:

• Healthcare Data: Personal data related to the provision of healthcare services within the UAE may not be stored, processed, generated outside the UAE, nor transferred abroad, unless a specific decision is issued by the competent Regulator allowing otherwise;

• Stored Value Facilities: Under the UAE Central Bank regulation on Stored Value Facilities (SVF), customer data, including identification data and transaction records, must be stored and updated within the UAE. SVFs are facilities where a customer pays funds to the issuer in exchange for value stored in the SVF;

• Banking Data: Entities licensed by the UAE Central Bank must also ensure that copies of records containing banking information are maintained within the UAE.

2. ADGM personal data protection regulation

Text of the law is available here. Complete guidance on personal data protection issued by ADGM itself is available here. 

Regulator

Commissioner of Data Protection in ADGM

ADGM Building, ADGM Square, Al Maryah Island, PO Box 111999, Abu Dhabi, UAE

+97123338888

Contact via: https://www.adgm.com/contact-us/make-an-enquiry/general-enquiry

Registration as a data controller

Once the company starts to process personal data, it must notify the regulator immediately via the online portal. Certain companies may be exempt from registration. To qualify for the exemption, a company must have fewer than five employees and not engage in high-risk personal data processing activities. 

If the exception is not applied, ADGM entities are required to provide information about how they interact with personal data.

The notification is subject to USD 300 fee and must be submitted annually.

The ADGM Office of Data Protection maintains a public register of data controllers, which forms part of the ADGM Public Register of Companies. 

Obligations

In addition to the basic obligation to ensure lawful grounds for personal data processing, companies must:

• Submit an annual application for renewal of data controller status;

• Ensure personal data rights prescribed by law are upheld and respond promptly
  to personal data subjects’ requests;

• Notify the regulator of any changes to the company’s details or the appointment
  or termination of a data processor, or changes to the processor’s details;

• Appoint a Data Protection Officer (DPO) if: The core activities of the company consist of processing operations which, by virtue of their nature, scope, and purposes, require regular and systematic monitoring of data subjects on a large scale; or The core activities consist of large-scale processing of special categories of personal data.

The appointment or resignation of the DPO must be reported to the Head of the ADGM Office of Data Protection within one month;

• Data protection impact assessments (“DPIAs”)

A DPIA is a document that provides a detailed description of a company's personal data processing. If DPIA shows that processing will involve a high risk to the rights and interests of individuals, the company must notify the regulator before starting such processing. 

The ADGM Law does not define “processing involving a high risk to the rights and interests of personal data subjects”. The regulator states that the risk in this case is associated with causing any significant physical, material or non-material harm to individuals. ”High risk" implies either: a high probability of negative consequences; or these negative consequences are significant; or a combination of both.

The law does not prescribe a mandatory format for DPIAs. However, the regulator has provided a template. DPIA may be submitted via the online-portal.

Overseas data transfers

Companies may transfer personal data outside ADGM to a third country only if:

• The regulator has designated the country as having an adequate level of protection; or

• The company has implemented measures to ensure data subjects’ rights are protected once the data is transferred (e. g., specified standard data protection clauses); or

• A specific carve-out applies (e.g., the data subject consents to such transfer).

In certain cases, companies must obtain the regulator's approval of safeguards adopted prior to the transfer. These cases include: 

• Contractual clauses between the controller or processor and the controller, processor or the recipient of the personal data outside of ADGM or the international organization; or 

• Provisions to be inserted into administrative arrangements, including regulatory memorandums of understanding between public authorities or domestic or international bodies which include enforceable and effective data subject rights.

Actions upon a data breach

The company must document the details of the breach, assess the risks to affected individuals, and describe the measures taken to mitigate harm.

By default, the company must notify the regulator of the data breach within 72 hours
of becoming aware of it. The notification must include the details of the data breach, its potential consequences, measures to mitigate them and company’s contact details. The notification must be directed via the online portal.

Liability for non-compliance

The maximum fine for non-compliance with the ADGM law or regulatory orders is USD 28,000,000.

In addition, the regulator may impose specific restrictions, in particular:

• Issuing a binding order to take certain actions to comply with the law;

• Revoke the company’s status as a personal data;

• Ordering the cessation of personal data processing or its transfer overseas.

Personal data subjects may lodge complaints directly with the regulator and claim compensation in cases of law violations by companies.

No criminal liability is prescribed under the ADGM law. However, breaches may result
in privacy-related liability under UAE federal law, as previously discussed.

Localization & Storage

The ADGM law does not require localization of personal data; this remains subject to provisions of law within the UAE. However, the storage period of personal data should be limited. 

Personal data should be stored in a form that allows identification of personal data subjects for no longer than is necessary for the purposes for which they are processed. The ADGM Law does not set any minimum or maximum retention periods, although other laws or regulations applicable to specific activities may impose certain requirements.

According to ADGM guidance, the data controller is responsible for determining appropriate retention periods, taking into account the nature of the processing and any applicable requirements/recommendations. ADGM recommends developing a retention policy or schedule, listing the types of information held by the company and defining the retention period for each type.

The ADGM Law does not establish any mandatory security measures but provides examples of those that companies may implement. ADGM recommends using encryption for storing personal data; however, the ADGM Law still applies to encrypted data.

3. DIFC personal data protection regulation

Texts of the law and amendments to it are available here. Complete guidance on personal data protection issued by DIFC itself is available here.

Regulator

Commissioner of the Data Protection’s Office 

Level 14, The Gate Building 

+971 4 362 2222 

commissioner@dp.difc.ae

Scope

The regulation applies to companies, which are: 

• Registered in DIFC; or

• Not registered in DIFC but processes personal data in the DIFC. “In the DIFC” means that the tools or personnel used to process the data are physically located within
  the DIFC.

Registration as a data controller

Companies are required to notify the DIFC Data Protection’ Office about the start of personal data processing. The notification must be filed via the DIFC portal:

• Within 30 days from the start of personal data processing or any change to the processing parameters (e.g., scope, purposes, etc.);

• Annually from the date of initial notification (if processing continues).

Notifications are subject to fees from USD 10 to USD 1,250.

Data controller’s obligations

In addition to ensuring lawful grounds for personal data processing, companies must:

• Implement technical, administrative, organizational and confidentiality measures to ensure data security;

• Prepare Records of Processing Activities (detailing what data is processed and how);

• Provide data subjects with a clear description of what data is processed and how;

• Appropriately delete or eliminate data if the company ceases the processing;

• Respect the data subjects’ rights prescribed by the DIFC law (e.g., the right to withdraw consent, the right to access information about their data processing, etc.).

Overseas data transfers

Companies are allowed to transfer personal data outside DIFC to a third country only if:

• The regulator designated the country as having an adequate level of protection; or

• The company has implemented measures to safeguard data subjects’ rights after the transfer (e. g., specified standard data protection clauses); or

• A specific carve-out applies (e.g., the data subject consents to such transfer).

In certain cases, companies must notify the regulator prior to the transfer.

Localization of databases used for personal data processing

There are no requirements under DIFC law for companies to use servers within the UAE while processing personal data. 

Appointing the data protection officer

In general, companies are not obliged to appoint a data protection officer (DPO).

However, appointment of a DPO is mandatory if at least one of the following conditions is met:

• The company is a DIFC body (e.g., the DFSA or the Courts); 

• The company conducts high risk processing activities (e.g., processes high volumes of data or sensitive categories of data); 

• The company is compelled by the Commissioner to designate the data protection officer.

Once the data protection officer is appointed, it is subject to specific obligations (handling personal data subjects’ complaints, lodging assessments to a regulator, etc.).

Actions upon data breach

In case of a data breach, the company must notify the regulator as soon as possible after becoming aware of the breach. The notification must be submitted via email and must include the information required under the instruction issued by DIFC.

Fines for non-compliance

Fines range from USD 25,000 to USD 100,000, depending on the nature of the breach.

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About the firm

FUTURA Law 

Futura Legal is an international legal and strategic consulting firm headquartered in Dubai. Founded in 2016 by Alexandra Kurdyumova and Gennady Kurdyumov, the firm supports ambitious companies scaling globally in fast-moving and high-risk industries. Futura’s 100+ specialists operate directly in 20+ countries, delivering clear and actionable legal support in dynamic regulatory environments. With deep expertise in tech, gaming, fintech, and blockchain, Futura protects clients from legal risks, hidden costs, and reputational threats — helping them grow as category leaders on the global stage.

Operational Presence: UAE, Hong Kong, Cyprus, Singapore, USA, India, Oman

futura.law 

contact@futura.law

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Antitrust regulation

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1. Please tell us about the main requirements of antimonopoly legislation applied in your country? What should a foreign investor take into account when starting a business to avoid restricting competition, what requirements should be observed?
2. Please name the main legislative acts in the field of competition protection?
3. In what spheres does the law on competition apply? Which sectors of the economy have the most stringent antimonopoly requirements?
4. How does the Competition Law define abuse of dominant market position? What are the main violations in this area?
5. What antimonopoly law requirements should be taken into account when concluding M&A transactions? What authorizations for the transaction should be obtained and what authorities should be notified of the transaction?
6. What are the penalties for violating antimonopoly legislation? What are the most serious penalties for violations?

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1. Please tell us about the main requirements of antimonopoly legislation applied in your country? What should a foreign investor take into account when starting a business to avoid restricting competition, what requirements should be observed?

The UAE competition laws aim to prevent monopolistic practices, restrict anti-competitive agreements, and ensure fair market competition. Foreign investors must comply with these regulations when entering the UAE market to avoid legal risks.

The primary legislation governing antitrust and competition in the UAE includes:

• Federal Law No. (36) of 2023 on the Regulation of Competition
  (UAE Competition Law);

• Executive Regulations of Federal Law No. 36 of 2023;

• Economic Substance Regulations (ESR);

• Sector-Specific Regulations.

The UAE's Ministry of Economy (MoE) oversees competition enforcement and merger approvals.

A company is considered dominant when it has the ability to control or significantly influence a relevant market, even without holding a monopoly. While the law itself doesn’t specify a fixed percentage, the Executive Regulations or guidelines issued by the Ministry of Economy often define dominance as having a market share of 40% or more in a relevant market. Factors like the market structure and competitive dynamics are also considered.

Prohibited practices include:

• Predatory pricing (selling below cost to drive out competitors);

• Price discrimination or unfair trading conditions;

• Forcing customers to buy additional products (“tying”);

• Price-fixing agreements between competitors;

• Market allocation (dividing customers or territories);

• Bid-rigging (colluding to manipulate tenders);

• Misleading advertising or false claims to gain an unfair advantage;

• Exclusive dealing agreements that restrict competition.

2. Please name the main legislative acts in the field of competition protection? 

The UAE has a comprehensive legal framework to regulate competition and prevent anti-competitive practices. The key laws include:

Federal Law No. 36 of 2023 on the Regulation of Competition.

This is the main antitrust and competition law in the UAE. It regulates:

• Anti-competitive agreements (e.g., cartels, price-fixing, market allocation);

• Abuse of market dominance (e.g., predatory pricing, unfair trade practices); 

• Merger control (certain transactions require prior approval).

The Enforcement Authority is the UAE Ministry of Economy (MoE).

Cabinet Decision No. 3 of 2025 (Executive Regulations of the Competition Law). 

It establishes key thresholds and procedures for implementing the Competition Law.

Economic Substance Regulations (ESR) (Cabinet Decision No. 98 of 2024).

These regulations aim to prevent anti-competitive tax practices and ensure that businesses have real economic activity in the UAE.

Federal Decrees Establishing Sectoral Regulators. 

Certain industries have their own competition rules:

• Telecommunications – Regulated by TDRA (Telecommunications and Digital Government Regulatory Authority);

• Financial Sector – Regulated by the Central Bank of the UAE;

• Energy & Utilities – Subject to sector-specific pricing & monopoly laws.

3. In what spheres does the law on competition apply? Which sectors of the economy have the most stringent antimonopoly requirements? 

The UAE Competition Law (Federal Law No. 36 of 2023) applies broadly across most sectors of the economy, with the goal of promoting market efficiency, consumer welfare, and preventing anti-competitive behavior. It covers all economic activities carried out in the UAE or affecting the UAE market, including those conducted by:

• Domestic and foreign companies;

• Free zone companies (if their activities impact the mainland UAE market);

• Online businesses serving UAE customers.

Certain sectors are exempt or subject to separate competition oversight due to their strategic nature or heavy regulation. These include:

• Telecommunications & Digital Services – regulated by Telecommunications and Digital Government Regulatory Authority (TDRA);

• Oil & gas – often exempt due to strategic state interest;

• Electricity & water – governed by local regulatory authorities;

• Transport (Aviation, Ports) – some exemptions apply due to state-backed infrastructure control;

• Financial Services/Banking – regulated by the Central Bank of the UAE or Securities and Commodities Authority (SCA);

• Cultural Activities and Press – often exempt under public policy grounds.

While the law applies generally, some sectors are subject to particularly close monitoring due to their market size, sensitivity, or history of monopolistic practices:

• Retail and E-commerce. Subject to intense scrutiny for price fixing, market allocation, and exclusivity agreements. Authorities closely monitor dominant players, particularly in digital marketplaces;

• Pharmaceuticals and Healthcare. High concern around price controls, supply restrictions, and merger activity. MOE and health regulators work in close coordination;

• FMCG and Distribution. Common issues include exclusive distribution, resale price maintenance, and abuse of dominance;

• Technology and Digital Services. Increasing focus on platform dominance, data monopolies, and digital market consolidation;

• Construction and Infrastructure. Historically subject to scrutiny for bid-rigging and cartel-like behavior in large government procurement projects.

Specific enforcement cases are not disclosed publicly; however the enhanced legal framework indicates a move towards more rigorous competition regulation in the UAE.

4. How does the Competition Law define abuse of dominant market position? What are the main violations in this area?

Under UAE law, a company is considered dominant if it has the ability to control or significantly influence prices, supply, or market access in a particular market, typically when it holds a market share of 40% or more (as specified in the executive regulations).

Abuse of dominance occurs when a company exploits its market power to restrict competition, harm consumers, or prevent new entrants from competing fairly.

The main violations of abuse of dominance are:

• Imposing Unfair Prices. Setting excessively high or artificially low prices to exploit consumers or eliminate competition;

• Restricting Production, Supply, or Technical Development. Deliberately limiting output or innovation to manipulate market conditions;

• Discriminatory Treatment. Treating similar customers differently without an objective justification;

• Tying or Bundling Products. Forcing customers to purchase a secondary product or service as a condition for obtaining the primary one;

• Exclusive Dealing / Refusal to Deal. Refusing to sell to certain customers or requiring exclusivity from partners;

• Setting Conditions That Limit Market Entry. Using contractual or pricing mechanisms that create barriers for new competitors.

5. What antimonopoly law requirements should be taken into account when concluding M&A transactions? What authorizations for the transaction should be obtained and what authorities should be notified of the transaction? 

When engaging in mergers and acquisitions (M&A), parties must carefully consider antimonopoly (competition law) requirements under Federal Decree-Law No. 36 of 2023 on the Regulation of Competition, along with the Executive Regulations (Cabinet Decision No. 3 of 2025).

Under UAE law, M&A transactions that lead to "economic concentration" must be notified and approved if certain thresholds are met. Economic concentration includes mergers, acquisitions of shares or assets and control or influence over another company.

Notification to the Ministry of Economy is required before closing the transaction if either of the following thresholds is met:

• Combined UAE turnover exceeds AED 300 million;

• Combined UAE market share exceeds 40%.

The notification must be submitted at least 90 days before completing the transaction. If the thresholds are met, the transaction cannot proceed without prior approval from the Ministry of Economy – Competition Department. The Ministry may approve, conditionally approve, or block the transaction.

Certain industries (e.g., banking, telecommunications, energy) require additional sectoral regulatory approvals before a transaction can be completed.

If the transaction involves companies operating in free zones such as DIFC (Dubai International Financial Centre) or ADGM (Abu Dhabi Global Market), additional compliance with the respective regulatory frameworks may be necessary.

6. What are the penalties for violating antimonopoly legislation? What are the most serious penalties for violations?

Violations of Federal Law No. 36 of 2023 on the Regulation of Competition in the UAE can result in severe administrative and financial penalties, especially in cases that involve abuse of dominance, cartel behavior, or failure to obtain required approvals for M&A transactions.

Main violations and corresponding penalties include:

Failure to Notify Economic Concentration (M&A). 

If a transaction meets the notification thresholds but is not submitted for approval:

• Fine: Up to 5% of the annual UAE turnover of the violating party;

• Transaction may be deemed void or suspended;

• Possible forced demerger or unwinding of the transaction.

• Anti-Competitive Agreements (Cartels) include price-fixing, market allocation, bid rigging, and limiting production or supply:

• Fines: Up to 10% of the annual UAE turnover of each participating entity;

• Invalidation of agreements.

• Abuse of Dominant Position includes predatory pricing, refusal to deal, and exclusive agreements:

• Fine: Up to 5% of annual UAE turnover;

• Additional financial penalties in cases of consumer harm;

• Corrective measures (behavioral or structural) may be imposed.

• Obstruction of Investigation, providing false information, failure to cooperate with the Ministry of Economy:

• Fine ranging from AED 50,000 to AED 500,000.

• Non-compliance with Ministry Decisions:

• Daily fines of AED 10,000 to AED 100,000, until compliance is achieved;

• In serious cases, revocation of licenses may be imposed.

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About the firm

BSA Ahmad Bin Hezeem & Associates LLC

BSA Law is a prominent law firm with eight offices across five countries in the Middle East. The firm offers clients globally-informed perspectives and comprehensive legal solutions. Known for its client-focused approach, the firm combines actionable advice with strategic insights, fostering long-term partnerships and driving sustainable, forward-thinking growth for businesses.

DUBAI	+97145285555
ABU DHABI	+97126444474
SHARJAH	+97165371166
RAS AL KHAIMAH	+97172273106

BSALAW.COM

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Bankruptcy

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1. Please describe the specifics of bankruptcy of companies with foreign participation. Are there any requirements different from local companies?
2. How does the bankruptcy process of a foreign legal entity work in practice?

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1. Please describe the specifics of bankruptcy of companies with foreign participation. Are there any requirements different from local companies?

Bankruptcy proceedings in the UAE are governed by the recently adopted Federal Decree-Law No. 51 of 2023 on Financial Restructuring and Bankruptcy (the “Bankruptcy Law”), effective from 1 May 2024. This legislation applies uniformly to all companies incorporated in the UAE, whether locally owned or with foreign participation (e.g., through shareholders or partners).
No distinction is made based on ownership nationality, ensuring equal treatment under the law. This approach reinforces the UAE’s status as a transparent and investor-friendly jurisdiction.

Below is an overview of the key provisions of the UAE Bankruptcy Law relevant to companies with foreign participation:

• Mainland and Free Zone Companies: For UAE mainland companies, the Bankruptcy Law applies uniformly, irrespective of foreign ownership. However, companies in certain free zones (e.g., DIFC or ADGM) fall under distinct insolvency regimes, such as the DIFC Insolvency Law 2019, which may differ in procedure and cross-border provisions. Free zone regulations take precedence for entities incorporated within their jurisdictions;

• Jurisdiction and Administration: The Bankruptcy Law introduced a new Bankruptcy Court with jurisdiction over insolvency matters. A Bankruptcy Department, established at the court’s headquarters, holds broad powers, including receiving and registering applications, serving notices, and facilitating discussions with creditors. Additionally, the Financial Restructuring and Bankruptcy Unit within the Ministry of Justice provides opinions on applications and maintains a bankruptcy register;

• Equal Treatment of Creditors: The Bankruptcy Law ensures equitable treatment of all creditors, including foreign ones, regardless of their nationality or residency. This principle is vital for companies with foreign shareholders and international creditors;

• Management Liability: Directors, managers, and any person responsible for the actual management or liquidation may be held liable for negligent or fraudulent conduct leading to bankruptcy. The Bankruptcy Law extends potential liability beyond board members to include these individuals, holding them accountable for acts within two years prior to the company’s payment cessation. If found liable, they may be ordered to contribute to debt repayment proportionate to their errors – e.g., if company assets cover less than 20% of debts due to their actions. A two-year limitation period applies from the bankruptcy judgment; though liability may be avoided if precautionary measures were taken or objections documented.

The Bankruptcy Law imposes identical procedural and substantive requirements – such as filing deadlines, financial disclosures, and creditor notifications – regardless of ownership nationality. This uniformity supports the UAE’s goal of attracting foreign investment.

In practice, however, companies with foreign participation may face closer scrutiny to ensure compliance, particularly where foreign assets or complex structures are involved.

2. How does the bankruptcy process of a foreign legal entity work in practice?

The bankruptcy of a foreign legal entity – incorporated outside the UAE but operating or holding assets within its borders – differs from that of UAE-incorporated companies. The Bankruptcy Law applies only to entities or branches registered under UAE law. For foreign legal entities, UAE courts lack jurisdiction over global insolvency; proceedings are confined to UAE-based assets or registered branches. In contrast, UAE companies with foreign participation fall fully under the Bankruptcy Law, with no distinction based on ownership nationality.

Foreign legal entities

In practice, foreign entities may encounter unique challenges:

• Asset Tracing: Trustees may struggle to locate UAE assets if ownership is obscured;

• Creditor Coordination: Foreign creditors must engage with UAE procedures, often requiring local representation;

• Non-Recognition of Foreign Proceedings: The UAE (except for DIFC and ADGM) has not adopted the UNCITRAL Model Law on Cross-Border Insolvency, limiting formal recognition of foreign proceedings or cooperation with overseas courts. Thus, companies with foreign shareholders, assets, or creditors must navigate these constraints. Foreign bankruptcy judgments are enforceable only under the Civil Procedures Law (Federal Law No. 11 of 1992, as amended), subject to reciprocity
  and UAE public policy.

UAE Companies with Foreign Participation

The following process applies to UAE-incorporated companies, including those with foreign shareholders, under the Bankruptcy Law:

Eligibility

A company qualifies for bankruptcy if it:

• Ceases debt payments for more than 30 consecutive working days
  due to financial distress; or

• Becomes insolvent (liabilities exceed assets). This applies to mainland commercial companies but excludes individuals and public entities unless specified.

Initiation 

Proceedings may be initiated by:

• Debtor: Management files voluntarily with the competent Commercial Court (e.g., Dubai or Abu Dhabi Courts), submitting balance sheets, creditor lists, and a justification report;

• Creditors: One or more creditors owed at least AED 100,000 (approx. USD 27,000) file after issuing a demand notice and proving default;

• Authorities: Courts or public prosecutors may initiate proceedings in exceptional cases.

Court Review and Trustee Appointment: 

• The Court reviews the application within five working days;

• If approved, a trustee is appointed, assuming control of assets and operations. Management powers are suspended, and creditor actions are stayed. 

Asset Assessment and Creditor Notification:

• The trustee inventories assets and verifies creditor claims within 10 working days of public announcement;

• Creditors submit documented claims; secured creditors retain priority over specific assets, while unsecured creditors rank equally;

• Notices are published in two newspapers (one in Arabic, one in English).

Liquidation:

• The trustee liquidates assets, maximizing value under court oversight;

• Proceeds are distributed in the following order:

  • Bankruptcy costs (e.g., trustee fees);

  • Preferential Claims (e.g., familial claims, payments owed to government entities);

  • Secured creditors (up to collateral value);

  • Unsecured creditors (on a pro rata basis);

  • Shareholders (if a surplus remains).

Conclusion:

• The trustee submits a final report, and the court declares bankruptcy concluded, dissolving the company;

• Fraudulent or negligent management may face liability or criminal penalties.

Alternative: Preventive Settlement and Financial Restructuring:

• Preventive Settlement: The Bankruptcy Law replaces the former preventive composition with a new “Preventive Settlement” mechanism.
  This court-supervised process enables debtors to negotiate debt restructuring with creditors, allowing the business to continue operating while settling obligations.

• Financial Restructuring: If preventive settlement fails, a court-appointed trustee oversees debt restructuring, balancing business continuity with creditor interests.

Therefore, for foreign legal entities, the Bankruptcy Law governs only UAE assets or branches, with no extraterritorial reach. UAE companies with foreign participation, however, undergo a comprehensive process covering all assets and liabilities. The lack of UNCITRAL adoption limits cross-border coordination for foreign entities, unlike free zones (e.g., DIFC, ADGM) which offer broader frameworks.

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About the firm

TA Advisory

TA Advisory is a law firm based in Geneva, with offices in Zurich, Belgrade, and Dubai. The firm specializes in international litigation and dispute resolution, and cross-border corporate transactions, including venture capital.

With a team of experienced attorneys from top-tier firms and law schools, TA Advisory provides expert legal services across diverse industries, including banking and real estate. Known for its client-focused approach, the firm offers tailored solutions to address complex legal and business challenges globally.

DUBAI

TAADVISORY.LAW

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Anti-corruption measures and combating money-laundering

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1. What actions of a foreign company may be qualified as corruption?
2. What measures of responsibility exist in case of detection of corruption?
3. How is the fight against money laundering organized in your country?

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1. What actions of a foreign company may be qualified as corruption?

The UAE ranks 23rd globally and 1st regionally on the Corruption Perceptions Index (CPI) for 2024, reflecting its strong commitment to transparency and regulatory compliance. The UAE Accountability Authority (UAEAA) is the primary body responsible for combatting corruption in the public sector, ensuring the government entities operate in accordance with anti-corruption laws. However, despite the UAE’s robust framework, certain sectors – such as real estate, corporate service providing, public procurement, and state-owned enterprises (SOEs) – remain vulnerable to illicit financial activities.

In the UAE, corruption is primarily defined in relation to government officials and the abuse of power for personal gain. However, for private individuals and foreign companies, corruption can manifest in different forms within the private sector, collectively referred to as private sector corruption. The following activities may be classified as corruption under UAE law:

Bribery of Public Officials

Corruption in the UAE extends beyond direct bribery and includes indirect methods of influence. Offering money, gifts, or favors to a government official in exchange for preferential treatment is a serious offense, often used to secure contracts, licenses, or approvals.

Indirect bribery includes offering travel, sponsorships, or business opportunities to officials or their relatives, creating undue influence. Additionally, facilitation payments – small payments made to expedite administrative processes such as customs clearance or government approvals – are strictly prohibited under UAE law, regardless of their size or intent.

Example: A foreign company bids for a UAE government contract and offers an expensive "consulting fee" to a procurement official in exchange for securing the deal. This would be considered bribery and a violation of UAE anti-corruption laws.

Corrupt Practices in Public Procurement

Public procurement remains a high-risk area for corruption, especially in contracts awarded to foreign companies. Corrupt procurement practices include:

• Colluding with competitors or using insider information to manipulate bidding processes;

• Paying kickbacks to procurement officers within SOEs, often disguised as consulting fees or bonuses;

• Submitting fraudulent financial statements, inflating revenue, or hiding liabilities to meet eligibility requirements.

Example: An international supplier inflates its financial records to meet tender eligibility criteria for a government infrastructure project, misleading authorities about its financial stability.

Fraud

Fraudulent activities by foreign companies often involve misrepresentation of financial information, manipulation of trade transactions, and regulatory loophole exploitation. A major concern is the misuse of legal person accounts for financial crimes. Foreign entities sometimes set up shell companies to channel illicit funds through the UAE’s financial system.

Common fraud schemes include:

• Over-invoicing and under-invoicing to disguise financial flows;

• Phantom shipments – where companies fabricate trade transactions to justify large fund transfers;

• Back-to-back Letters of Credit (LoC) schemes, where foreign companies create a cycle of fraudulent transactions that obscure the true movement of capital.

The UAE Financial Intelligence Unit (UAEFIU) report (January 2024) highlighted the rise of business email compromise (BEC) scams, impersonation fraud, and online investment fraud. Some fraudulent firms use misleading names resembling legitimate businesses to gain investor trust, while others promise high returns and reroute funds through offshore accounts.

Example: A foreign firm operating in the UAE fraudulently promotes an investment scheme, collects millions from unsuspecting investors, and then moves the money through a network of corporate accounts to obscure its origins.

Money Laundering Through High-Value Assets

The UAE’s real estate, precious metals, and luxury goods sectors are commonly exploited by foreign companies and high-net-worth individuals for money laundering. UAEFIU investigations found that foreign firms have purchased high-value properties, precious metals, and luxury cars to integrate illicit funds into the legitimate economy.

One particularly concerning case involved a real estate developer receiving large, unexplained cash deposits from offshore entities, followed by rapid resale transactions – a classic sign of real estate-based money laundering.

Investigative reports, including Dubai Unlocked (2024), revealed that politically exposed persons (PEPs) and sanctioned individuals continue to hold substantial property assets in Dubai. A follow-up study showed that over half of the PEPs identified in 2018 still retained their properties, despite unexplained wealth and no evidence of an official investigation.

Example: A foreign investor buys multiple high-end properties in Dubai through offshore entities, making it difficult to trace the original source of funds. These properties are later sold in quick succession, further complicating the financial trail and integrating illicit funds into the market.

2. What measures of responsibility exist in case of detection of corruption?

The UAE has a zero-tolerance policy on corruption, enforcing strict anti-corruption measures, ensuring that individuals and businesses involved in corrupt activities face criminal, financial, and organizational penalties. These measures are governed by:

• UAE Penal Code (Federal Decree-Law No. 31 of 2021);

• Federal Decree-Law No. 20 of 2018 (Anti-Money Laundering and Counter-Terrorism Financing Law);

• Federal Law No. 2 of 2015 on Commercial Companies.

As previously stated, anti-corruption measures can be classified as:

Criminal Penalties

Foreign companies and individuals involved in corruption in the UAE face severe criminal consequences, including imprisonment, deportation, and extradition. The severity of penalties depends on the nature of the offense. Bribery involving public officials can result in up to 15 years in prison, while bribery in the private sector carries a sentence of up to 5 years. In cases of embezzlement of public funds, individuals may face up to 10 years of imprisonment.

For foreign executives and business owners convicted of corruption-related crimes, deportation and visa revocation are common measures. Those sentenced for financial misconduct may be expelled from the country after serving their prison term, and their residency visas revoked, preventing them from returning to the UAE.

Additionally, the UAE actively cooperates with foreign governments to extradite individuals involved in corruption and financial crimes. This ensures that those attempting to escape prosecution cannot evade justice by relocating abroad.

A clear example of these enforcement measures involved a foreign investor who was convicted of embezzling funds from a UAE government project. After being sentenced to 10 years in prison, the individual was permanently expelled from the UAE.

Asset Confiscation and Financial Penalties

Corruption-related offenses in the UAE carry significant financial consequences, including substantial fines, asset confiscation, and business restrictions. Companies and individuals convicted of bribery, fraud, or money laundering may face financial penalties reaching tens of millions of dirhams, reflecting the severity of the offense. Bribery and financial fraud can result in fines of up to AED 10 million, while money laundering violations may lead to fines of up to AED 5 million, depending on the severity of the offense and the extent of illicit financial activities.

Authorities in the UAE have broad powers to freeze and confiscate assets linked to financial crimes. The UAE Financial Intelligence Unit (UAEFIU) plays a key role in identifying illicit transactions, allowing law enforcement to seize suspect bank accounts, real estate, luxury assets, and business holdings. Any property or funds obtained through corrupt practices can be frozen and permanently confiscated.

Organizational Penalties and Business Restrictions

Companies involved in corruption may also face regulatory and corporate governance consequences, significantly affecting their ability to operate in the UAE. Authorities have the power to suspend or revoke business licenses, particularly in free zones, where compliance violations trigger immediate regulatory action. 

The UAE Department of Economic Development (DED) and Free Zone Authorities strictly monitor corporate activities, ensuring that businesses engaged in corruption do not continue operating within the country. Authorities have the right to blacklist firms from participating in government tenders and public contracts, effectively cutting them off from lucrative commercial opportunities in the UAE.

Financial institutions also play a role in enforcing these measures. The UAE Central Bank has the authority to impose banking restrictions on convicted companies, leading to the closure of corporate accounts or the refusal of financial services to businesses involved in illicit activities. 

A notable example of these enforcement actions involved a financial services firm that was found guilty of laundering money through fraudulent investments. As a result, its business license was revoked, and its CEO was barred from operating any UAE-registered company. These measures demonstrate how the UAE actively enforces its anti-corruption and AML frameworks, ensuring that companies engaging in financial misconduct face long-term operational consequences.

Other Consequences

Beyond legal penalties, corruption can result in significant reputational damage and civil liability. Government agencies and private entities affected by corruption can file lawsuits to recover financial losses, and foreign companies may be required to compensate affected parties for damages. Additionally, businesses involved in corruption risk losing commercial partnerships, sponsorships, and client trust, making it difficult to operate in the UAE market.

3. How is the fight against money laundering organized in your country?

The UAE has significantly strengthened its anti-money laundering (AML) framework, leading to its removal from the Financial Action Task Force (FATF) grey list in February 2024.

The UAE has implemented a multi-layered AML enforcement system, combining strict regulations, financial intelligence monitoring, and corporate compliance obligations. The Higher Committee on AML/CFT, chaired by H.H. Sheikh Abdullah bin Zayed Al Nahyan, Minister of Foreign Affairs, plays a key role in overseeing national AML policies. At its 21st meeting in July 2024, the committee approved the UAE's National AML/CFT Strategy for 2024-2027, focusing on risk-based supervision, regulatory alignment with global standards, and enhanced oversight of financial institutions, DNFBPs, and virtual asset service providers (VASPs).

The primary authorities responsible for AML enforcement include:

• The UAE Financial Intelligence Unit (UAEFIU): Collects and analyses suspicious financial activity, collaborating with international agencies to track illicit fund flows;

• The Central Bank of the UAE (CBUAE): Enforces AML compliance for financial institutions, requiring them to conduct Know Your Customer (KYC) procedures, Enhanced Due Diligence (EDD), and Suspicious Activity Reporting (SAR);

• The Executive Office for Anti-Money Laundering and Counter-Terrorism Financing
  (EO AML/CTF): Oversees AML policies and ensures coordination between financial and law enforcement authorities;

• The Ministry of Economy (MoE): Regulates Designated Non-Financial Businesses
  and Professions (DNFBPs), such as real estate firms, law firms, and corporate service providers, ensuring compliance with AML laws.

The UAE has developed a comprehensive anti-money laundering (AML) framework, aligning with FATF standards to strengthen financial oversight. AML enforcement applies to both financial institutions (FIs) and designated DNFBPs, ensuring broad regulatory coverage.

Financial institutions, including banks, insurance companies, and investment firms, must comply with AML due diligence measures, Know Your Customer (KYC) procedures, and Enhanced Due Diligence (EDD) for high-risk transactions. The UAE Financial Intelligence Unit (UAEFIU) oversees compliance, requiring mandatory reporting of suspicious transactions via the goAML system, an online portal developed by the United Nations Office on Drugs and Crime (UNODC). Institutions failing to report financial crimes risk fines up to AED 5 million, banking restrictions, and license revocation.

The AML framework also extends to DNFBPs, including real estate firms, law offices, traders of precious metals, and corporate service providers, sectors commonly exploited for money laundering. These businesses must register with the goAML system, conduct due diligence on clients, and identify Ultimate Beneficial Owners (UBOs) to prevent illicit financial flows. The Ministry of Economy (MoE) and various free zone authorities enforce compliance, with penalties ranging from hefty fines to permanent business blacklisting.

The UAE’s financial free zones, such as DIFC and ADGM, maintain independent AML regulations under Dubai Financial Services Authority (DFSA) and Financial Services Regulatory Authority (FSRA). However, all free zone entities must adhere to federal AML laws, ensuring uniform compliance across jurisdictions. The UAE has also strengthened cross-border financial crime cooperation, enhancing its ability to freeze and confiscate illicit assets.

Although the UAE has been removed from the FATF grey list in February 2024, reflecting its significant regulatory improvements, the European Union continues to classify it as a high-risk jurisdiction, limiting its financial transactions with European entities. Despite repeated appeals from UAE authorities, including Minister Abdulla bin Touq Al Marri, the EU has not revised its position, leading to criticism from UAE officials who argue that the designation does not reflect the nation’s strengthened AML framework.

To further combat financial crime, the UAE enforces severe penalties for AML violations, including fines up to AED 10 million for Fis and up to AED 5 million for DNFBPs, business license revocation, asset confiscation, and prison sentences of up to 10 years. The regulator actively monitors all entities subject to AML regulations, conducting both on-site and remote inspections. As part of this oversight, businesses are required to complete a detailed AML compliance questionnaire consisting of more than 300 questions, assessing their implementation of AML risk controls, transaction monitoring, and reporting mechanisms.  

This extensive monitoring reflects the UAE’s ongoing commitment to strengthening financial transparency and aligning with global AML standards.

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List of abbreviations

ADGM – Abu Dhabi Global Market
ADRA – Abu Dhabi Registration Authority
AED – United Arab Emirates Dirham
AML – Anti-Money Laundering
BIT – Bilateral Investment Treaty
CBUAE – Central Bank of the UAE
CFT – Countering Financing of Terrorism
DED – Department of Economic Development
DFM – Dubai Financial Market
DFSA – Dubai Financial Services Authority
DIFC – Dubai International Financial Centre
DIAC – Dubai International Arbitration Centre
DMCC – Dubai Multi Commodities Centre
FATF – Financial Action Task Force
FDI – Foreign Direct Investment
FSRA – Financial Services Regulatory Authority
FTA – Federal Tax Authority
FZE – Free Zone Establishment
FZ-LLC – Free Zone Limited Liability Company
GCC – Gulf Cooperation Council
JAFZA – Jebel Ali Free Zone
LSA – Local Service Agent
M&A – Mergers and Acquisitions
MOFA – Ministry of Foreign Affairs
MOHAP – Ministry of Health and Prevention
MOHRE – Ministry of Human Resources and Emiratisation
RAK ICC – Ras Al Khaimah International Corporate Centre
SCA – Securities and Commodities Authority
TDRA – Telecommunications and Digital Government Regulatory Authority
UAE – United Arab Emirates
UAEAA – UAE Accountability Authority
UAEFTS – UAE Funds Transfer System
USD – United States Dollar
VARA – Virtual Assets Regulatory Authority
VASP – Virtual Asset Service Provider