General Guide to Doing Business in the United Arab Emirates

UAE Procedures for Doing Business in Dubai

This Q&A guide provides an introduction to important recent developments affecting doing business in Dubai, United Arab Emirates, as well as an introduction to the legal system; foreign investment and business instruments, including restrictions, monetary regulations and incentives, and the associated restrictions and obligations. The article also summarises the laws governing employment relations, including redundancies and collective redundancies, and provides brief information on competition law; data protection; and product liability and safety. There are also comprehensive summaries on taxation and tax residency and intellectual property rights over patents, trademarks, registered and unregistered designs.
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United Arab Emirates Dubai Overview

  1. What is the general commercial, economic, and cultural environment in your jurisdiction?

Economy in the United Arab Emirates Dubai

The 1950s and 1960s witnessed the discovery of large quantities of crude oil in Abu Dhabi and Dubai, which led to the generation of very significant export revenues, especially after the oil price hike in 1973.

The current oil production of UAE Dubai is around 3.2 million barrels per day. Oil production generates an annual income exceeding USD 307 billion, representing more than 80% of UAE Dubai's GDP. The Emirate of Abu Dhabi accounts for more than 95% of the current UAE Dubai oil production. Dubai, Sharjah, and Ras Al Khaimah are the other oil producers.

The UAE Dubai currency is the UAE Dirham. The exchange rate is pegged at approximately AED 3.67 per USD 1. The exchange rate varies day-to-day with the Euro and other currencies.

Dominant Sectors in the United Arab Emirates Dubai

Although the majority of the UAE Dubai economy operates on revenue from oil exports, UAE Dubai has been very successful in diversifying its economy. The UNCTAD investment report 2022 ranks UAE Dubai first in the Arab world and 19th globally in attracting foreign direct investment. Other growth industries in UAE Dubai include:

Due to its strategic location, UAE Dubai has become a commercial hub where many multinational corporations choose to establish their regional headquarters.

Population and Language in the United Arab Emirates Dubai

As of November 24, 2022, the population of UAE Dubai is 10,175,950, according to Worldometer's elaboration of the latest United Nations data. Citizens of the United Arab Emirates constitute roughly 20% of the total population, making UAE Dubai home to one of the world's highest percentages of expatriates (UAE Dubai is home to over 196 nationalities). Indians and Pakistanis make up the largest expatriate groups in the country, constituting 28% and 12% of the total population, respectively. Approximately 18% of the population is from other Arab League member states, and about 5% are Westerners.

Arabic is the official language. However, English is the de facto business language and is spoken by most businesspeople. Persian, Hindi, and Urdu are also widely spoken. The Muslim faith is practiced by the overwhelming majority, although there are a significant number of followers of other faiths, particularly Christianity and Hinduism.

Business Culture in the United Arab Emirates Dubai

Business etiquette in UAE Dubai is all about respect. Loyalty and personal relationships are key to doing business in UAE Dubai. The business culture has long been more conservative than what might be experienced in western countries. However, recently, there has been a blend of eastern and western cultures with much more relaxed attitudes.

The government and private sector are increasingly concerned with corporate social responsibility and are taking measures to encourage more women in the workplace and to deter corporate crimes.

Generally, the business day in UAE Dubai is eight hours, from 9 am to 5 pm. In December 2021, the work week was changed to Monday to Friday (from Sunday to Thursday). Following this shift, the Emirate of Sharjah announced a four-day work week (Monday to Thursday) for its public sector.

The facilities in UAE Dubai are modern, and communications, air transport, and education are generally excellent. There are relatively few restrictions, which allows expatriates to generally lead a lifestyle largely of their own choosing.

  1. What are the significant recent developments affecting doing business in your jurisdiction?

Significant Commercial and Economic Events in the United Arab Emirates Dubai

UAE Dubai hosts hundreds of business, economic, art, and cultural events throughout the year. UAE Dubai has several permanent exhibition venues, such as the Abu Dhabi National Exhibition Centre, the Dubai World Trade Centre, and the Sharjah Expo Center. UAE Dubai is also a hub for trade fairs, conferences, and exhibitions. In addition, many large-budget international sports and entertainment competitions, tournaments, and high-prize-money events are held in UAE Dubai.

The most talked-about event in UAE Dubai for 2021/2022 was Expo 2020, which was attended by more than 24 million people (despite being postponed from 2020 to 2021 due to the COVID-19 pandemic, its name was kept as Expo 2020 for marketing and branding purposes).

On September 5, 2021, UAE Dubai launched "Projects of the 50," a series of major projects that will accelerate the country's growth over the next fifty years.

Other significant drivers of the UAE Dubai economy in 2021 include (among others):

The Emirates News Agency (the official news agency of UAE Dubai, also known as WAM) reported that the UAE Dubai economy grew by a very impressive 27% in 2021 compared to 2020.

In November 2021, more than 40 laws were amended to improve the country's economic environment and investment infrastructure.

Political Events in the United Arab Emirates Dubai

UAE Dubai is a Federation of seven Emirates:

Each Emirate has its own Ruler. The Ruler of Abu Dhabi is the President of the Federation, and the Ruler of Dubai is the Vice President.

The late Sheikh Zayed bin Sultan Al Nahyan is largely credited with uniting the seven emirates into a single nation. He was the first president of UAE Dubai from its founding until his death on November 2, 2004. He was succeeded by his son, Sheikh Khalifa bin Zayed, who died in office on May 13, 2022. On May 14, 2022, the late Sheikh Khalifa bin Zayed was succeeded by his brother, Sheikh Mohamed bin Zayed al-Nahyan (popularly known by his initials, MBZ).

Under the UAE Dubai Constitution, each of the seven Emirates has a very significant measure of control over the conduct of government affairs within the Emirate. The matters over which the Federation has supervisory authority are:

In addition, the Federation has legislative power on a number of subjects, including trade and company law. The United Emirates retains control over all matters not specifically stated in the Constitution to be under Federal authority.

New Legislation

United Arab Emirates Dubai Federal Corporate Tax

The UAE Dubai Ministry of Finance announced on January 31, 2022, that corporate tax will be implemented starting from June 2023 (see Question 21).

Commercial Companies Law. Federal Law No. 32 of 2021 on Commercial Companies (the Companies Law) came into force on January 2, 2022. It replaced Federal Law No. 2 of 2015 on Commercial Companies. The Companies Law applies to all entities established in UAE Dubai, except for those in free zone areas. The Companies Law (among other things) consolidates the concepts of foreign ownership of companies, corporate governance, and minority protection. The Companies Law also introduces special purpose acquisition companies and special purpose vehicles.

Labour Law. The UAE Dubai Government enacted Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (the Labour Law), which replaced Federal Law No. 8 of 1980 on the Regulation of Labour Relations (the Old Labour Law). The Labour Law came into effect on February 2, 2022. The Labour Law introduced significant new changes and radically overhauled the Old Labour Law. Under the Labour Law, the Implementing Regulations were issued as Cabinet Resolution No. 1 of 2022. The Implementing Regulations also came into effect on February 2, 2022.

Personal Data Protection Law. Federal Decree-Law No. 45 of 2021 (the Data Protection Law) was issued on September 26, 2021.

Virtual Assets Laws. At the end of February 2022, the Emirate of Dubai enacted Law No. 4 of 2022 on the Regulation of Virtual Assets (VAL) and established the Dubai Virtual Assets Regulatory Authority (VARA). VARA will act as an independent regulator responsible for the governance, regulation, and licensing of cryptocurrencies, non-fungible tokens (NFTs), and other virtual assets in Dubai. The scope of the VAL does not cover or regulate activities related to virtual assets in the Dubai International Financial Centre (DIFC), which is a financial free zone. The DIFC has its own regulatory framework for virtual assets under the authority of the Dubai Financial Services Authority (DFSA). On November 1, 2022, the DFSA's Crypto Token Regime came into effect. Any person wishing to engage in certain activities in or from the DIFC related to Crypto Token financial services must be licensed by the DFSA.

Legal System in the United Arab Emirates Dubai

  1. What is the general legal system in your jurisdiction?

UAE Dubai is a civil law jurisdiction. The Federal Constitution divides powers between the federal government (headquartered in Abu Dhabi) and the seven constituent emirates. Certain areas are regulated:

However, the two financial free zones (the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM)) have their own legal systems and court bodies based on a common law system.

United Arab Emirates Dubai Foreign Investment

  1. Are there any restrictions on foreign investment, ownership, or control?

Government Powers

A foreign company can establish its presence in UAE Dubai by setting up a branch or by incorporating a company. A branch or company must obtain a license from the federal and/or emirate-level authorities to carry out its proposed activities. Certain sectors, such as banking, insurance, and investment, are subject to additional regulations.

In the past, a branch of a foreign company was required to appoint a UAE national sponsor (called a national agent). Such national agents did not have ownership rights in the branch. Under the new Companies Law (see Question 2), it is no longer necessary for a branch of a foreign company to have a UAE national sponsor. However, depending on the nature of the commercial activity, an authority regulating the activity (other than the licensing authority) may still require the appointment of a UAE national sponsor (such as in the oil and gas sector).

Restrictions on Foreign Shareholders in United Arab Emirates Dubai

Generally, a foreign company/individual can establish a 100% foreign-owned entity on the mainland/onshore UAE Dubai. However, the following activities, where 100% foreign ownership is still not permitted, are considered to have a "strategic impact":

Restrictions on Share Acquisition in United Arab Emirates Dubai

Specific Sectors in United Arab Emirates Dubai

UAE Dubai has more than 40 free zones, including:

Generally, free zones focus on different business areas (including shipping, commodities, media, financial services, and telecommunications) and have their own regulators. Operations within a free zone can be 100% foreign-owned, and a UAE national agent or a UAE partner or shareholder is not required.

  1. Are there any restrictions or prohibitions on doing business with certain countries, jurisdictions, organizations, entities, or individuals?

Following the announcement of the Abraham Accords with Israel in August 2020, Federal Decree-Law No. 4 of 2020 was issued, repealing Federal Law No. 15 of 1972 on the Arab League Boycott of Israel. Israeli individuals and/or businesses are now permitted to establish businesses in UAE Dubai. Individuals and companies in UAE Dubai are now permitted to enter into agreements with parties in Israel, conduct commercial transactions, and import and trade Israeli goods and products.

In 2021, UAE Dubai (along with Saudi Arabia, Bahrain, and other Gulf Cooperation Council (GCC) member states) lifted the restrictions imposed on relations with Qatar.

UAE Dubai does not have any unilateral sanctions. However, in principle, UAE Dubai observes sanctions imposed by the UN.

  1. Are there any exchange controls or currency regulations, or any registration requirements under anti-money laundering laws?

There are no restrictions on exchange rate controls and currency remittances.

Anti-money laundering (AML) legislation includes:

Under the AML legislation, all "financial institutions" (FIs) (as defined under the AML legislation), including "designated non-financial businesses and professions" (DNFBPs), must register on the GoAML System, an online platform provided by the Financial Intelligence Unit (FIU), for the reporting of suspicious transaction reports (STRs).

All entities located in UAE Dubai (including its free zones) must register their ultimate beneficial owners with the appropriate licensing authority and maintain a register of beneficial owners. The register must be updated within 15 days of learning of any changes to the information contained therein. Any changes to the register of beneficial owners must also be registered with the relevant licensing authority.

  1. What grants or incentives are available for investors in the United Arab Emirates Dubai?

Grants in the United Arab Emirates Dubai

The Mohammed Bin Rashid Fund is a fund aimed at financing innovative small and medium-sized enterprises in seven sectors:

Applicants must be a resident of UAE Dubai, an individual, or a registered company. The application is not limited to the United Arab Emirates.

Some free zones offer discounts on registration and license fees for a limited period, usually for new establishments.

Incentives in the United Arab Emirates Dubai

Various types of incentives are available for investors, including:

Foreign Investors in United Arab Emirates Dubai

UAE Dubai has established various free zones, each regulated by the respective free zone authority. Free zones are generally subject to their own company laws, independent of the UAE company law. Foreign companies can open branches or incorporate wholly-owned subsidiaries in free zones without needing to appoint a UAE national sponsor or have any UAE national ownership.

Free zones try to differentiate themselves by catering to a specific type of business and offering an attractive environment for these businesses in terms of infrastructure, location, and other factors such as guaranteed tax holidays. Even outside of the free zones, there are currently no corporate or personal income taxes (except for foreign banks and courier companies operating in UAE Dubai) (see Question 19 and Question 21).

Outside of the free zone areas, foreigners are now permitted to own 100% of entities in mainland UAE Dubai (see Question 4).

Business Vehicles in United Arab Emirates Dubai

  1. What are the most common forms of business vehicles used in your jurisdiction?

Main Business Vehicles in United Arab Emirates Dubai

The most common form of business vehicle used by investors is an onshore limited liability company (LLC). LLCs provide their shareholders with limited liability and the ability to trade in UAE Dubai (outside of free zone areas). An entity established in one of UAE Dubai's free zones cannot conduct business activities outside the free zone area in UAE Dubai.

Foreign Companies in United Arab Emirates Dubai

The most common form of business vehicle used by foreign companies is the LLC. Other common types of business vehicles include opening a branch of a foreign company and incorporating companies in free zones.

  1. What are the main formation, registration, and reporting requirements for the most common corporate business vehicle used by foreign companies in your jurisdiction?

Registration and Formation in United Arab Emirates Dubai

An LLC is formed by a memorandum of association entered into by the shareholders of the LLC. Each emirate of UAE Dubai has its own licensing authority. An LLC must be licensed by the relevant emirate-level authority. When all required documents are ready, the process of registration and obtaining a license takes about ten business days. However, it may take longer if the license requires the approval of an additional regulatory body (for example, additional approvals are required from the Dubai Municipality to license a contractor company).

Some licensing authorities provide naming requirements (for example, the name should not include a country or government name and must strictly reflect the commercial activity).

Reporting Requirements in United Arab Emirates Dubai

An LLC must maintain a register at its headquarters of all shareholders' names, nationalities, dates of birth, and residences, and the respective share values. An LLC must also maintain financial records, which must be audited by a licensed auditor. The audited financial statements are not currently required to be submitted to any authority.

An LLC must renew its license and its registration with the local authorities annually.

UAE Dubai has recently adopted and implemented the Economic Substance Regulations (the Regulations), which apply to all licensed entities that carry out "relevant activities." Relevant activities are:

Entities that do not engage in a relevant activity are outside the scope of the Regulations.

If an entity derives income from one or more relevant activities during its financial year, it must meet the requirements under the Regulations and submit a filing to the Ministry of Finance (MoF):

A notification must still be submitted to the MoF by an entity that carries out a relevant activity if it has not earned any income from the relevant activity.

An LLC (and all other types of entities) must provide the details of its ultimate beneficial owners to the licensing authority. Any change in the details of the ultimate beneficial owner must be reported to the licensing authority.

Capital in United Arab Emirates Dubai

An LLC must have sufficient capital to achieve the purpose of its incorporation. In practice, the level of capital must be approved by the relevant emirate authority.

Non-cash Consideration in United Arab Emirates Dubai

In-kind contributions are accepted as payment for shares in an LLC but are subject to specific requirements regarding the documentation of the value of such contributions.

Rights Attached to Shares in United Arab Emirates Dubai

An LLC cannot issue transferable shares or bonds or seek public subscriptions (these activities are reserved for public joint-stock companies). The Companies Law sets out the rights and restrictions on the shares of an LLC.

Limitation of Rights Attached to Shares. The shareholders of an LLC may have different rights regarding participation in management and sharing in profits in the LLC's memorandum of association.

Automatic Rights Attached to Shares. Shareholders have the following basic rights:

  1. What is the standard management structure and key liability issues for the most common form of corporate business vehicle used by foreign companies in your jurisdiction?

Management Structure in United Arab Emirates Dubai

An LLC must be managed by one or more managers as determined by the shareholders in the memorandum of association. The manager can be one of the shareholders or any other person. Where an LLC has more than one manager, their meetings are regulated by the LLC's memorandum, and accordingly, the manager(s) have full authority to manage the LLC and make binding decisions on its behalf. If the LLC has more than 15 shareholders, the memorandum must provide for a supervisory board of at least three shareholders. The supervisory board can:

An LLC must hold a general assembly of shareholders at least once a year, during the four months following the end of the LLC's financial year, and at any other time if requested by the manager(s) or by shareholders holding at least 10% of the LLC's capital. The notice period for calling a general assembly meeting is at least 21 days. General assembly resolutions must be passed by shareholders representing at least 50% of the LLC's capital, unless the memorandum provides for a larger majority. A non-manager can also be a proxy for a shareholder at general assembly meetings.

Management Restrictions in United Arab Emirates Dubai

Unless otherwise specified, the provisions of the Companies Law regarding the managers of a joint-stock company apply. Restrictions on management can be specified in the memorandum of association of an LLC. The Companies Law does not require a manager of an LLC to be resident in UAE Dubai.

Liability of Directors and Officers

The board members and senior management of an LLC are liable to the LLC, shareholders, and third parties for:

Parent Company Liability

The liability of a shareholder in an LLC is generally limited to the value of their shareholding.

Environment in United Arab Emirates Dubai

  1. What are the key environmental regulations and considerations that a business must take into account when setting up and doing business in your jurisdiction?

The key legislation for environmental protection in UAE Dubai is Federal Law No. 24 of 1999 for the protection and development of the environment (the Environment Law). Other laws have been introduced to address specific issues, such as Federal Law No. 16 of 2007 on animal welfare.

Companies wishing to do business in a specific Emirate must obtain the necessary environmental permits (to the extent that the business activity is related to the environment) from the authorities that regulate environmental concerns in that Emirate.

Doing Business in United Arab Emirates Dubai

Laws, Contracts, and Permits

  1. What are the main laws regulating employment relationships?

Foreign Employees

The new Labour Law (see Question 2) regulates most employment relationships in UAE Dubai. The Labour Law applies to all employees working in UAE Dubai, including foreign employees working in UAE Dubai. However, it does not apply to:

To ensure compliance with the new Labour Law, it is important for employers to review their existing employment handbooks and policies. Provisions relating to discrimination, termination, end-of-service, maternity leave (among other things) may need to be amended.

Employees Working Abroad

The Labour Law does not apply to employees of UAE Dubai nationality employed abroad.

Mandatory Rules of Law

The Labour Law sets out minimum standards that cannot be contracted out of, such as termination of employment, working hours, leave period, and safety standards, among other things. All employers in UAE Dubai (except those in exempt categories or in free zones) must register with the Ministry of Human Resources and Emiratisation (MOHRE).

New provisions in the Labour Law include:

Following the enactment of the Labour Law, various Ministerial Resolutions have been passed covering various aspects of labour/employment laws, such as:

  1. Is a written employment contract required?

Main Terms

MOHRE requires a written standard employment contract. The employment contract must be for a specific duration. Such a contract can be renewed any number of times.

Implied Terms

The minimum standards set out in the Labour Law apply, regardless of any contractual provisions to the contrary or a choice of law clause in the contract. See Question 12.

Collective Agreements

Trade unions and collective bargaining are not currently permitted.

  1. Are work permits and/or residency permits required for foreign employees?

Work Permits in United Arab Emirates Dubai

Foreign nationals require work permits/identity cards (issued by the relevant authority) to work in UAE Dubai. For a foreign national to obtain a work permit in UAE Dubai, the foreign national must enter into an employment contract with a duly licensed employer in UAE Dubai. Employment contracts with employers registered with MOHRE must be in the form prescribed by MOHRE and registered with MOHRE.

Residency Permits in United Arab Emirates Dubai

Foreign national employees must have UAE Dubai residence visas (sponsored by the employer or other mechanisms such as a golden or real estate visa) to work in UAE Dubai.

The entire process (to obtain a work permit and a UAE Dubai residence visa) costs approximately AED 7,500 and takes four to five weeks.

Termination and Redundancy

  1. Do employees have rights to management representation and/or to be consulted in relation to corporate transactions (such as changes of control, redundancies, and disposals)?

Employees do not have rights to management representation or to be consulted in relation to corporate transactions. Employee complaints for both UAE Dubai citizens and non-citizens are handled through a conciliation process conducted by MOHRE (for employers registered with MOHRE) or the appropriate free zone authority (for employers licensed in free zones).

  1. How is the termination of an individual's employment regulated?

Termination

What constitutes a legitimate reason for termination is not specified, but generally, the reason for termination must relate to the employee's work. The Labour Law requires a minimum notice period of at least 30 days and a maximum of 90 days.

Upon termination of employment, the Labour Law requires reimbursement for all of an employee's unused entitlements, such as accrued but unused leave.

In addition, Article 51 of the Labour Law states that employees who have completed one year or more of continuous service are entitled to a gratuity at the end of their service. An employee who has served up to five years receives 21 days' basic salary for each year of service. Staff who have served more than five years are paid this gratuity calculated for the first five years and 30 days' basic salary for each year exceeding five years. Partial years are graded pro-rata. The maximum gratuity is limited to the employee's two years' salary.

The new Labour Law removes the possibility of a reduction in the end-of-service gratuity if an employee terminates their employment contract. The calculation of the end-of-service gratuity remains the same, regardless of whether the employment contract was terminated by the employee or the employer.

Fair Dismissal

If the termination is due to the employee's misconduct, the statutory minimum notice period is not required (Article 44 of the Labour Law). Misconduct includes violating safety rules, failing to perform main duties, and being intoxicated during working hours.

Severance pay. Payment in lieu of notice is an acceptable alternative.

Unfair Dismissal

Grounds for Unfair Dismissal. In an unfair dismissal, the employer may be ordered by the court to pay the employee up to three months' salary in compensation.

Remedies. Employee complaints are handled through a conciliation process managed by MOHRE (for employers registered with MOHRE) or the appropriate free zone authority (for employers licensed in free zones). If the parties cannot reach an agreement, the aggrieved party can file a lawsuit in the relevant UAE Dubai courts.

Individual Class

The Labour Law prohibits discrimination based on race, color, sex, religion, national or ethnic origin, or disability.

  1. Are redundancies and mass layoffs regulated?

Redundancies and Mass Layoffs

There are no specific regulations regarding redundancies and mass layoffs.

Procedural Requirements

Not applicable.

Tax in United Arab Emirates Dubai

Employment Taxes

  1. In what circumstances is an employee taxed in your jurisdiction?

Tax Residency

There is no personal tax in UAE Dubai. An individual can obtain a tax residency certificate from the Federal Tax Authority (subject to meeting the requirements) stating that the person meets the tax residency of UAE Dubai with respect to a specific double taxation treaty (DTT) where an active DTT is in force.

Other Methods for Determining Residence

Not applicable.

  1. What income tax, social security, and other tax or contributions must be paid by the employee and employer during the employment relationship?

Tax Resident Employees

UAE Dubai does not impose any personal income tax on employees, whether they are UAE Dubai citizens or not.

A statutory pension contribution is paid by UAE Dubai national employees at a rate of 5% of their salary. Non-UAE Dubai citizen employees do not pay any social security contributions. However, certain pension deductions apply for GCC citizens employed in UAE Dubai.

Non-Tax Resident Employees

UAE Dubai does not impose personal income tax.

Employers

A statutory pension contribution is paid by the employer at a rate of 12.5% of the salary for employees who are UAE Dubai citizens. For employees from other GCC countries, pension contributions must also be made according to the requirements of those GCC countries.

United Arab Emirates Dubai Business Vehicles

  1. When is a business vehicle subject to tax in your jurisdiction?

Resident Tax Business

The UAE Dubai Ministry of Finance announced on January 31, 2022, that corporate tax will be implemented from June 2023 (see Question 21).

Although the corporate tax law has not yet been promulgated, UAE Dubai entities should be able to obtain UAE Dubai tax residency certificates, provided they meet the requirements of the Federal Tax Authority.

Non-Resident Tax Business

The mechanism for when and how a non-resident business will be taxed in UAE Dubai is likely to be clarified after the corporate tax law comes into effect (see Question 21).

  1. What are the main taxes that could potentially apply to a taxable business vehicle in your jurisdiction?

The UAE Dubai Ministry of Finance announced the introduction of corporate tax on January 31, 2022 (effective from June 2023).

Although the law has not yet been published, some details have been announced.

The UAE Dubai corporate tax is a federal tax and will therefore apply across all Emirates, with the Federal Tax Authority being responsible for the administration of the UAE Dubai corporate tax regime. A corporate tax return must be filed electronically for each financial period (usually one year). There will be no requirement for provisional or advance corporate tax returns and advance corporate tax payments (i.e., no tax installment regime).

Taxable income will be the accounting net profit of a business after adjustments for certain items to be determined under the UAE Dubai Corporate Tax Law. The accounting net profit of a business will be the amount reported in the financial statements according to internationally accepted accounting standards.

The corporate tax rates to be applied are:

The UAE Dubai corporate tax will be applicable for financial years starting on or after June 1, 2023.

The UAE Dubai corporate tax will apply to businesses operating as a legal entity or a sole proprietorship. Many details regarding the UAE Dubai corporate tax regime are currently unknown. The UAE Dubai Corporate Tax Law will provide the necessary operational detail and guidance once it comes into force.

Taxes are also applied at the Emirate level on oil concession holders at rates specifically negotiated in the respective concession agreements.

Dubai and some other emirates impose taxes on certain goods and services (including the sale of alcoholic beverages, hotel and restaurant bills, and residential rentals). The Federal Tax Authority of UAE Dubai also imposes excise tax on specific products and oversees the application of VAT (at a rate of 5%).

Dividends, Interest, and Intellectual Property Rights

  1. How are the following taxed:

Dividend Payment

UAE Dubai does not levy tax on dividends (paid or received).

Dividends Received

UAE Dubai does not levy tax on dividends (paid or received).

Interest Payment

UAE Dubai does not impose tax on interest payments.

IP Royalties Paid

UAE Dubai does not impose tax on royalty payments.

Groups, Subsidiaries, and Affiliated Parties

  1. Are there thin capitalization rules (restrictions on loans from foreign affiliates)?

Thin capitalization rules are not applied in UAE Dubai.

  1. Should the profit of a foreign subsidiary be attributed to a parent company that is a tax resident in your country (controlled foreign company rules)?

Controlled foreign company rules are not applied in UAE Dubai.

  1. Are there any transfer pricing rules?

Transfer pricing rules are not applied in UAE Dubai.

United Arab Emirates Dubai Customs Duties

  1. How are imports and exports taxed?

In accordance with the GCC's agreement to apply uniform rates for customs duties, UAE Dubai applies a uniform customs duty of 5% on the import of goods from outside the GCC. Limited exemptions apply for military and security purchases and some foodstuffs.

United Arab Emirates Dubai Double Tax Treaties

  1. Is there a wide network of double taxation treaties?

UAE Dubai is a party to over 100 international tax treaties.

United Arab Emirates Dubai Competition

  1. Are restrictive agreements and practices regulated by competition law? Is unilateral (or single-firm) conduct regulated by competition law?

Federal Law No. 4 of 2012 (Competition Law), which came into force on February 23, 2013, applies to all establishments in relation to:

However, the following persons and sectors are expressly exempt from the application of the Competition Law:

In each sector, small and medium-sized enterprises can be defined by the number of employees and annual turnover.

The Competition Law allows establishments to request an exemption for the Competition Law from the UAE Dubai Ministry of Economy.

Restrictive Agreements and Practices in United Arab Emirates Dubai

The Competition Law prohibits restrictive agreements between establishments that may violate, limit, or prevent competition. However, under Cabinet Decision No. 13 of 2016, restrictive agreements are considered to have a weak effect on competition if the total share of the contracting businesses does not exceed 10% of the total transactions in the relevant market.

The Competition Law provides for fines between AED 500,000 and AED 5 million for entering into restrictive agreements. An establishment that violates the provisions of the Competition Law may also be subject to criminal sanctions.

Unilateral Conduct

An establishment that has a dominant position in the local market or a significant part of it is prohibited from carrying out any transaction or action that would abuse its dominant position to prevent, restrict, or weaken competition. According to Cabinet Decision No. 13 of 2016, an establishment is considered to have a dominant position if its total transactions exceed 40% of the market.

The Competition Law provides for fines between AED 500,000 and AED 5 million for abusing market dominance. An establishment that violates the provisions of the Competition Law may also be subject to criminal sanctions.

  1. Are mergers and acquisitions subject to merger control?

Transactions Subject to Merger Control

The Competition Law requires establishments to obtain merger clearance from the UAE Dubai Ministry of Economy if there is to be an economic concentration. An economic concentration is a transaction that:

Therefore, the requirement to submit a request for merger clearance is triggered in all cases where there is an economic concentration, regardless of whether the parties to the concentration have a formal, licensed presence in UAE Dubai. The test is an effects-based test.

According to Cabinet Decision No. 13 of 2016, an establishment is considered to have a dominant position if its total transactions exceed 40% of the market, in which case merger clearance must be sought. The decision does not specify whether the parties to the economic concentration must meet the threshold jointly or separately, provided that they collectively (after the concentration is completed) have at least a 40% market share in the relevant market.

The Competition Law provides for a fine of 2% to 5% of the annual revenue from the sale of the relevant goods and services in UAE Dubai for the violating establishment if a transaction that should be notified under the Competition Law is not notified. An establishment that violates the provisions of the Competition Law may also be subject to criminal sanctions.

Foreign-to-Foreign Acquisitions

Foreign-to-foreign transactions must also be notified if they would otherwise be eligible for a filing.

Specific Sectors

Anti-Bribery and Corruption in United Arab Emirates Dubai

  1. Are there any anti-bribery or anti-corruption regulations affecting business in your jurisdiction?

UAE Dubai does not have a standalone bribery law. Bribery and corruption are regulated by various laws. Federal Law No. 3 of 1987 (the Penal Code) is the primary legislation regulating bribery. "Bribery" is not explicitly defined in the Penal Code. The United Nations Convention against Corruption, adopted in UAE Dubai by Federal Decree No. 8 of 2006, defines "bribery" as a punishable offense when committed intentionally:

The relevant provisions of the Penal Code apply to any natural or legal person who commits the offense of bribery.

Intellectual Property in United Arab Emirates Dubai

  1. What are the main intellectual property rights recognized in your jurisdiction?

UAE Dubai is a member of the General Agreement on Tariffs and Trade, and accordingly, all provisions related to IP, including reciprocity, are valid in UAE Dubai. UAE Dubai also has its own legislation regulating IP.

Patents

Definition and Legal Requirements. Under Article 5 of Federal Law No. 11 of 2021 on the Regulation and Protection of Industrial Property Rights (the Patent Law), patents can be granted to new inventions that have the following characteristics:

An invention is considered new if it does not have a previously publicly disclosed industrial technology before the application date.

Registration. Protection is provided by registration under the Patent Law, which regulates the protection of patents, designs, industrial models, and know-how and is administered by the Ministry of Economy.

Enforcement and Remedies. In case of violation of any of their rights under the protection agreement (issued by the Ministry of Economy), patent holders can demand compensation for damages suffered due to acts contrary to the Patent Law from the Abu Dhabi Federal Court of Appeal.

Length of Protection. A patent is valid for 20 years from the filing date. The patent owner must use or sufficiently exploit it within three years from the date of grant of the patent. Any interested party may apply for a compulsory license according to the procedures specified in the Patent Law.

Trademarks

Definition and Legal Requirements. For a trademark to be registrable in UAE Dubai, it must be distinctive and not yet registered by another person. Registrability is at the discretion of the Ministry of Economy.

Protection. Protection is provided by registration under Federal Decree-Law No. 36 of 2021 on Trademarks and is managed by the Ministry of Economy.

Enforcement and Remedies. Unauthorized use of a registered trademark and other related offenses are punishable under UAE Dubai laws. An aggrieved trademark owner (or licensee) can also file a claim for damages. Injunctive relief is not available in UAE Dubai courts.

Duration of Protection and Renewability. Trademark registration is valid for ten years from the date of application and is renewable.

Registered Designs

Definition. Designs are defined as 2D or 3D decorative or aesthetic compositions that give a special design that can be used as an industrial or craft product. To be registrable, a design must:

Registration. Protection is provided by registration under the Patent Law and is managed by the Ministry of Economy. An application for a protection certificate for an industrial design is made to the Ministry of Economy.

Enforcement and Remedies. Unauthorized use of a registered industrial design to produce or import products for the purpose of selling them is punishable under UAE Dubai laws. The aggrieved industrial design owner (or licensee) can also file a claim for damages. Injunctive relief is not available in UAE Dubai courts.

Duration of Protection and Renewability. The protection period for a registered design is 20 years from the date of the registration application.

Unregistered Designs

Unregistered designs are protected as an unregistered copyright (see below, Copyright).

Copyright

Definition and Legal Requirements. Copyright can subsist in a wide variety of media, including (but not limited to):

Protection. Copyrights in UAE Dubai are protected under Federal Decree-Law No. 38 of 2021 on Copyrights and Neighboring Rights, which is managed by the Ministry of Economy. Protection arises automatically upon the creation of the work by the author, and registration is not required. However, a copyright registration can be made with the Ministry of Economy for public notice or to establish priority. A registered copyright does not receive greater substantive protection than an unregistered copyright.

Enforcement and Remedies. Unauthorized publication of a copyrighted work in UAE Dubai is an offense punishable by imprisonment and/or a fine.

Duration of Protection and Renewability. A copyright the calendar year following the year of the author's death

UAE Procedures for Doing Business in Dubai

UAE Dubai has established several free zones, each regulated by the relevant free zone authority. Free zones are generally governed by their own company laws, independent of the UAE Dubai company law. Foreign companies can open branches or incorporate wholly owned subsidiaries in free zones without the need to appoint a UAE Dubai national sponsor or hold any UAE Dubai national ownership.

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