Business in the United Arab Emirates (UAE)

Mar 16, 2023
Author: David Cairns
David is our senior tax partner and has extensive knowledge of business and personal taxes. David specialises in providing international tax advice to our clients.
Business in the UAE

The middle east has become a desirable place to set up business. It has a world class infrastructure as well as a welcoming tax environment and efficient processes and procedures.

The United Arab Emirates is a young country, established on 2 December 1971,  combining seven places including Dubai and Ajman. It has become an investors dream, though it’s an oil-rich state, the UAE has expanded its economy to become a global hub for business, trade and finance. Despite the Emirates first language being Arabic many speak English.


Setting up a business in the UAE

The UAE has a strict legal framework based around both the Islamic Shariah law principles and civil code, the key legal sources are as follows:

  • The UAE Constitution;
  • Federal Laws and Legislations;
  • Emirate Laws and Legislations.

However, The UAE Constitution is the main source of law but this only applies to a few areas.

There are two financial free zones in the UAE, the DIFC and ADGM, these have their own body of bylaws. The ADGM put into practice the ‘Application of English Law Regulation’ 8 years ago, which made England and Wales common law.


Carrying out business in the UAE

There are a number of options for foreign investors and companies to commence business activities in the UAE. They are as follows:

  • Trading from overseas allows you to trade to the UAE from a foreign company;
  • Business can be done through an agent to determine a presence in the UAE;
  • Setting up entities is an option for the foreign investor;
  • To conduct business in the mainland UAE you must trade as a branch/representative office of a foreign entity or as a limited liability company;
  • Company structure must follow UAE Nationals owning at least 51% of the company’s share capital, the remaining 49% can be owned by foreigners (although this is being relaxed);
  • Foreign companies are required to have a representative in the UAE, either a branch or representative office;
  • Foreign investors can establish a 100% foreign owned company/branch if it’s based on onshore mainland UAE;
  • You can set up business under the offshore regulatory system if you don’t anticipate to carry out business within the UAE;
  • Joint venture vehicles are set up either on conventional mainland or free zone companies, however the mainland restrictions of foreign ownership are still in place;
  • As a foreign investor buying an existing entity in the UAE is an entry strategy, however, you must consider the regional factors;
  • The freelance permit recognises you as a sole practitioner meaning you can conduct business under a name rather than brand.

You must also take into consideration additional tax implications such as corporate taxes, a regime announced by the Ministry of Finance (MoF) effective in the UAE from 1 June 2023. These will be different subject to how you carry out business activities.

How can we help?

At Hawsons we have a team of tax specialists who have helped a number of clients ensure they have been tax efficient when setting up, moving to or expanding their businesses to the UAE. We are part of HLB International, a global network of independent accountancy and advisory firms where we combine expertise and global capabilities. Our international reach is valuable to being able to act for you and your business in the UAE.

David Cairns

Tax Partner, Northampton

Related content