Investment country factsheet · Middle East / Gulf
Legal & tax framework for investment — 2026 edition
Series: UGGC Africa country factsheets — country-by-country guidance for investing in North Africa and the Gulf.
The United Arab Emirates have established themselves as the principal gateway for foreign investment into the Gulf. Two structural shifts now shape any establishment decision: the opening of mainland share capital, which in 2021 ended the requirement for a majority Emirati shareholder, and the introduction of a federal corporate tax from June 2023 in a country that had none. A domestic minimum top-up tax has since 2025 brought the effective rate of large multinational groups up to 15%. The choice between the mainland and one of the free zones — more than forty of them, two of which are financial free zones with their own legal systems — remains the first structural decision of any UAE project, and the one whose tax and dispute-resolution consequences last longest.
The UAE in figures
A two-tier legal framework: mainland and free zones
- A federation, a federal law. The United Arab Emirates bring together seven emirates — Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah. Mainland company law is governed by Federal Decree-Law No. 32 of 2021. The country belongs to no uniform legal area comparable to OHADA.
- The mainland. Governed by federal law and by the economic authorities of each emirate, it gives direct access to the domestic market. Since Federal Decree-Law No. 26 of 2020, foreign ownership there may reach 100% for most activities.
- The free zones. The Ministry of Economy and Tourism counts more than forty. They offer full foreign ownership, complete repatriation of capital and profits, and their own single point of entry.
- Two financial free zones apart: the DIFC (Dubai International Financial Centre) in Dubai and the ADGM (Abu Dhabi Global Market) in Abu Dhabi. Created respectively by Federal Decree No. 35 of 2004 and Federal Decree No. 15 of 2013, they are exempt from all federal civil and commercial laws and have their own courts and regulators. Federal criminal law, by contrast, continues to apply.
The DIFC and the ADGM are not interchangeable
| DIFC (Dubai) | ADGM (Abu Dhabi) | |
|---|---|---|
| Applicable law | Its own codified body of law, common law in inspiration. English law applies only on a residual basis, to fill a gap. | Direct application of English common law, as it stands from time to time. |
| Courts | DIFC Courts — first instance and appeal. Jurisdiction may be conferred by an opt-in clause, even absent any connection with the DIFC. | ADGM Courts — first instance and appeal. |
| Financial regulator | DFSA (Dubai Financial Services Authority) | FSRA (Financial Services Regulatory Authority) |
Usual corporate forms and structuring
| Form | Regime | Typical use |
|---|---|---|
| Limited Liability Company (LLC) | Mainland — foreign ownership up to 100% for most activities. No statutory minimum capital; minimum amounts may arise from sector regulation. | Trading, distribution, services to the domestic market |
| Public Joint Stock Company (PJSC) | Mainland — the form for companies open to the public. Statutory reserve reduced to 5% of net profits, up to 50% of share capital. | Fundraising, listing |
| Free zone company | Full foreign ownership, regulatory framework specific to the zone, complete repatriation of profits | Trading, logistics, light manufacturing, regional services |
| DIFC or ADGM company | Financial free zone — law inspired by or directly applying common law, dedicated courts | Financial services, funds, holding structures, international contracts |
| Branch or representative office | Attached to the foreign company | Representation, market exploration |
Tax regime — the essentials
| Tax | Rate | Details |
|---|---|---|
| Corporate tax (mainland) | 0 % up to AED 375,000 9 % above |
Federal Decree-Law No. 47 of 2022, financial years commencing on or after 1 June 2023. Small business relief, capped at AED 3 million of turnover, has been extended to 31 December 2029. |
| Corporate tax (free zone) | 0 % on qualifying income 9 % on the remainder |
Qualifying Free Zone Person regime. The nil rate is lost if non-qualifying revenue exceeds 5% of total revenue or AED 5 million, whichever is the lower. |
| Domestic minimum top-up tax | 15 % minimum effective rate | Applies to multinational groups with consolidated revenue of EUR 750 million or more in at least two of the four preceding financial years. Financial years commencing on or after 1 January 2025. |
| VAT | 5 % | Since 1 January 2018. Registration mandatory above AED 375,000, voluntary from AED 187,500, with no threshold for non-residents. Zero-rated: exports outside the GCC, international transport, crude oil and natural gas, the first supply of residential real estate, healthcare and education. |
| Withholding tax | 0 % | On dividends, interest and royalties paid to non-residents. No registration or filing obligation is expected in this respect. |
| Personal income tax | None | Neither at federal nor at emirate level. |
| Branches of foreign banks | 20 % | Regime specific to each emirate, distinct from the federal regime. |
| Oil, gas and petrochemicals | Variable | Taxation set by the concession agreement or fiscal letter specific to each company, at emirate level. |
| Customs duties | 5 % | On CIF value, with higher rates in anti-dumping matters. |
Tax sources: Federal Tax Authority, UAE Ministry of Finance, PwC Worldwide Tax Summaries — United Arab Emirates (reviewed 12 March 2026).
Attractive sectors
- Trade and logistics. Trade is the largest contributor to non-oil GDP, at 16.9%. Non-oil foreign trade passed the USD 1 trillion mark in 2025, up 27% year on year.
- Financial services and insurance. The second contributor at 13.2% of non-oil GDP, and one of the most dynamic sectors — up 10.4% in 2025. This is the natural ground for DIFC and ADGM structures.
- Construction and real estate. Construction accounts for 12.9% of non-oil GDP and posted the strongest sectoral growth of 2025 at 11.1%; real estate grew by 7.9%.
- Manufacturing. 12.8% of non-oil GDP, driven notably by aluminium and polymers, which rank among the country’s leading non-oil exports.
The UAE have also concluded fourteen comprehensive economic partnership agreements in force at the end of 2025, several of them with African countries. Exports to those partners reached AED 175.5 billion, or 21.6% of total exports — a point of interest for groups structuring Africa-facing operations out of Dubai or Abu Dhabi.
Investment incentives
- Free zones. More than forty zones offering full foreign ownership, complete repatriation of capital and profits, and customs exemptions. ⚠️ The still-frequent reference to a “fifty-year corporate tax exemption” is misleading since the federal corporate tax took effect: it is now the Qualifying Free Zone Person regime that determines access to the nil rate, subject to conditions.
- Small business relief. Capped at AED 3 million of turnover, extended to 31 December 2029.
- Mainland access for Dubai free zone companies. Dubai Executive Council Resolution No. 11 of 2025 allows a free zone entity to operate in the emirate’s mainland without incorporating a separate mainland entity, through a branch licence or a temporary permit, with no local sponsor. The mechanism covers neither the DIFC nor the ADGM, and applies to Dubai only.
- Long-term residence visa. A renewable five- or ten-year permit, without a sponsor, open in particular to investors evidencing minimum capital of AED 2 million or an establishment paying at least AED 250,000 in tax per year.
- Real estate ownership. Freehold ownership is open to foreign nationals, resident and non-resident alike, in designated areas — more than thirty in Dubai under Law No. 7 of 2006, and in the investment areas of Abu Dhabi under Law No. 13 of 2019. Outside those areas, usufruct rights or leases of up to 99 years.
Work permits for expatriates
- Employment law is governed by Federal Decree-Law No. 33 of 2021, in force since 2 February 2022, which made the fixed-term contract the general rule by abolishing the indefinite-term contract. The initial three-year cap was removed by Federal Decree-Law No. 14 of 2022.
- The work permit attaches to the employing entity — mainland company, free zone company, or DIFC or ADGM establishment — each following its own procedure.
- With no personal income tax and no exchange controls, expatriate remuneration is transferable without any specific restriction.
Exchange control regulations
- A dirham pegged to the dollar. The dirham is pegged to the US dollar at a fixed rate, which neutralises currency risk on dollar-denominated flows and stabilises conversion from the euro to the extent of the euro-dollar parity. The Central Bank of the United Arab Emirates conducts that exchange rate policy.
- No exchange controls. There are no general controls restricting the use or repatriation of foreign currency.
- Repatriation of dividends and capital. Free. Capital and profits may be converted and transferred abroad through licensed banks and exchange houses. With no withholding tax, distributions to a foreign parent company bear no UAE deduction.
- Good practice. Document the origin and destination of flows from the moment the account is opened: the ease of transfer comes with banking compliance checks — anti-money-laundering rules and sanctions regimes — which are in practice the main point of friction.
Regulations are subject to change — arrangements should be verified with the Central Bank of the United Arab Emirates and a licensed bank.
Securing the investment — the UGGC angle
In the UAE, most of the legal risk lies not in the substance of the law but in the choice of the jurisdiction of establishment. The same contract will not have the same judge, the same governing law or the same tax treatment depending on whether it is concluded from the mainland, an ordinary free zone, the DIFC or the ADGM.
- Mainland or free zone — access to the domestic market, tax treatment and competent court are decided together, not separately.
- Tax qualification — Qualifying Free Zone Person status is not acquired once and for all: it is tested financial year by financial year.
- Arbitration & disputes — standard clauses predating 2021 designate institutions that no longer exist.
- Tax & compliance — corporate tax, VAT, the 15% top-up tax and forthcoming e-invoicing together form a timetable of new obligations in a country that previously had none.
Our teams advise on these transactions in mergers & acquisitions, tax law and dispute resolution & arbitration.
Our reading — a practitioner’s view
Figures do not tell the whole story. These are the points we draw to our clients’ attention before any establishment in the United Arab Emirates.
Mainland or free zone: which structure?
The question is no longer one of share capital ownership. Since 2021 a mainland company may be wholly foreign-owned for most activities, so the historic argument in favour of the free zone has lost much of its force. The decisive criterion has become market access — a free zone company is not intended to operate on the mainland, and the Qualifying Free Zone Person tax regime precisely assumes that it does not. For distribution or services aimed at the domestic market, the mainland remains the natural route. For international trading, logistics or a holding structure, the free zone retains its appeal. For financial services or international contracts calling for a common law judge, the DIFC or the ADGM meet a need that neither the mainland nor ordinary free zones address.
Three points investors underestimate
- The nil free zone rate is not a status, it is an annual qualification. Qualifying Free Zone Person treatment is lost where non-qualifying revenue exceeds 5% of turnover or AED 5 million — and it is the lower of the two thresholds that applies, which for a company of any size amounts to an absolute cap far more constraining than the percentage suggests. Exceeding it moves the entity to the 9% rate.
- Arbitration clauses predating 2021 designate abolished institutions. Dubai Decree No. 34 of 2021 brought an end to the DIFC-LCIA (the DIFC’s arbitration joint venture with the London Court of International Arbitration) and EMAC (the Emirates Maritime Arbitration Centre). Agreements referring to them are deemed to take effect in favour of the DIAC (the Dubai International Arbitration Centre), but that substitution has generated litigation which is not yet settled. Moreover, absent contrary stipulation, the default seat of a DIAC arbitration is now the DIFC — not Dubai — which changes both the supervisory court and the annulment regime. In Abu Dhabi, arbitrateAD (the rebranded local arbitration centre) replaced the ADCCAC (the Abu Dhabi Commercial Conciliation and Arbitration Centre) in early 2024. Any standard clause carried over from an older precedent deserves review.
- The ADGM Arbitration Centre does not administer arbitrations. It is a hearing venue, with no rules of its own, open to proceedings conducted under any institution. Designating it in a clause in the belief that one is choosing an arbitral institution produces an imprecise clause.
From text to practice
Two points call for case-by-case verification rather than a general answer. First, the interaction between Dubai’s new mainland-access mechanism for free zone companies and the retention of the nil tax rate: the texts opening that access do not expressly resolve the effect on Qualifying Free Zone Person status, which assumes no mainland activity. Second, the seven activities of strategic impact: Cabinet Decision No. 55 of 2021 does not set out a list of prohibitions but leaves it to the competent regulator to determine, activity by activity, the level of national participation and the composition of the board. The answer therefore depends on the regulator seised, not on the text alone.
Frequently asked questions
Mainland or free zone in the UAE: what is the difference?
The mainland is governed by federal UAE law and gives direct access to the domestic market. Free zones have their own regulatory framework and a single point of entry. The two financial free zones — the DIFC in Dubai and the ADGM in Abu Dhabi — go further: they are exempt from all federal civil and commercial laws and have their own courts and regulators. Federal criminal law, however, applies throughout.
Is 100% foreign ownership possible in the UAE?
Yes. Federal Decree-Law No. 26 of 2020 removed the requirement for 51% Emirati ownership for most mainland activities, with the relevant provisions taking effect on 30 March 2021. Seven activities of strategic impact — among them security and defence, banks and finance companies, insurance, currency printing and telecommunications — remain subject to the assessment of the competent regulator, which determines the required level of national participation on a case-by-case basis. This is an authorisation regime, not a prohibition.
What is the corporate tax rate in the UAE?
Federal Decree-Law No. 47 of 2022 provides for a rate of 0% up to AED 375,000 of taxable income and 9% above that threshold, for financial years commencing on or after 1 June 2023. A company qualifying as a Qualifying Free Zone Person benefits from a 0% rate on its qualifying income. Multinational groups with consolidated revenue of EUR 750 million or more are additionally subject to a domestic minimum top-up tax bringing the minimum effective rate to 15%, for financial years commencing on or after 1 January 2025.
What is the VAT rate in the UAE?
VAT has been levied at 5% since 1 January 2018. Registration is mandatory above AED 375,000 of turnover and voluntary from AED 187,500; no threshold applies to non-residents. No rate change has been announced: the amendments effective 1 January 2026 are procedural, notably a five-year time limit for claiming a refund of excess input VAT. An e-invoicing obligation will be rolled out in phases from 2027.
Which arbitration centre should be chosen for a UAE contract?
The arbitration landscape has been restructured. Dubai Decree No. 34 of 2021 abolished the DIFC-LCIA and EMAC, whose caseloads were transferred to the DIAC; in Abu Dhabi, arbitrateAD replaced the ADCCAC in early 2024. The ADGM Arbitration Centre does not administer proceedings: it provides hearing facilities. A clause still designating the DIFC-LCIA or EMAC refers to institutions that no longer exist and should be revisited. Onshore arbitration is governed by Federal Law No. 6 of 2018, as amended in 2023, and the UAE have been a party to the 1958 New York Convention since 2006.
Considering an establishment in the United Arab Emirates?
Contact the UGGC Africa team · Download the country factsheet (PDF)
Disclaimer. This country factsheet is provided for general information purposes, as at August 2026; it does not constitute legal or tax advice and cannot bind UGGC Africa. Tax rates, free zone regimes and foreign ownership rules evolve rapidly in the Gulf and are liable to change. Any investment decision should be the subject of a tailored analysis.
Sources: Federal Tax Authority · UAE Ministry of Finance · u.ae official portal · PwC Worldwide Tax Summaries — United Arab Emirates (12 March 2026) · International Monetary Fund, Article IV consultation (December 2025) · Ministry of Economy and Tourism · DIFC Courts · ADGM · DIAC.