The United Arab Emirates (UAE) continues to strengthen its position as a global hub for investments by providing a business-friendly environment and legal infrastructure that facilitates growth and innovation. Recent updates to the legal framework in 2024 and upcoming changes in 2025 reflect the UAE’s commitment to fostering investor confidence and streamlining regulatory processes. This article outlines the essential legal requirements and key updates for investing in the UAE in 2024 and beyond.
1. Legal Forms of Business in the UAE
Investors can choose from several legal structures depending on the nature of their business and strategic goals. These include:
● Limited Liability Company (LLC): Suitable for businesses that require a local presence and flexibility in operations. Under the 2020 amendments to the Commercial Companies Law, 100% foreign ownership is permitted in most sectors.
● Free Zone Entities: Ideal for businesses seeking full ownership and customs benefits. Each free zone has its own regulatory framework and offers specific advantages based on the industry.
● Sole Proprietorship or Civil Company: Applicable for professionals and service providers.
● Branch of a Foreign Company: Allows companies to expand operations into the UAE without establishing a separate legal entity.
2. Investment Licensing
Obtaining an appropriate license is a prerequisite for conducting business in the UAE. The main types of licenses include:
● Commercial License: For trading activities.
● Industrial License: For manufacturing and industrial operations.
● Professional License: For service-oriented businesses.
Investors must apply for licenses through the Department of Economic Development (DED) in the relevant emirate or the governing authority of a free zone.
3. Key Legal Updates for 2024 and 2025
- Introduction of the Golden License
The UAE has introduced the "Golden License" for large-scale investors and high-impact entrepreneurs. This initiative provides long-term residency benefits and incentives, including expedited visa processing and government facilitation services.
- Enhanced Foreign Direct Investment (FDI) Regulations
The updated FDI Law expands the list of sectors eligible for 100% foreign ownership. Strategic sectors such as technology, renewable energy, and advanced manufacturing have received particular emphasis to align with the UAE’s economic diversification goals.
- Corporate Tax Implementation
As of June 2023, the UAE has implemented a federal corporate tax at a standard rate of 9% on taxable income exceeding AED 375,000. Free zone companies remain eligible for tax exemptions if they comply with regulatory requirements.
- Introduction of a 15% Minimum Top-Up Tax in 2025
Effective January 1, 2025, the UAE will implement a Domestic Minimum Top-Up Tax (DMTT) of 15% for large multinational enterprises with global revenues exceeding €750 million. This aligns with the OECD’s global minimum corporate tax framework, ensuring fair tax practices for large corporations.
- Sustainability Compliance
Investments in sectors like real estate and manufacturing now require adherence to sustainability standards, including green building codes and environmental impact assessments, reflecting the UAE’s commitment to achieving net-zero emissions by 2050. Additionally, starting January 2025, Dubai will ban single-use plastic utensils and styrofoam containers to promote environmental sustainability.
- Corporate Governance Reforms
Starting January 1, 2025, all UAE private joint-stock companies are mandated to appoint at least one woman to their board of directors, emphasizing gender diversity and leadership equity.
4. Real Estate Investments
The UAE offers attractive opportunities for real estate investors, with streamlined processes for property ownership. Recent updates include:
● Residency by Investment: Investors in properties valued at AED 2 million or more are eligible for long-term residency visas.
● Mortgage Financing: Regulatory reforms have simplified access to mortgage financing for expatriate investors.
5. Compliance and Regulatory Requirements
Investors must adhere to several compliance obligations, including:
● Anti-Money Laundering (AML) Regulations: Businesses must maintain robust mechanisms to prevent illicit financial activities. The UAE’s Financial Action Task Force (FATF) compliance measures have been further strengthened in 2024.
● Ultimate Beneficial Ownership (UBO) Disclosure: Companies must disclose UBO details to the relevant authorities to ensure transparency.
6. Investor Support and Dispute Resolution
The UAE’s legal system offers multiple mechanisms to protect investors and resolve disputes efficiently. These include:
● Investor Protection Laws: Enhanced safeguards for minority shareholders and intellectual property rights.
● Alternative Dispute Resolution (ADR): Institutions like the Dubai International Arbitration Centre (DIAC) and Abu Dhabi Global Market (ADGM) Courts provide investor-friendly forums for resolving disputes.
● Investor Support Initiatives: Government-backed platforms such as Invest in Dubai offer end-to-end support for investors.
Conclusion
The UAE’s legal landscape in 2024 and 2025 reflects a progressive approach to attracting and retaining investments. By providing clear regulatory frameworks, competitive tax regimes, and a robust dispute resolution system, the UAE continues to position itself as a leading destination for global investors. Al Safar & Partners stands ready to assist investors in navigating these requirements and ensuring compliance with the latest laws.
For further information or legal consultation regarding investment opportunities in the UAE, please contact our team of experts on +971.4.4221944 - reception@alsafarpartners.com - www.alsafarpartners.com
Written By:
Mrs. Kavitha Panicker - Managing Partner at Al Safar and Partners Law Firm.