New Conditions for Company Registration in the United Arab Emirates (2025–2026)

Introduction: Why the UAE Is an Attractive Destination for Company Formation

In recent years, particularly during 2025–2026, the United Arab Emirates (UAE) has introduced significant reforms to its company registration framework. These changes are designed to attract foreign investment, accelerate digital transformation, and enhance transparency in line with international compliance standards.

With its advanced infrastructure, business-friendly regulations, and competitive tax environment, the UAE—especially Dubai and Abu Dhabi—has positioned itself as one of the leading global hubs for entrepreneurship and international business. As a result, company formation procedures have become more streamlined, efficient, and accessible to foreign investors.

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1. Legal Structures for Company Registration in the UAE

Currently, there are three primary legal structures available for company formation in the UAE:

1.1 Free Zone Companies

Free Zones remain one of the most popular options for foreign investors due to the following advantages:

• 100% foreign ownership with no requirement for a local partner

• Fast incorporation process, often completed within 3–7 business days

• Availability of flexi-desk or virtual office solutions

• Ideal for international trade, consulting, technology, fintech, and specialized services

However, Free Zone companies are generally restricted from conducting direct business within the UAE mainland unless they appoint a local distributor or open a mainland branch.

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1.2 Mainland Companies

Mainland companies are licensed by the Department of Economic Development (DED) of each emirate and offer:

• The ability to trade directly within the UAE market

• 100% foreign ownership for most commercial and professional activities, following recent legal reforms

• Mandatory requirement for a physical office space registered under the Ejari system

This structure is suitable for businesses seeking unrestricted access to the local UAE market.

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1.3 Offshore Companies

Offshore entities are primarily used for:

• Asset holding and wealth management

• International trading and holding structures

They typically:

• Do not require a physical office in the UAE

• Cannot conduct business within the UAE market

• Do not qualify for residency visas

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2. Updated Company Registration Process (2026)

The company formation process in the UAE generally follows these steps:

Step 1: Selection of Business Activity and Trade Name

The proposed trade name must comply with UAE naming regulations and must not include offensive, religious, or political terms.

Step 2: Trade Name Reservation and Initial Approval

This step is completed online through government portals or relevant Free Zone authorities.

Step 3: Document Preparation and Verification

Required documents typically include:

• Passport copies of shareholders and directors

• Memorandum of Association (MOA)

• Office lease agreement (mandatory for mainland companies)

• No Objection Certificate (NOC), if applicable

Step 4: Business License Issuance

Upon approval of all documents, the relevant authority issues the trade license, allowing the company to commence operations legally.

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3. Key Regulatory Changes and New Compliance Requirements

3.1 Full Foreign Ownership Expansion

One of the most impactful reforms is the expansion of 100% foreign ownership across most mainland business activities, eliminating the previous requirement for a local Emirati partner in many sectors.

3.2 Full Digitalization of Procedures

The UAE has significantly digitized company registration, licensing, renewals, and compliance filings, reducing administrative burdens and processing times.

3.3 Enhanced Transparency and Reporting

Companies are now required to comply with:

• Ultimate Beneficial Owner (UBO) registration

• Economic Substance Regulations (ESR), ensuring real economic presence

• Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) frameworks

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4. Taxation and Financial Obligations

4.1 Corporate Tax

The UAE introduced a federal corporate tax regime with the following structure:

• 0% tax on taxable profits up to AED 375,000

• 9% tax on profits exceeding AED 375,000

All companies must register with the Federal Tax Authority (FTA) and submit annual corporate tax returns.

4.2 Value Added Tax (VAT)

VAT registration is mandatory once a company’s annual taxable turnover exceeds AED 375,000, at a standard rate of 5%.

4.3 Mandatory E-Invoicing System

From mid-2026, businesses will be required to issue and store invoices electronically for B2B and B2G transactions. Non-compliance may result in administrative penalties.

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5. Costs and Timeframes

Estimated Costs (First Year):

• Free Zone companies: AED 10,000 – 25,000

• Mainland companies: AED 15,000 – 30,000 (excluding office rent)

• Offshore companies: Generally lower, depending on jurisdiction

Estimated Timeframes:

• Free Zone incorporation: 3–7 business days

• Mainland incorporation: 7–14 business days, depending on activity and office requirements

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6. Key Considerations for Investors

• Choosing the correct jurisdiction (Free Zone vs. Mainland) based on business objectives

• Ensuring compliance with AML, ESR, and UBO regulations

• Preparing a clear business plan to facilitate bank account opening

• Renewing licenses and visas on time

• Observing Emiratisation requirements where applicable

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Conclusion

The 2025–2026 reforms in UAE company registration laws have made the country more accessible, transparent, and competitive for global entrepreneurs and investors. Key advantages include:

• Expanded 100% foreign ownership

• Fast, fully digital registration processes

• Clear and competitive corporate tax framework

• Multiple legal structures to suit diverse business models

While compliance requirements have increased, these measures align the UAE with international best practices and reinforce its reputation as a secure and forward-looking business destination. Overall, the UAE remains one of the most attractive jurisdictions globally for company formation and expansion.

Ref. source : Dubai Parsi