Doing Business In UAE

Foreword

The United Arab Emirates (UAE) stands as a beacon of economic dynamism and strategic foresight in the global landscape. With an ambitious vision to solidify its position among the world's leading economies, the UAE has embarked on a transformative journey, underpinned by robust growth across key sectors such as digital transformation, renewable energy, manufacturing, infrastructure, and technology—areas that hold immense promise for international investors. This vision is further exemplified by initiatives like the Dubai Economic Agenda (D33), which aims to double the size of Dubai's economy over the next decade and consolidate its position among the top three global cities. D33 encompasses 100 transformational projects, including doubling foreign trade and adding 400 cities to Dubai's foreign trade map, launching plans for green and sustainable manufacturing, and fostering new economic corridors with regions like Africa, Latin America, and Southeast Asia.

For multinational corporations and aspiring entrepreneurs exploring opportunities in the UAE, the environment is both compelling and highly supportive. The nation's strategic location at the crossroads of Europe, Asia, and Africa, coupled with its world-class infrastructure and a business-friendly ecosystem, offers unparalleled advantages. The UAE's proactive approach to economic diversification, moving beyond traditional oil reliance, is evident in the significant contributions of non-oil sectors to its GDP, reinforcing its status as a global hub for innovation and trade.

The UAE's broader economic framework is equally impressive. Initiatives like We the UAE 2031 and the D33 agenda aim to significantly increase FDI flows and triple FDI stock, reflecting a clear commitment to attracting global capital. The country's commitment to a simplified tax system, including the recent introduction of corporate tax aligned with global standards, further enhances its appeal. On the international stage, the UAE's proactive diplomacy and strategic trade partnerships, such as Comprehensive Economic Partnership Agreements (CEPAs), highlight its reliability as a global economic partner. The growing focus on sustainability and ESG initiatives resonates deeply with the UAE's commitment to fostering innovation in clean energy and green technology, aligning economic ambitions with global sustainability goals.

The UAE's vibrant consumer market, driven by a diverse and tech-savvy population, offers boundless opportunities in retail, e-commerce, and consumer goods. Additionally, the nation's emphasis on technology and smart city development, including initiatives like 'Sandbox Dubai' for testing new technologies and attracting top universities, creates a fertile ground for long-term growth and collaboration for companies looking to innovate and scale.

This publication is a comprehensive guide designed to support businesses, investors, and entrepreneurs navigating the dynamic UAE marketplace. At Nexdigm, we remain committed to supporting businesses as they explore and capitalize on the opportunities within the UAE's evolving economic landscape, providing clarity and confidence in this opportunity-rich terrain.

Sources:

https://u.ae/en/about-the-uae/strategies-initiatives-and-awards/strategies-plans-and-visions/finance-and-economy/dubai-economic-agenda-d33

https://wetheuae.ae/en/pillar/forward-economy

https://www.moec.gov.ae/en/future-economy

Executive Summary

UAE has firmly established itself as a pivotal global business hub, driven by a strategic vision for economic diversification and sustainable growth. This guide offers a comprehensive overview of the key facets essential for businesses, investors, and entrepreneurs looking to enter or expand within this dynamic market.

The UAE's economy is robust and rapidly diversifying. Its GDP reached USD 507.06 billion in 2022, with an estimated USD 509.68 billion in 2023. This growth is underpinned by a stable political environment, advanced infrastructure, and a significant shift towards non-oil sectors.

The legal system in the UAE is a hybrid of civil law and Islamic Sharia principles, with independent common law jurisdictions in financial free zones like DIFC and ADGM. Recent reforms, including 100% foreign ownership in most mainland sectors and modernized bankruptcy laws, significantly enhance business openness. The judicial system operates through federal and emirate-level courts, complemented by specialized financial free zone courts, ensuring a robust framework for dispute resolution, particularly through arbitration, which is aligned with international standards like the New York Convention.

Real estate laws prioritize transparency and investor protection, with distinct ownership types—freehold, leasehold, and free zone property ownership—and recent expansions of freehold zones for foreign nationals. Regulatory updates, such as the AI-powered Smart Rental Index Calculator and stricter developer compliance, further strengthen the market.

The UAE's financial landscape features prominent exchanges like ADX, DFM, NASDAQ Dubai, ADGM, and DGCX, all operating under comprehensive regulatory frameworks. The nation has also implemented a robust Anti-Money Laundering (AML) framework, aligning with international standards and applying to financial institutions and designated non-financial businesses.

The introduction of a federal Corporate Tax (CT) regime, effective from June 2023, marks a significant shift. This is complemented by existing taxes like VAT, customs duty, and excise tax. The UAE's commitment to the OECD's BEPS Inclusive Framework has led to the implementation of Transfer Pricing (TP) documentation requirements, ensuring adherence to the Arm's Length Principle for related party transactions.

Employment and labor laws are primarily governed by Federal Labor Law No. 33 of 2021, with specific regulations for free zones. Key aspects include Emiratization initiatives (with D33 aiming to integrate young Emiratis into the job market), mandatory work permits and visas, health checkups, and various contract types. The guide details compensation structures, leave policies, and the Wage Protection System (WPS), which ensures timely salary payments. The Involuntary Loss of Employment (ILOE) insurance scheme provides a safety net for employees.

Immigration and residency policies are designed to attract global talent and investors, highlighted by the Golden Residence visa for entrepreneurs, professionals, and exceptional talents, and the Green Residence for skilled professionals and freelancers. These reforms simplify eligibility criteria and offer greater flexibility for long-term stay.

Finally, the guide emphasizes the critical importance of cybersecurity and data privacy compliance. The UAE's multi-layered regulatory framework, including the UAE Personal Data Protection Law (PDPL) and specific regulations for DIFC and ADGM, mandates strict protocols for safeguarding digital information. Businesses must adopt a proactive, risk-based approach, aligning with international standards like ISO 27001, to ensure compliance and mitigate risks in the evolving digital landscape.

This publication aims to equip businesses with the knowledge needed to make informed decisions and drive sustainable growth in the UAE's dynamic and opportunity-rich market.

Source:

https://data.worldbank.org/indicator/NY.GDP.MKTP. CD?locations=AE

Introduction

We are proud to present the inaugural edition of Doing Business in the United Arab Emirates, a comprehensive guide designed to support businesses, investors, and entrepreneurs navigating the dynamic UAE marketplace.

This guide goes beyond a legal overview—it offers strategic insights into the UAE's evolving regulatory environment, investment frameworks, and sectoral opportunities. Whether you're a multinational seeking expansion or a startup exploring a launchpad in the Middle East, this publication aims to equip you with the knowledge needed to make informed decisions and drive sustainable growth.

In this first edition, we explore the UAE's economic evolution, legal system, business incorporation models, foreign ownership rules, tax landscape, employment considerations, and more. Our approach is practical and forward-looking, shaped by Nexdigm's on-the-ground experience and multidisciplinary expertise across advisory, legal, tax, and compliance domains.

The UAE has positioned itself as a global business hub through ambitious reforms, world-class infrastructure, and a strong commitment to innovation. As the region continues to transform, Nexdigm remains committed to guiding organizations through this opportunity-rich terrain with clarity and confidence.

We hope this guide becomes a valuable starting point for your business journey in the UAE.

Economy

Key Points

• The UAE economy is diverse, with a 2024 GDP of about USD 528 billion, projected to grow to USD 550 billion in 2025.
• Population is around 11 million in 2024, with a large expatriate workforce.
• FDI inflows reached USD 30.7 billion in 2023, ranking second globally, with expected continued growth.
• Employment is strong; unemployment rates are low, supported by flexible labor policies.
• Trade is robust, with 2023 exports at AED 441 billion and imports at AED 1.4 trillion, aiming for AED 4 trillion by 2031.
• Trends show a shift to non-oil sectors, aligning with the "We the UAE 2031" vision for economic diversification.

Economy Overview

The UAE, comprising seven emirates including Abu Dhabi and Dubai, is a key global trade hub due to its strategic location between Europe, Asia, and Africa. It offers a stable political environment and advanced infrastructure, making it attractive to foreign investors.

Economic Indicators

• GDP: Estimated at USD 527.8 billion in 2024, with a 2025 forecast of USD 550.2 billion IMF World Economic Outlook.
• Population: Approximately 11 million in 2024, with a significant expatriate presence enhancing the workforce.
• FDI: Recorded USD 30.688 billion in inflows in 2023, ranking second globally, with expectations of sustained growth UNCTAD World Investment Report 2024.
• Employment: Features low unemployment, supported by a flexible labor market that adjusts to economic demands.
• Trade: In 2023, non-oil exports increased by 16.7% to AED 441 billion, re-exports totaled AED 690 billion, and imports reached AED 1.4 trillion, with a target of AED 4 trillion by 2031 UAE Ministry of Economy.

Trends and Investment

The UAE is diversifying its economy, with non-oil sectors, such as transportation and finance driving growth. The "We the UAE 2031" vision aims to double FDI flows and triple FDI stock by 2031, with a focus on innovation and sustainability.

UAE Economy for Foreign Investors

The United Arab Emirates (UAE), established as a federation of seven emirates—Abu Dhabi (the capital), Dubai, Sharjah, Ajman, Fujairah, Ras Al Khaimah, and Umm Al Quwain—stands as a pivotal economic entity in the Middle East. Its strategic location at the crossroads of Europe, Asia, and Africa positions it as the region's largest trading center, facilitating access to markets with over half a billion people in the Middle East and North Africa (MENA) region.

Economic Indicators and Performance

• Gross Domestic Product (GDP): The UAE's economy, traditionally reliant on oil, has seen significant diversification. In 2024, the nominal GDP was estimated at USD 527.8 billion, with projections for 2025 suggesting an increase to USD 550.2 billion, according to the International Monetary Fund (IMF) World Economic Outlook IMF World Economic Outlook. This growth, driven by a 3.6% increase in real GDP in the first half of 2024 and a 3.8% rise in the first nine months, reflects robust economic activity, particularly in non-oil sectors, contributing 75% to GDP. The non-oil GDP grew by 4.4% in the first half of 2024, reaching AED 660 billion at constant prices, underscoring the shift towards a knowledge-based economy.
• Population Dynamics: As of 2024, the UAE's population is estimated to be approximately 11 million, based on recent United Nations projections from Worldometer World Population Prospects: The 2024 Revision. This figure includes a significant expatriate population, estimated at 11.06 million, with a diverse demographic comprising over 190 ethnicities. The population's median age is 33.6 years, with a large proportion (8.58 million) in the 25-54 age bracket, enhancing the dynamism of the labor market. This diversity fosters a multicultural business environment, ideal for global networking and innovation.
• Foreign Direct Investment (FDI): The UAE has emerged as a top destination for FDI, with inflows reaching USD 30.688 billion in 2023, a 35% increase from USD 22.737 billion in 2022, as reported by the United Nations Conference on Trade and Development (UNCTAD) in the World Investment Report 2024 UNCTAD World Investment Report 2024. This positions the UAE as the second-largest recipient globally, driven by initiatives like NextGenFDI, which facilitates expedited licensing for technology firms. The "We the UAE 2031" vision aims to double FDI flows to AED 240 billion annually and triple FDI stock to AED 2.2 trillion by 2031, reflecting ambitious investment targets.
• Employment and Labor Market: The UAE maintains a low unemployment rate, with employment surpassing pre-COVID levels, reaching 5.5 million in 2022 compared to 5.1 million in 2019, according to Swiss Re insights. The labor market is characterized by a high expatriate workforce, with construction (25%) and wholesale/retail (21%) as key sectors. Emiratisation policies mandate increasing local employment, with targets of 5% in firms with 50 or more employees by mid-2024, rising to 10% by 2026, ensuring a balanced approach to workforce development.
• Import and Export Trade: Trade is a cornerstone of the UAE economy, with total foreign trade reaching AED 3.5 trillion in 2023. Non-oil exports surged by 16.7% to AED 441 billion, re-exports grew by 6.9% to AED 690 billion, and imports increased by 14.2% to AED 1.4 trillion, according to the Department of Economic Development. Service trade hit a record AED 967 billion, with exports at AED 587 billion, highlighting the UAE's role as a global trade hub. The country aims to achieve AED 4 trillion in foreign trade by 2031, supported by Comprehensive Economic Partnership Agreements (CEPAs) like the UAE-India CEPA.
• Investment Opportunities and Trends: Investment in the UAE is facilitated by a business-friendly environment, including 100% foreign ownership in over 1,000 mainland sectors and incentives in free zones like the Dubai International Finance Centre (DIFC) and Abu Dhabi Global Market (ADGM), which operate under English common law. The introduction of corporate tax aligns with global standards, protecting small businesses while ensuring tax transparency. The UAE's over 100 double taxation treaties (DTAs) and absence of exchange control restrictions enable seamless cross-border trade and repatriation of capital. Trends indicate a focus on non-oil sectors, with tourism (16.5% of GDP), real estate, and technology driving growth, supported by investments like Abu Dhabi's USD 10 billion in tourism infrastructure and Dubai's public-private partnership portfolio valued at USD 10.9 billion.

Strategic Initiatives and Vision 2031

The "We the UAE 2031" vision, launched as a national plan for the next decade, builds on the country's developmental achievements over the past 50 years. It focuses on four pillars: society, economy, diplomacy, and ecosystem, aiming to enhance the UAE's position as a global economic partner. Key targets include doubling FDI flows, tripling FDI stock, and achieving a 5.0% non-oil GDP growth in 2025, with projections of 4.5% real GDP growth in 2025 and 5.5% in 2026. Initiatives like long-term visas, the World Expo 2020 (held in 2021, attracting 24 million visitors), and investments in AI and renewable energy underscore the government's commitment to attracting global businesses and fostering innovation.

Abu Dhabi Economic Vision 2030

The Abu Dhabi Vision 2030 is a strategic plan to transform the emirate into a sustainable, diversified economy by 2030, reducing reliance on oil and fostering growth in knowledge-based industries.

Abu Dhabi Vision 2030 aims to diversify the economy, focusing on non-oil sectors and sustainability. It seeks to reduce oil dependency, targeting 64% non-oil GDP contribution by 2030. The vision emphasizes creating high-value jobs, enhancing business environments, and developing skilled workforces. It includes nine pillars, such as a strong private sector and global integration, to ensure sustainable growth.

Competitive Advantages for Foreign Investors

The UAE's competitive edge lies in its strategic location, enabling businesses to connect with major global markets. It serves as a regional headquarters for multinationals due to favorable tax systems, investment-friendly laws, and state-of-the-art infrastructure, including leading airlines like Emirates and Etihad. The country offers a safe and secure family environment, with cities like Dubai consistently ranked among the safest globally. Over 40 free zones, such as DIFC and ADGM, provide sector-specific advantages, while recent changes allowing 100% foreign ownership onshore eliminate the need for local partners, attracting new investors targeting the local market.

For foreign investors, the UAE presents a dynamic and diversified economy supported by robust economic indicators, strategic initiatives, and a clear vision for sustainable growth. Opportunities span mainland, DIFC, ADGM, and other free zones, with the "We the UAE 2031" vision providing a roadmap for long-term investment and collaboration. The UAE's blend of stability, innovation, and global connectivity makes it an ideal destination for businesses seeking to expand in the MENA region.

Legal System

The United Arab Emirates (UAE) legal system is a hybrid system that incorporates civil law principles along with elements of Islamic Sharia, which forms the legal foundation for personal, civil, and commercial matters. While Sharia law is predominant in family and personal status laws, the civil legal system governs most commercial and business operations.

Dual Legal Structure: Federal and Emirate-Level Governance

As a federation of seven emirates, the UAE has a dual legal system:

• Federal legislation applies across all emirates and is promulgated under the authority of the UAE Constitution (adopted in 1971). Significant commercial enactments— such as Federal Law No. 32 of 2021 (Commercial Companies Law) and Federal Decree-Law No. 9 of 2023 on Regulating the Bankruptcy and Insolvency of Companies—are applicable nationwide.
• Emirate-level Law can fill gaps or provide more localized regulation. For instance, Dubai Law No. 13 of 2016 regulates judicial authorities in Dubai, and Law No. 12 of 2004 established Dubai Courts.

Distinct court systems exist within every emirate (Sharia and civil courts) that operate together with the Federal Judiciary and contain various degrees of independence depending upon emirate.

Common Law Jurisdictions: ADGM and DIFC

The UAE stands out for its inclusion of common law jurisdictions within its financial-free zones:

• zInternational Financial Centre (DIFC) has a jurisdictional framework of its own established by DIFC Law No. 10 of 2004, founded on English common law and governed by the DIFC Courts.
• Abu Dhabi Global Market (ADGM) was established by ADGM Law No. 4 of 2013, and its law is based on English common law as applied directly pursuant to ADGM Courts Regulations 2015.

These jurisdictions provide standalone legal and regulatory frameworks for financial services, dispute resolution, and commercial matters, which appeal to foreign investors seeking legal familiarity and certainty.

Emerging Legal Landscape

The UAE has introduced comprehensive reforms to propel its business landscape and legal openness. These are:

• Foreign ownership of 100 percent in all sectors is permitted by Federal Decree-Law No. 26 of 2020, which updated the Commercial Companies Law.
• Reforms of bankruptcy laws through Federal Decree-Law No. 9 of 2023, streamlining restructuring and insolvency processes.
• Reforms of personal status laws and family laws, bringing greater clarity and adhering to global norms for expatriates.

Judicial Practice and Precedent

Although the UAE follows a civil law system that does not typically adhere to binding legal precedent, decisions of the Court of Cassation (both the federal and local ones, such as in Dubai and Abu Dhabi) are authoritative. Lower courts will follow these higher court rulings to ensure consistency and predictability of litigation results.

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