DUBAI / Tax and Legal Framework
Investment laws, regulations and incentives are continuously improving to encourage further foreign investment.
This includes the introduction of foreign ownership of land and stocks – Dubai became the first emirate within the
UAE to open its property market to foreign ownership, followed by Abu Dhabi.

Company law

On December 4, 2011, the UAE Federal Cabinet has approved a new Company Law that paves the way for more
relaxed foreign ownership above the existing ceiling of 49 percent in the future. In addition, the new law allows for
a simplified process of starting a business in the UAE and strengthens protection of shareholders. A new FDI law is
also in the works and, when announced, will make the investment environment even more attractive.

Some of the main features of the new company law include the following:
  • The existing 49 percent foreign ownership threshold will remain; however, the new law permits the Cabinet to issue a separate resolution specifying the types of businesses that may be majority-owned by foreigners.
  • It is expected that majority foreign ownership will initially be permitted only in business sectors in which the government seeks to increase foreign direct investment.
  • The new law reportedly exempts from its application public joint stock companies wholly owned by a federal or local government, and will likely focus on private joint stock companies and limited liability companies.
  • With respect to minimum capital requirements, the current position remains unchanged as the new law will not require new companies to have a minimum required share capital and this has been the position under the existing law since 2009.
  • One of the many aims of the new legislation is to reduce the length of time required to establish a company.
  • The new law is likely to increase stock subscription amounts for raising capital for newly founded public joint stock companies.
Intellectual property rights

The UAE is a regional leader in the protection of Intellectual Property Rights, with continuous improvements of
copyright, trademark and patent laws. The rate of software piracy in the UAE is regarded as one of the lowest in
the Middle East and Dubai is acknowledged as the best performer.

Tax Framework

There is no federal corporate or income tax levied in the UAE (except on oil companies and foreign banks). Dubai introduced a local income tax under the Dubai Income Tax Ordinance of 1969; however, the tax has not been implemented and it is understood that there are no plans to do so. In addition, free zone entities are subject to a number of tax concessions. There is no value added tax or sales tax in Dubai or the UAE. There are no exchange controls on the remittance of profits or repatriation of capital and there are virtually no restrictions on foreign trade.Corporate governance Dubai has embraced the need to develop and encourage principles of good corporate governance in the Middle East which can only help to attract foreign direct investment. Hawkamah Corporate Governance Institute, the first institute of its kind in the UAE, has been established with the mission of assisting the countries and companies of the Middle East region to develop and implement sound and globally well-integrated corporate governance frameworks.

Dubai’s serious attitude to developing corporate transparency and principles of good corporate governance and anti-money laundering is a beacon for the Middle East region and is a significant attraction to the international investment and financial community.

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