The Dubai Multi Commodities Centre (DMCC) Free Zone has introduced two new types of licences — the Special Purpose Vehicle (SPV) and the Holding Company licence.

SPV Licence

The SPV licence is intended for companies and investors seeking a simplified structure without complex operational functions. It is an optimal solution for entities involved in asset holding, securitisation, and structured finance transactions.

Holding Company Licence

This type of licence allows businesses to effectively manage subsidiaries and investments under a single corporate framework. It is particularly suitable for multinational corporations, family offices, and investment groups looking to consolidate governance, optimise tax efficiency, and enhance strategic decision-making.

New Licences Without Office Lease Requirements

Both licences eliminate the need for a physical office or operational infrastructure. This enables companies to establish flexible and cost-effective corporate structures within the free zone.

Tax Conditions

Under the UAE’s tax framework, Free Zone residents, including DMCC entities, may qualify for a zero per cent corporate tax rate, provided certain conditions are met.

Author: Ivanka Pylypiuk, owner and CEO of Parus Corporate Services LLC

How to Know if the UAE is the Right Market for You?

If you’re choosing a jurisdiction to take your business to an international level, it’s important to ask yourself the right questions. For example: “Are my clients, partners, or suppliers located in Middle Eastern countries?” If the answer is no, then perhaps you should consider other regions. However, if you’re planning to invest in a promising sector in the region, purchase property in the Emirates, or launch a crypto or e-commerce project with global ambitions, the UAE might be the ideal choice.

It’s essential that your choice of jurisdiction makes sense not just to you, but also to local tax authorities and banks that will review your application to open an account. Just saying “taxes are low” is not a sufficient justification. A clear, reasoned business model and market entry strategy are necessary.

Who to Sell to in the UAE Market?

The UAE is home to about 11 million people, over 10 million of whom are expats from over 200 nationalities. This makes defining your target audience a complex task.

Global giants like Amazon and Uber have the resources for extensive localization. But if your business is niche, you need a precise understanding of your customer — are they locals, a specific ethnic group, or speakers of a particular language? This needs to be clarified in advance to successfully scale in the region.

Don’t Come to the Emirates “With Your Own Samovar”

I often encounter entrepreneurs, especially from Eastern Europe, who are convinced they know how to do business the “right way” and come to the UAE to teach others. This isn’t just a mistake — it’s a dead end. Ignoring the specificities of the country while hoping for success is, at best, naïve.

You have two paths in a new market. One is harder but more privileged: changing the market to fit you. This is for the strong — those with a truly unique product and a large-scale strategy. The other is to adapt to existing rules, understand the local culture and environment, and confidently grow into your niche. This path is equally valid, especially for newcomers.

A simple example: you won’t get the typical banking products you’re used to if you choose an Islamic bank without understanding its principles. A restaurant serving alcohol and pork won’t survive in a neighborhood of observant Muslims. Success here belongs to those who adapt or create something new at the intersection of cultures.

Cultural Nuances That Impact Business

The Middle East has unwritten rules that are crucial for effective business:

1. People Don’t Say “No” Directly
   You may be greeted with a smile and have your documents accepted — but never hear back. This isn’t a refusal, just a cultural nuance. Learn to read between the lines.
2. Relationships First, Then Business
   No one starts with a product pitch. First comes the relationship — familiarity, trust, and a human connection. Only then come deals.
3. Learn to Be Patient
   Everything takes time here — responses, decisions, transactions. Patience and consistent communication are essential.

A Strong Business Model is Your Main Asset

The UAE isn’t the place for trial and error. It’s a market for mature businesses with stable processes and financial buffers.

A strong business model means understanding the market, a clear structure, logistics, marketing, and most importantly, resources to survive the first months without loss. Long-term commitment is valued — leases start at a year, and contracts often span 5–10 years.

Is It Possible to Attract Investment?

Yes, the UAE has investment funds and private investors. But no one invests in napkin ideas. Investors are interested in businesses that already have an office, team, website, at least one year of market experience, and some financial performance.

Simply put — investments are for scaling, not launching. You finance the launch. But if you can show potential — you’ll get noticed.

How Much Does a Company in the UAE Cost?

The best things are rarely cheap — and this applies to setting up a business in the Emirates. The minimum annual budget for company administration starts at $10,000 and can realistically reach $15,000–20,000. This is more than in some European, Asian, or American jurisdictions. So, assess your budget in advance.

But what do you get in return?

• One of the most tax-friendly systems: 9% corporate tax, 5% VAT, and no personal income tax;
• A promising real estate market: since 2019, prices have risen by over 50% and transaction volumes have doubled;
• High living standards and one of the lowest crime rates in the world;
• Eligibility for a residency visa for you and your family;
• Legal crypto trading and special free zones for digital projects.

Legal System: Key Features

The UAE operates under two parallel legal systems: Sharia law and English common law. That’s why experienced legal support is critical — for contracts, deal structuring, and dispute resolution.

Corporate agreements require special attention, especially when a company has multiple founders from different countries. All terms must be documented in accordance with local laws to protect your interests.

So, Should You Start a Company in the UAE?

If you’re successful in your field, have a clear business model, understand the market, are ready to adapt to local realities, and have at least a year’s budget — then absolutely yes. Success here is not just possible — it’s inevitable for those who are prepared and act mindfully.

And if you’re still unsure whether the Emirati market is right for you — consult with me or the team at Parus Corporate Services LLC. We’ll help you navigate the nuances, calculate costs, choose the optimal business structure, and build your market entry strategy.

The Executive Council of Dubai has adopted Resolution No. 11, which lifts the restrictions on mainland business operations for companies registered in free economic zones.

What is required to enter the UAE mainland market?

Companies licensed in Dubai’s Free Zones can now conduct business outside their designated areas, provided they obtain the appropriate licenses or permits from the Dubai Department of Economy and Tourism (DET).

What types of permits can Free Zone companies obtain?

DET may issue the following types of permits to such companies:
• A license to open a branch in the mainland of Dubai.
• A license for a branch with the head office in a Free Zone (valid for 1 year).
• A temporary permit for specific activities in the mainland (valid for up to 6 months).

Responsibilities of Free Zone companies operating in the UAE mainland:

• Comply with all applicable federal and local laws.
• Maintain separate accounting for operations outside the Free Zone.
• If planning to operate outside the Emirate of Dubai, obtain the relevant licenses and approvals from competent authorities in the respective jurisdictions.

Taxation

Income generated from mainland activities is subject to a 9% corporate tax under UAE law. Income earned within the Free Zone may remain tax-exempt if specific conditions are met.

Deadlines and Transition Period

Companies already operating outside their Free Zones as of the resolution’s effective date (March 17, 2025) must comply with the new requirements within one year. This period may be extended by another year at the discretion of the Director General of DET.

The UAE Ministry of Finance has issued an updated Ministerial Decision clarifying the requirements for the preparation and maintenance of audited financial statements. All tax groups are now required to prepare audited special purpose aggregated financial statements. However, individual members of the tax group are not required to prepare separate audited financial statements.

The Federal Tax Authority (FTA) will also issue further guidance on the preparation of special purpose aggregated financial statements for corporate tax purposes.

Additionally, the new decision introduces clarifying procedures for Qualifying Free Zone Persons engaged in the distribution of goods or materials within or from Free Zones. The FTA will also publish further guidance on these provisions.

These clarifications will ensure that distribution businesses can confidently benefit from the corporate tax advantages available to Free Zone entities.

Starting March 1, the holy month of Ramadan for Muslims will begin in the UAE. In connection with this, the working hours for government employees have been adjusted for this period:

• Monday to Thursday: 9:00 AM to 2:30 PM;
• Friday: 9:00 AM to 12:00 PM. These changes will not apply to employees whose work requires a different schedule, and staff from ministries and federal authorities may use their approved work schedules during Ramadan, as long as they comply with working hour limits. If you plan to visit the UAE for work during the holy month, make sure to take these changes into account. Also, remember the rules of behavior during Ramadan: do not display aggressive behavior, refrain from listening to music and dancing in public places, avoid speaking

The authorities of the Emirate of Sharjah have announced the introduction of a special corporate tax of 20% for companies engaged in the extraction, transportation, or processing of raw materials or natural resources (oil, metals, minerals, and construction materials).

The corresponding law has already been adopted. According to it, extractive companies will be subject to a 20% tax on the taxable base in accordance with the mechanisms and schedules established in agreements between the Sharjah Oil Department and the respective company.

The taxable base for companies engaged in the extraction of natural resources is calculated based on the company’s total share of the value of extracted oil and gas, according to a formula that distributes the total royalty and other agreed payments between the Oil Department and the company.

All amounts related to royalties, bonuses, and annual rent for any concession operated by extractive companies will be determined in accordance with the agreement signed between the Oil Department and these companies.

Corporate Tax for Non-Extractive Companies Working with Natural Resources

Companies engaged in non-extractive activities are subject to a 20% tax on the taxable base for each financial year.

The taxable base for such companies is calculated based on the company’s net taxable profits under the provisions of this law, with the following adjustments:

a) Asset depreciation may be deducted from the taxable base, with non-current asset depreciation calculated at a rate of 20% per year. If a company applies international financial reporting standards that alter depreciation accounting methods, it may deduct depreciation amounts according to the rates specified in financial statements, provided that the finance department approves this during the audit and ensures that the intent is not to reduce profits.

b) Tax losses may be deducted from the taxable base for subsequent tax periods. Additionally, tax losses may be carried forward to unspecified future periods.

Tax Compliance and Penalties

The payment of tax is a prerequisite for renewing concession rights or a commercial license in Sharjah. Companies subject to taxation under the new law are required to maintain records and supporting documents to ensure the accuracy of the financial statements or any other tax-related documents for a period of seven years from the date of issuance.

If the emirate’s finance department determines that a company has intentionally committed financial violations for the purpose of tax evasion, a penalty of 5% of the total due tax amount will be imposed on the company.