The Shift Towards Full Foreign Ownership

One of the most transformative developments in UAE company law is the recognition of 100 per cent foreign ownership for commercial and industrial companies, except where activities fall within limited strategic impact sectors linked to national security or defence.

This change was cemented through Federal Decree-Law No. 32 of 2021 on Commercial Companies, which consolidated earlier reforms introduced under Federal Decree-Law No. 26 of 2020. The legislation formally abolished the long-standing “51/49 rule”, which had required mainland companies to appoint a UAE national majority shareholder.

The reform marks a decisive shift towards protecting beneficial ownership and investor control. Historically, foreign investors relied on informal and legally vulnerable side arrangements to secure decision-making authority. The 2021 Decree now provides a clear statutory basis for full equity ownership, enabling investors to exercise complete control over board appointments, management decisions and profit distribution.

In addition, the removal of the requirement to appoint a Local Service Agent for branches of foreign companies has significantly reduced administrative complexity and ongoing costs. In practical terms, the concept of a local sponsor or “silent partner” has been eliminated. An international investor setting up a business in Dubai today enjoys the same autonomy and legal certainty available in major global jurisdictions.

A Competitive and Structured Corporate Tax Framework

The introduction of corporate tax in the UAE has not diminished Dubai’s appeal. Instead, it has positioned the country as a credible, internationally aligned tax jurisdiction while retaining significant incentives for startups and growth-stage businesses.

Under Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, a standard 9 per cent corporate tax rate applies only to taxable income exceeding AED 375,000. This threshold preserves relief for smaller enterprises and early-stage ventures.

Crucially, Qualifying Free Zone Persons may continue to benefit from a 0 per cent corporate tax rate, provided they maintain adequate economic substance in the UAE and earn income from qualifying activities as defined by the regulations.

Further relief is available through Small Business Relief under Article 21 of the law. Companies with annual revenue below AED 3 million may elect to be treated as having no taxable income, effectively maintaining a tax-neutral status until the end of the 2026 tax period. Despite the end of the blanket tax-free era, the UAE remains one of the most globally competitive corporate tax regimes.

Jurisdictional Versatility and Legal Certainty

Dubai’s legal architecture offers a rare degree of jurisdictional choice. Investors may incorporate within the mainland jurisdiction, governed by UAE civil law, or establish operations within financial free zones such as the Dubai International Financial Centre (DIFC).

The DIFC operates as an independent jurisdiction with its own civil and commercial laws, largely derived from English Common Law principles. This is particularly advantageous for private equity, fintech and technology companies that require sophisticated legal mechanisms, including multiple classes of shares, drag-along and tag-along rights, trust structures and shareholder agreements.

The DIFC Courts, which conduct proceedings in English, offer a predictable and internationally respected forum for dispute resolution. This significantly reduces jurisdictional and enforcement risk, a concern often associated with emerging markets.

Golden Visa: Residency Security for Business Founders

A robust business framework must be complemented by personal residency security. The UAE’s Golden Visa programme, governed by Federal Decree-Law No. 29 of 2021 on the Entry and Residence of Foreigners, directly links long-term residency to business ownership and investment.

Eligible investors who establish a company with a capital investment of at least AED 2 million may obtain a 10-year renewable residency visa. The Golden Visa is self-sponsored and does not require the holder to remain in the UAE for a minimum number of days each year.

This separation of residency rights from operational employment status provides founders with long-term stability and confidence, encouraging sustained capital commitment and business expansion.

Modernised Corporate Governance Structures

Recent amendments to the Commercial Companies Law have further strengthened Dubai’s appeal by introducing advanced corporate vehicles such as Special Purpose Vehicles (SPVs) and Special Purpose Acquisition Companies (SPACs).

These structures facilitate mergers and acquisitions, asset segregation, capital raising and public listings, while offering effective risk containment. By ring-fencing liabilities, SPVs and SPACs ensure that legal or financial exposure in one segment of a business does not jeopardise other investments or personal assets.

Key Legal Provisions at a Glance

Conclusion

Dubai’s emergence as a global business capital is the result of a deliberate, law-driven strategy. By aligning domestic legislation with international regulatory standards, including OECD initiatives and FATF compliance, the UAE has created a business environment where ease of doing business is matched by legal certainty.

The advantages of setting up a company in Dubai in 2026 lie not only in access to a tax-efficient jurisdiction, but also in the stability of a mature and investor-friendly legal system. Whether through the Common Law protections of the DIFC or the full ownership rights available on the mainland, businesses in Dubai operate at the intersection of opportunity, protection and long-term certainty.