UAE Law and Practice Contributed by: Ahmed Ibrahim, Malack El Masry and Maryam Quadri, IN’P IBRAHIM .N. PARTNERS
entity and also have to be taken into consideration. This has also left a mark on transaction documents, where tax indemnities are now becoming market standard. That said, given the introduction of federal corporate tax, the Ministry of Finance recently issued Cabinet Decision 98 of 2024 pursuant to which eco - nomic substance requirements will not be applicable for the financial year started on or after 1 January 2023 but remains applicable for the financial years 1 Janu - ary 2019 to 31 December 2022. Further, if penalties have been applied by the competent authorities for financial periods falling after 31 December 2022, these will be annulled and any amounts collected returned to the relevant entity. Accordingly, given the rapidly evolving nature of the tax environment in the UAE, specialist tax advice is now a necessary component for M&A transactions. Further, in December 2025, the UAE issued a Federal Decree-Law amending certain provisions of the Cor - porate Tax Law, introducing additional clarity on the application and settlement of tax credits and incen - tives. These developments enhance certainty in tax modelling and may affect transaction structuring and due diligence processes, particularly where target entities benefit from tax incentives or carry forward tax balances. Identification of UBO Another important aspect which became extremely relevant for M&A transactions is the identification of the ultimate beneficial owner (UBO). Under UAE regu - lations, the UBO is an individual who owns or con - trols, whether directly or indirectly, 25% or more of the shares/voting rights of a company or has the right to appoint or dismiss the majority of its directors. UBOs have to be disclosed to the authorities at the time of incorporation or change in shareholding or simi - lar structuring actions. It is therefore imperative that transactions are structured in a way that permits the identification of the UBOs of the companies involved. Of course, if a publicly listed company is involved, the rules may differ. Recent legislative developments, including Federal Decree-Law No 10 of 2025 on AML/CFT, have rein - forced beneficial ownership transparency require - ments and introduced stricter supervisory and
enforcement mechanisms, including administrative and criminal penalties for the provision of false or mis - leading information. As a result, accurate ownership mapping has become increasingly critical in transac - tion structuring and due diligence. KYC Requirements Regulatory authorities have also placed considerable emphasis on the enforcement of mandatory know- your-customer (KYC) requirements. This commitment to transparency has resulted in the UAE’s removal from the Financial Action Task Force (FATF) grey list. The UAE’s removal from the FATF grey list further emphasises its commitment to robust KYC practices and overall financial transparency to further enhance the UAE’s reputation as a secure and transparent financial hub. The new AML framework also reinforces risk-based customer due diligence and ongoing monitoring obligations, expanding supervisory and inspection powers of regulators and increasing potential admin - istrative and criminal exposure for non-compliance. These developments may lead to enhanced scrutiny of source-of-funds documentation and extended onboarding timelines in transactional contexts. 1.3 Key Industries Many industries have shown good progress this year such as investments in green energy in part due to the push from government authorities to focus on green energy solutions. There has been a strong and strate - gic focus on artificial intelligence, which is projected to contribute nearly 14% to the region’s GDP by 2030. Additionally, the real estate sector has also witnessed a significant upswing, with a substantial number of joint ventures, both among major developers and smaller players, being announced and executed for the development of various areas across all major Emirates. This is expected to continue this year.
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