UAE Trends and Developments Contributed by: Amir Alkhaja, Gerry Rogers, Daria Selivanova and Danila Kriuchkov, Habib Al Mulla & Partners
liberalise its entry rules for foreign direct inves - tors by amending the UAE Commercial Com - panies Law and allowing 100% foreign owner - ship for mainland companies for most business sectors, thereby abandoning a long-standing requirement for a local controlling (51%) part - ner. Exceptions are still preserved for a number of sensitive fields, such as, for example, oil and gas, telecoms and utilities. In some instances, a foreign investor could still benefit from engaging a local partner, so the decision on the ownership structure would usually be taken upon assess - ment. Freezone-registered companies, previously lim - ited in their operations to the relevant jurisdic - tions, have received a right to operate in main - land Dubai without establishing a local branch. This new option is available to companies run - ning certain listed activities, and requires obtain - ing a permit from the Dubai Department of Econ - omy and Tourism (DET). Further, there is a trend for lowering the fees related to company formation and obtaining operational licences, especially in the freezones. The move is paired with a number of offers pro - vided to certain types of businesses (eg, tech and innovation), which are aimed at attracting more start-ups and allowing them a faster and simplified track to taking off. In line with the above benefits, there remain a number of areas for improvement, calling for fur - ther adaptation, such as, for example, regulatory background for operations of the mainland com - panies, especially relating to corporate govern - ance, share transfers and shareholders’ rights. Certain challenges could be addressed by the parties securing their interests in a contractual manner as the regulations allow application of English law, traditionally used in international
investment arrangements. Some jurisdictions within the UAE, being financial freezones (Abu Dhabi Global Markets (ADGM) and Dubai Inter - national Financial Centre (DIFC)), offer traditional flexibility and protections due to direct or indi - rect application of the English law and common law principles. However, in situations which still require the parties to follow public procedures or engage with public sources, such as, for example, engaging a notary for share transfers, navigating inheritance matters for Muslims with application of Sharia laws, or performing due diligence, certain processes may appear more challenging and time consuming. Current solu - tions lie primarily in the field of structuring. We anticipate that the practice will further adapt to pick up on speed and flexibility when the mar - ket presents a sufficiently pressing number of requests. Compliance/AML/Taxation The recent focus of the authorities is also on increasing transparency of business practices, which reflects in enhanced sophistication of pro - cedures such as AML, KYC and others. Imple - mentation and enforcement of these rules has demonstrated the UAE’s commitment to global compliance standards and was recently interna - tionally recognised by removal of the UAE from the “grey list” of the Financial Action Task Force (FATF). Another act of the commitment of the country to prevent tax avoidance and money laundering was exercised in the field of taxation. In 2023, the UAE introduced a 9% corporate tax for com - panies with profits exceeding AED375,000. This measure was further followed by the introduction of a 15% tax applicable to multinational enter - prises, the group revenue of which is equal to or exceeds EUR750 million, effective from 1 Janu - ary 2025. The latter was performed to bring the
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