UAE updates corporate laws and tax regulations

The United Arab Emirates has implemented significant regulatory changes regarding corporate governance and taxation. Under Federal Decree-Law No. 32 of 2021, the UAE Commercial Companies Law governs mainland companies across the seven emirates. A major shift in this law is the removal of the general requirement for majority Emirati ownership, allowing for increased foreign investment. The law recognizes various company forms, including Limited Liability Companies (LLC), private and public joint stock companies, general partnerships, and simple limited partnerships.

Simultaneously, the introduction of UAE Corporate Tax has altered the landscape for international businesses, particularly those from India. While the UAE Free Zone regime offers a conditional 0% tax rate for qualifying income, non-qualifying income is subject to a standard 9% rate. This shift makes the India-UAE Double Taxation Avoidance Agreement (DTAA) increasingly relevant for Indian exporters and businesses operating through UAE branches. Companies must now carefully manage permanent establishment risks, transfer pricing between parent and subsidiary entities, and the commercial implications of new tax structures on pricing and contracts.