UNITED ARAB EMIRATES: An Introduction

General Overview

The UAE, located in the Arabian Gulf, has experienced remarkable growth over the past 25 years. It boasts an open economy with a high per capita income and a strong trade surplus. Abu Dhabi and Dubai serve as its financial hubs, positioning the UAE as a leading economy in the region. The country offers an exceptional quality of life, with state-of-the-art infrastructure, medical facilities, schools, and entertainment options such as beaches, water sports and shopping malls. It is also one of the safest countries globally, making it an attractive destination for both residents and businesses.

The UAE is a federation of seven emirates – Abu Dhabi, Dubai, Ajman, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain. While Arabic is the official language, English is widely spoken and preferred for business. The UAE’s strategic location offers easy access to regional and global markets, making it a key commercial hub, particularly Dubai.

Economic Overview 

The UAE has been successfully diversifying its economy, reducing its dependence on oil while promoting sectors like trade, banking, tourism, real estate, renewable energy and manufacturing. This has led to a significant reduction in the share of oil-based GDP, with the UAE branding itself as the “United Global Emirates” to attract foreign investment and talent. Despite global economic uncertainty and inflation, the UAE economy has remained resilient in 2024, driven by strong oil prices, government support and favourable corporate and commercial laws. Notably, Dubai’s economy is projected to grow over 6% in 2024, bolstered by its focus on sustainability, technology and financial services.

Real estate, construction and tourism continue to be the country’s core economic pillars. Over the past year, these sectors have seen continued growth, attracting local and international investors. Dubai’s real estate market, in particular, witnessed record property transactions in 2023, driven by demand from overseas buyers and high net worth individuals. Major infrastructure projects, such as Etihad Rail, the Natural History Museum, the Loop and Saadiyat Grove, further highlight the strength of the real estate, construction and tourism sectors.

Doing Business and Investing in the UAE 

According to the World Bank index for 2023, the UAE ranks 16th globally for ease of doing business. Due to legislative reforms in 2021 that allow foreign nationals to fully own and operate companies onshore, as well as the plethora of free trade zones, where 100% foreign ownership is permitted, the country is considered one of the most business-friendly in the world. This, coupled with a minimal VAT rate of 5%, no corporate tax in free zones and a low 9% corporate tax onshore, makes the UAE one of the top destinations globally for foreign capital and investors.

A significant development in 2023 was the introduction of corporate tax under Federal Decree-Law No 47, which came into effect in June 2023 for onshore businesses. The low tax rate, combined with tax exemptions for free-zone companies, has preserved the UAE’s appeal to investors. Another milestone was the UAE’s removal from the FATF grey list in February 2024, following comprehensive reforms to strengthen its anti-money laundering (AML) and counter-terrorist financing (CTF) frameworks. This achievement boosted international confidence in the UAE’s financial sector, enhancing its reputation as a secure financial hub. The UAE also updated its Economic Substance Regulations (ESR), requiring businesses in certain sectors to demonstrate adequate economic activity within the country, ensuring compliance with global standards.

These developments, in conjunction with new regulations for cryptocurrencies and blockchain technologies, have positioned the UAE in a very strong position in the global economic landscape, including in relation to the digital economy. In 2024, the country passed new laws governing digital assets, data privacy and cybersecurity, ensuring that businesses adhere to international standards in these critical areas.

In the labour sector, significant amendments were introduced in early 2024 to streamline dispute resolution processes and clarify employer-employee rights. These reforms aim to foster a fair working environment. Additionally, the UAE has made significant strides in relation to dispute resolution, particularly in arbitration, which has increased foreign investor confidence. The Dubai International Arbitration Centre (DIAC) and the newly launched arbitrateAD in Abu Dhabi offer robust arbitration services that align with international standards, ensuring efficiency and fairness. The UAE’s commitment to the New York Convention ensures the enforceability of arbitral awards, further solidifying the country’s business-friendly environment.

The UAE continues to attract multinational companies and entrepreneurs due to its skilled workforce and growing number of international firms and financial institutions. Its evolving legal framework, which also supports free trade zones governed by independent regulatory authorities, means that entities have a range of choices of where to establish themselves, with the established free zones, in particular, providing tailored pro-business guidelines and streamlined regulations for setting up a business. Generally, the process involves obtaining initial approval from the relevant free-zone authority, followed by applying for a trade licence, with flexible capital requirements depending on the industry and zone.

Future Challenges and Opportunities 

In 2024, the UAE remains a dynamic country for doing business, particularly due to its technology-driven and strong economy, and strategic location. The country faces global challenges such as inflation and fluctuating energy prices, but remains resilient. Non-oil sectors like tourism, finance and technology are expected to drive growth, projected at 4–5% this year. The UAE’s removal from the FATF grey list in 2023 has further strengthened its position as a global financial hub, reassuring investors as to its economic and financial stability.

Despite ongoing regional conflicts, the UAE has emerged as a stable and secure destination for businesses and investors. Its commitment to neutrality, humanitarian support and economic resilience has enhanced its reputation as a reliable hub in a turbulent region.

The UAE is also placing increasing emphasis on environmental, social, and governance (ESG) initiatives and climate change action. The country’s Net Zero by 2050 strategy continues to drive investments in renewable energy and sustainability projects. Hosting COP28 in 2023 reaffirmed the UAE’s commitment to addressing climate change, further enhancing its appeal to global investors seeking socially responsible and sustainable opportunities.

Innovation and technology remain central to the UAE’s future agenda. The country is recognised for fostering an innovation-driven economy, with a focus on sectors like fintech, artificial intelligence and blockchain. As a member of the Agile Nations network, the UAE is working to create a regulatory environment that encourages technological advancements. Initiatives like smart cities and increased investment in research and development position the UAE as a global leader in technological innovation, attracting businesses eager to participate in this forward-thinking ecosystem.

Law firms in the UAE are likewise actively embracing technology to improve efficiency and transparency, and are adopting innovative tools to better serve clients and meet the growing demand for tech-driven legal solutions.