UAE–UK Business Expansion in 2026: Legal Considerations for New Companies

Expanding a business from the UK into the United Arab Emirates (UAE) is an exciting opportunity, offering access to new markets, tax advantages, and strategic global positioning. But while the potential gains are significant, so too are the legal and regulatory requirements.

At MAR Legal, based in Manchester and advising clients across the UK and Middle East, we support entrepreneurs and SMEs throughout the UAE–UK business expansion journey, from choosing the right entity to understanding cross‑border legal obligations.

This guide covers the essential legal considerations for UK businesses expanding into the UAE in 2026, including regulatory requirements, company setup options, compliance, contracts, workforce laws, and cross‑border issues.

Why UK Businesses are Looking to the UAE

The UAE has become a major hub for international business. Its appeal includes:

• Tax‑efficient environment – No corporate or personal income tax in many jurisdictions
• Strategic location – Between Europe, Asia and Africa
• Invest‑friendly zones – Free zones tailored to various industries
• Ease of doing business – With bilingual (English/Arabic) infrastructure
• Strong legal frameworks – Particularly in financial and commercial free zones

According to the UAE Ministry of Economy, foreign direct investment into the UAE continues to grow year‑on‑year, with the UK consistently among the top investor nations.

Expansion is especially attractive for technology, logistics, professional services, fintech, and renewable energy sectors.

Choosing the Right Business Structure in the UAE

One of the first decisions for a UK company expanding to the UAE is selecting the appropriate legal structure. The main options include:

1. Free Zone Company

Best for: UK businesses focused on exports, technology, e‑commerce, consulting, and professional services.

Key benefits:

• 100% foreign ownership
• No currency restrictions
• Zero corporate tax (in many zones)
• Easy repatriation of profits

There are more than 40 free zones in the UAE, including:

• Dubai Multi Commodities Centre (DMCC) – Popular for trading and commodities
• Dubai Internet City (DIC) – IT and tech companies
• Abu Dhabi Global Market (ADGM) – Financial services
• Sharjah Media City (Shams) – Creative and media enterprises

Requirements (vary by free zone):

• Minimum share capital (varies by zone)
• Office space lease (flexible options often available)
• Local licence and approvals

Each free zone has its own regulatory authority and legal framework, so it’s crucial to choose one aligned with your business model and future plans.

Support on company formation, licence application, and compliance is part of MAR Legal’s Dubai legal services:
https://www.marlegal.co.uk/dubai-legal-services

2. Mainland Company

Best for: Businesses intending to trade directly in the UAE market or bid for government contracts.

Key features:

• Access to the entire UAE market
• No requirement to operate through a local distributor (recent reforms)
• Ability to secure government and private sector contracts

Under recent UAE commercial company law reforms, foreign investors no longer require a local sponsor owning 51% of the company in many sectors, which marks an important shift for UK investors.

You’ll need to register with the UAE’s Ministry of Economy and comply with relevant commercial licensing requirements.

3. Branch Office of a UK Company

This is an extension of the existing UK business rather than a separate entity, making it suitable for service‑based firms testing the market.

Key points:

• Legal entity tied to the UK parent company
• Can engage in business activities defined by the parent licence
• Requires a UAE national service agent

Legal Requirements Before You Start Trading

Business Licence

In the UAE, a business licence is mandatory before you begin operations. Licence types depend on your activity, including:

• Commercial licence (trading)
• Professional licence (services)
• Industrial licence (manufacturing)

Licensing authorities differ between free zones and the mainland, so planning is essential.

Official guidance on business licensing can be found on the UAE Ministry of Economy website:  https://www.economy.gov.ae/en

Corporate Bank Account

Once your entity is established, you’ll need a UAE corporate bank account. Banks will require:

• Certificate of incorporation
• Business plan
• Passport copies of owners/directors
• Proof of address and licence documents

Note that each bank conducts its own due diligence, and timelines can vary.

Office Space Requirements

Most licences require a physical office address. Free zones offer flexible options ranging from flex desks to multi‑year leases, while mainland companies may need traditional commercial space.

MAR Legal can advise on lease agreement review and compliance with the UAE’s Ejari tenancy registration system.

Employment and Labour Law Considerations

If you plan to hire staff in the UAE, employment contracts and compliance with local labour laws are essential.

Work Visas and Sponsorship

Employers must sponsor work visas for expatriate staff. Typical steps include:

1. Obtaining initial approval from the Ministry of Human Resources & Emiratisation (MOHRE)
2. Securing an entry permit for the employee
3. Completing medical testing and Emirates ID registration
4. Issuing the residence visa

Work permits and visa sponsorship processes vary by free zone and mainland regulations.

Employment Contracts

Employment contracts in the UAE must specify key terms, such as:

• Job title and duties
• Salary and benefits
• Notice period
• End‑of‑service gratuity entitlements

It is important to align contracts with the UAE Federal Decree‑Law No. 33 of 2021 on Labour Relations, which governs employment terms in the private sector.

Acas guidance on UK employment rights remains relevant for UK staff who may retain UK contracts while working remotely for an expanded UAE entity:
https://www.acas.org.uk

MAR Legal can assist with drafting compliant employment contracts for both UK and UAE jurisdictions.

Commercial Contracts and Dispute Resolution

In international business relationships, well‑drafted contracts are not optional, they are essential.

Governing Law and Jurisdiction

When doing business across borders, specify:

• Which legal system applies (e.g., UAE law, English law)
• Where disputes will be heard (e.g., UAE courts, English courts, or arbitration)

Free zone authorities such as Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) operate civil and commercial courts based on common law, which may be attractive to UK businesses.

Mar Legal can advise on:

• Choice of law clauses
• Arbitration clauses
• Enforcement mechanisms in both the UK and UAE

Tax and Financial Reporting

UAE Corporate Tax

The UAE introduced a Federal Corporate Tax regime, effective for financial years starting on or after 1 June 2023, levying 9% on taxable profits above AED 375,000 (approx. £75,000).
Smaller profits below this threshold are subject to a lower effective rate.

Official UAE Federal Tax Authority details:
https://www.tax.gov.ae

Free zones remain attractive for tax planning, provided compliance requirements are met.

Double Taxation Agreement (DTA)

The UK and UAE have a double taxation agreement, helping to prevent income or profits from being taxed in both countries. This is particularly relevant for:

• Repayment of dividends
• Interest income
• Royalties

Understanding how the DTA applies to your business is critical for sound tax planning.

Intellectual Property and Trademarks

Protecting your brand and innovations in both the UK and UAE is essential.

Trademarks

• Register your trade mark with the UK Intellectual Property Office
  https://www.gov.uk/government/organisations/intellectual-property-office
• Register separately with the UAE Ministry of Economy or in relevant free zones

Trademark rights are territorial, meaning a UK registration alone does not protect your mark in the UAE.

Other types of IP, such as patents and designs, should also be evaluated based on your business model.

Data Protection and Privacy

UK businesses dealing with personal data must comply with the UK GDPR and Data Protection Act 2018. If you transfer personal data to or from the UAE, consider:

• Whether the UAE jurisdiction is considered “adequate” for data transfers
• Contractual safeguards such as data processing agreements

The UK Information Commissioner’s Office provides guidance on international data transfers:
https://ico.org.uk

MAR Legal can assist with data protection compliance across jurisdictions.

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Ongoing Compliance and Reporting

Once operational, UAE companies must maintain compliance with:

• Licence renewals
• Annual audits (where required)
• Visa expiries and renewals
• Commercial lease registrations
  

Failing to comply with regulatory deadlines can lead to fines or suspension of your business licence.

Practical Steps for UK Companies Expanding to the UAE

To ensure a smooth expansion in 2026:

1. Define your business objectives and activities
   Clarify whether you will operate in a free zone, mainland, or through a branch.
   
2. Choose the appropriate legal structure
   Seek guidance based on your industry and growth plans.
   
3. Prepare documentation early
   Incorporation, lease agreements, visa requirements, and bank account applications take time.
   
4. Address workforce planning
   Understand visa, employment contract, and labour compliance obligations.
   
5. Protect your intellectual property
   Register trademarks and consider international protections.
   

Plan for tax and financial reporting
Review UAE corporate tax obligations and leverage the UK–UAE DTA.