UAE Corporate and Tax Law Reforms 2025

In the final quarter of 2025, the United Arab Emirates (UAE) enacted a landmark suite of corporate and tax law reforms, consolidating its position as a sophisticated, investment-friendly jurisdiction. These legislative changes, spanning corporate structuring, governance, and tax administration, represent a strategic pivot toward global best practice and enhanced legal certainty for domestic and international investors alike.

Corporate Law: Flexibility, Governance, and Cross-Jurisdictional Clarity

Federal Decree-Law No. 20 of 2025 introduced amendments to the Commercial Companies Law (Federal Decree-Law No. 32 of 2021), marking a significant development to the UAE’s corporate legal framework.

A key reform is the introduction of multiple classes of shares, allowing companies to design capital structures with bespoke rights on voting, dividends, redemption, and liquidation preferences. This long-anticipated flexibility enables tailored governance models and is particularly attractive to private equity, venture capital, and joint venture investors seeking differentiated shareholder rights and exit mechanisms.

The amendments also formally recognise a non-profit company structure. These entities must reinvest surplus funds toward their stated purposes, thereby creating a regulatory framework for philanthropic ventures and impact investment platforms.

From a governance standpoint, shareholders are now afforded enhanced contractual freedom, with greater latitude to customise shareholder agreements, voting rights, and internal procedures, reducing reliance on statutory defaults and fostering greater commercial certainty.

Significantly, the reforms also clarify the extraterritorial application of the Commercial Companies Law, confirming its applicability to free zone companies operating outside their designated zones. This development resolves long-standing ambiguities around legal compliance for entities engaged in onshore activities and enhances the cohesion of the UAE’s federal corporate regime.

Tax Law: Harmonisation, Compliance, and Enhanced Procedural Integrity

In parallel, Federal Decree-Law No. 17 of 2025 introduced amendments to the Tax Procedures Law, which will come into effect on 1 January 2026. The reforms standardise the statute of limitations for audits and refund claims to five years, providing taxpayers with clear procedural timeframes. Exceptions apply in instances of fraud or deliberate non-compliance.

The VAT regime has also been simplified under Federal Decree-Law No. 16 of 2025, removing the obligation to issue self-invoices under the reverse charge mechanism. Importantly, the Federal Tax Authority (FTA) now has discretion to disallow input VAT claims linked to abusive tax arrangements, signalling an enforcement shift toward substance over form and heightening the burden of compliance and documentation on taxpayers.

Corporate tax reforms include clarification on the sequencing of tax credit utilisation, whereby withholding tax and foreign tax credits must be offset before any cash tax liability is settled. This measure aligns the tax treatment of cross-border income with international norms and improves transparency in the administration of tax reliefs.

Strategic Considerations and Market Positioning

These reforms are part of a broader legislative agenda aimed at cementing the UAE’s reputation as a jurisdiction grounded in rule of law, economic openness, and regulatory sophistication. By aligning more closely with OECD, WTO, and global capital market standards, the UAE is positioning itself as the jurisdiction of choice for regional headquarters, capital deployment, and cross-border structuring.

As the reforms take effect from 2026, companies operating in or through the UAE should undertake a thorough review of group structures, corporate governance instruments, and tax risk management strategies to ensure compliance with the updated legal landscape.

By: Zain Satardien
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