If you’re on the cusp of completing your business registration in Dubai, you’re probably wondering what comes next. With its robust business environment and strong economy, the UAE is one of the best places in the world to start a business. As an entrepreneur, this guide is crucial for you.

In this guide, we want to empower you with all the information you need to ensure compliance with local laws and regulations in the UAE. Remember, non-compliance in the UAE can open you up to risks such as hefty fines, license suspensions, and even forced business closure. 

With the following information at your fingertips, you can make sure your UAE business is safe, aligned with compliance requirements, and ready to thrive in this dynamic market.

1. Taxation

Getting savvy with the UAE’s tax systems will keep you ahead of the curve. Value Added Tax (VAT) is applicable to most businesses in the UAE. If a business has an annual taxable turnover exceeding AED 375,000, they must register for VAT. Currently, the VAT rate stands at 5%. Once you register, a business must file their VAT return on a quarterly basis. Remember, failure to comply with VAT regulations can result in penalties. 

Meanwhile, Corporate Tax (CT) is a form of direct tax levied on the net income or profit of corporations and other entities from their business. Recently, the UAE introduced a new CT system. The UAE’s CT framework has been crafted to adopt global best practices while reducing the compliance burden on businesses.

With the exception of Bahrain, the UAE has implemented the lowest corporate income tax rate in the GCC region, set at a standard rate of 9%. All UAE businesses and commercial activities are required to register for Corporate Tax, with some exceptions. For startups and small businesses, a 0% rate applies for turnover up to AED 300,000.

It’s important to note that even if you are not liable to pay taxes after your business registration in Dubai, UAE, corporate tax registration is mandatory in the UAE. Keep detailed financial records to avoid errors and penalties. 

2. Financial Auditing

Many businesses, especially those in certain sectors or with specific financial thresholds, are required to have their financial statements audited annually. Businesses must maintain accurate financial records for a specified period, typically five years.

For annual external audits to banks and regulators, business must have ready:

• Profit and loss account
• Balance sheet
• Trial balance
• Cash flow statement

If you are a company registered in the UAE mainland, your company’s financial records need to be audited annually. These audited accounts don’t need to be submitted to the authorities, but they need to be filed for future reference, when dealing with banks, investors, and potential business partners. 

For businesses in free zones, however, things are a bit different. Audit requirements are different based on which free zone you choose. In many free zones, annual audited financial accounts are necessary for your renewal process. With a business consultant in your free zone, you can understand the unique requirements for your business. 

3. Economic Substance Regulations (ESR)

The primary goal of the Economic Substance Regulations (ESR) is to ensure that companies engaged in specific activities maintain a genuine economic presence in the country. If you are a part of the following key industries, ESR will apply to your business:

• Banking
• Insurance
• Headquarters business
• Holding company business
• Investment fund management
• Distribution and service centre business
• Lease finance
• Shipping
• Intellectual property business

So, what do you need to do if your business is a part of these industries? Firstly, you will need to submit an ESR notification within 6 months of your financial year-end. On certain occasions, you may need to submit an ESR report within 12 months of your financial year-end. Along with this, you need to provide sufficient evidence to substantiate the claim that your company maintains adequate economic substance in the UAE.

If you fail to comply with ESR regulations, the penalties can be significant, possibly leading to fines of AED 50,000.

4. Ultimate Beneficial Owner (UBO) Compliance

UBO compliance is a crucial aspect of doing business in the UAE. An Ultimate Beneficial Owner (UBO) is the natural person who ultimately owns or controls a company, whether directly or indirectly. They are the individuals who benefit from the company’s activities. In the UAE, UBO is important for transparency and anti-corruption. Typically, an UBO owns or controls over 25% of a company’s shares or voting rights. 

All companies registered in the UAE mainland and certain free zones must register their UBOs with the relevant licensing authority. Companies must provide accurate and up-to-date information about their UBOs, including their name, date of birth, nationality, and address. Any changes to a company’s UBO information must be reported to the licensing authority within a specified timeframe.

For companies with complex ownership structures, identifying the UBO can be more challenging. In such cases, additional due diligence may be required. Also, certain types of companies, such as government entities or publicly listed companies, may be exempt from UBO reporting requirements.

Failure to comply with UBO regulations can result in significant penalties, including fines and potential legal action. 

5. Anti-Money Laundering (AML) and Counter-Finance Terrorism (CFT)

The UAE has implemented robust anti-money laundering (AML) and counter-terrorism financing (CTF) regulations to combat illicit activities and maintain a sound financial system. These regulations are aligned with international standards set by the Financial Action Task Force (FATF). 

The UAE Central Bank and the Securities and Commodities Authority are the primary regulatory bodies responsible for overseeing AML/CFT compliance within the financial sector. Businesses will have to undergo Customer Due Diligence (CDD) and Suspicious Activity Reporting (SAR), along with adhering to strict record keeping.

While all businesses must be aware of AML and CFT regulations, some sectors have additional requirements. These sectors are:

• Corporate service providers
• Real estate brokers and agents
• Independent accountants
• Precious metals and stone dealers

Those who fall within these sectors must do the following: 

• Register on the goAML website
• Report any suspicious activities or transactions immediately
• Implement Know Your Customer (KYC) procedures
• Carry out regular staff training so that all employees are aware of AML/CFT regulations

Remember, not adhering to these regulations can leave you at risk for hefty fines and potential imprisonment.

Your Annual Compliance Checklist

When it comes to annual compliance, there are specific requirements and documentation that all entrepreneurs who have completed their business registration in Dubai, UAE should consistently review. These are:

1. Trade license renewal 
2. Immigration card renewal
3. Labour card renewal
4. Visa renewal
5. Custom code renewal (for trading companies)
6. Insurance policies
7. Lease agreements 

Businesses must also comply with data protection laws, such as the UAE Personal Data Protection Law, to protect the privacy of personal information. Entrepreneurs must keep in mind that based on their industry or business setup (free zone or mainland), compliance requirements may vary. 

By following these guidelines, businesses can minimise the risk of non-compliance and operate smoothly within the UAE’s legal framework. Connect with a business setup advisor to make sure you follow each requirement and avoid disruption to your business journey.