From company setup to tax filings and ongoing regulatory obligations, this guide outlines the essential steps UAE business owners and investors need to understand to remain compliant.

‍

Step 1: Choose and Register the Right Business Structure

Compliance starts at the foundation.

In the UAE, companies typically fall into one of three structures:

• Mainland LLC
• Free Zone company
• Offshore entity

‍

Each structure affects ownership rules, visa eligibility, tax exposure, and reporting obligations. Mainland companies register with the Department of Economic Development (DED), while Free Zone entities are registered with their respective Free Zone Authorities.

Choosing the correct business activity during registration is critical. Incorrect or overly broad classifications can result in licensing issues, restrictions, or compliance risks later.

‍

Step 2: Secure the Correct Trade Licence and Permits

A valid trade licence is a legal requirement for operating in the UAE.

‍

Businesses must:

• Apply for a trade licence aligned with their activities
• Obtain sector-specific approvals if required (for example in healthcare, finance, education, or e-commerce)
• Maintain valid digital and physical copies of licences and approvals

‍

Operating without a valid licence can lead to fines, suspension, or restrictions on banking and visas.

‍

Step 3: Apply for the Investor or Partner Residence Visa

For business owners, the investor or partner residence visa is directly linked to the company licence.

‍

Key steps include:

• Applying for the visa based on the registered licence
• Completing Emirates ID registration
• Finalising documentation through a sponsor or PRO service

‍

Without a valid residence visa and Emirates ID, founders may face challenges opening bank accounts, sponsoring employees, or completing official filings.

‍

Step 4: Open a Corporate Bank Account

A corporate bank account is essential for handling business transactions and meeting tax obligations.

‍

Banks typically require:

• Trade licence
• Company incorporation documents (MOA/AOA)
• Office lease or proof of address
• Passports and visas of owners or shareholders

Banks conduct enhanced due diligence, so accurate and consistent documentation is crucial.

‍

Step 5: Register with the Federal Tax Authority (FTA)

Most UAE businesses must register with the Federal Tax Authority.

‍

Value Added Tax (VAT)

• VAT registration is mandatory if annual taxable supplies exceed AED 375,000
• VAT returns are generally filed quarterly
• Businesses must keep VAT records for at least five years

Corporate Tax

• Corporate tax applies at 9 percent on profits exceeding AED 375,000
• Registration is required in most cases, even if no tax is payable

Late registration or missed filings can result in penalties.

‍

Step 6: Comply with ESR and UBO Requirements

Economic Substance Regulations (ESR)

Companies conducting certain “relevant activities” may need to comply with ESR requirements.

This can include:

• Submitting an ESR notification within six months after the financial year end
• Filing a full ESR report if applicable (for example for holding companies, IP entities, or finance businesses)

‍

Ultimate Beneficial Owner (UBO)

All companies must:

• File UBO details within 60 days of incorporation
• Update records whenever ownership or control changes

‍

Failure to meet ESR or UBO obligations can lead to significant fines.

‍

Step 7: Ensure Labour and Payroll Compliance

Hiring employees introduces additional compliance responsibilities.

‍

Businesses must:

• Register employees with MOHRE
• Pay salaries through the Wage Protection System (WPS)
• Issue compliant employment contracts
• Meet Emiratisation requirements where applicable

‍

Non-compliance can result in fines, blocked visa renewals, or labour restrictions.

‍

Step 8: Implement AML and Data Protection Controls

Depending on the sector, businesses may be required to implement Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) controls.

‍

This may include:

• Customer due diligence and KYC procedures
• Internal AML and CFT policies
• Data protection measures aligned with UAE PDPL standards
• Registration on goAML for covered activities

‍

These controls are increasingly scrutinised by regulators and banks.

‍

Step 9: Create a Compliance Calendar

Compliance in the UAE is ongoing, not a one-time task. Key timelines typically include:

‍

Monthly or quarterly:

• VAT filings
• Financial record updates

‍

Annually:

• Trade licence renewal
• Corporate tax filings (within nine months of financial year end)
• ESR notifications and reports
• UBO updates
• Financial audits, if required

‍

A structured compliance calendar helps prevent missed deadlines.

‍

Step 10: Maintain Organised Records and Documentation

Strong internal record-keeping reduces risk during audits and regulatory reviews.

‍

Businesses should maintain organised records of:

• Tax filings and invoices
• Payroll and employee documentation
• Corporate resolutions and board minutes

‍

Clear documentation simplifies audits and supports regulatory compliance.

‍

Step 11: Seek Professional Support When Needed

UAE regulations continue to evolve, with new requirements such as e-invoicing frameworks expected in 2026.

‍

Working with tax advisors, legal consultants, and PRO services helps businesses:

• Stay aligned with regulatory changes
• Reduce compliance risk
• Focus on growth rather than administration

‍

For tailored compliance support, contact gcc@hudsonmckenzie.com.

‍

Contact and Disclaimer

Should you have any questions regarding the above information, or require assistance with your immigration or global mobility matters, please don’t hesitate to contact our legal team at Hudson McKenzie. You can reach us by telephone at +971 (0) 54 249 4303.

‍

For office locations, please visit our Our Offices page.

‍

The information provided in this blog is for general guidance only and does not constitute legal advice.

‍