Several laws that took effect on 1 January 2026 — and others rolling out through the year — change how UAE companies are taxed, governed, staffed, and supervised. Some impose hard deadlines. Others introduce penalties where none previously existed. This article identifies the changes that require action, the authorities responsible, and the timelines that matter.
Short answer
- Tax enforcement is tighter. Federal Decree-Law No. 17 of 2025 rewrites the Tax Procedures Law. VAT credits now expire after five years. Credits from 2021 start lapsing in 2026.
- The Commercial Companies Law has been amended. Federal Decree-Law No. 20 of 2025 introduces multiple share classes, drag-along and tag-along rights, in-kind capital rules, and cross-jurisdiction re-domiciliation for onshore LLCs — all effective 1 January 2026.
- A new AML law is in force. Federal Decree-Law No. 10 of 2025 replaces the 2018 framework with broader offences, lower awareness thresholds, and personal liability for managers.
- Emiratisation penalties have escalated. The penalty per missing Emirati employee is now AED 108,000 per year for companies with 50+ staff. The minimum salary for Emiratis in the private sector rises to AED 6,000.
- E-invoicing begins mid-2026. Mandatory electronic invoicing will roll out in phases, with penalties of AED 5,000 per month for non-implementation.
Who this applies to
Every company operating in the UAE — mainland, free zone, or offshore with onshore activity — is affected by at least one of these changes. The tax and AML reforms apply federally. The Commercial Companies Law amendments apply primarily to mainland companies, though free zone companies with onshore branches now fall within scope. Emiratisation rules apply to private sector companies regulated by MOHRE.
ADGM and DIFC entities remain governed by their own regulatory frameworks for corporate governance and employment matters, but are subject to federal tax, AML, and data protection obligations.
Tax: tighter deadlines, expiring credits, and e-invoicing
Two federal decree-laws reshape the tax compliance environment from 1 January 2026.
Federal Decree-Law No. 17 of 2025 amends the Tax Procedures Law (Federal Decree-Law No. 28 of 2022). The most immediate consequence is the introduction of a five-year cap on VAT credit carry-forwards. Excess input VAT that has not been refunded or offset within five years of the tax period in which it arose will expire permanently. For businesses that have carried forward credits since 2021, some of those credits will lapse during 2026. A transitional window allows claims for tax periods 2018–2020 to be filed until 31 December 2026 — after which those refund rights are permanently extinguished.
Federal Decree-Law No. 16 of 2025 amends the VAT Law itself. The requirement to issue self-invoices under the reverse charge mechanism has been removed. The FTA now has express authority to deny input VAT recovery where a supply is connected to tax evasion and the recipient knew or should have known of the connection.
Corporate tax filings under Federal Decree-Law No. 47 of 2022 continue on schedule. A company with a December 2025 year-end must file and pay by 30 September 2026. The 9% rate and AED 375,000 zero-rate band are unchanged.
E-invoicing is the next major compliance event. Cabinet Decision No. 106 of 2025 introduces penalties for failure to implement the Electronic Invoicing System:
Commercial Companies Law: structural flexibility with new compliance requirements
Federal Decree-Law No. 20 of 2025 amends the Commercial Companies Law (Federal Decree-Law No. 32 of 2021) with effect from 1 January 2026. The changes are significant for corporate structuring, governance, and capital raising.
Onshore LLCs and joint stock companies may now issue multiple classes of shares with different voting, dividend, and liquidation rights. This allows venture capital–style structuring — preferred shares, anti-dilution protections, and differentiated returns — without needing to use an offshore or free zone vehicle.
Drag-along and tag-along rights are now recognised under statute. Previously, these protections existed only if drafted into shareholder agreements, with enforcement depending on contractual interpretation. The statutory framework gives them clearer legal standing.
In-kind capital contributions now require independent valuation by certified valuers, with approval from the competent authority. This tightens governance around non-cash contributions and reduces the risk of disputes over inflated asset values.
Private joint stock companies may now issue securities through private placement, subject to approval from the Securities and Commodities Authority (now reconstituted as the Capital Markets Authority under Federal Decree-Law No. 32 of 2025).
Companies may also transfer their commercial registration between UAE licensing authorities — from one emirate to another, from mainland to free zone, or between free zones — while retaining the same legal entity.
Free zone companies with branches or representative offices operating outside their free zone are now expressly subject to the Commercial Companies Law in addition to their free zone regulations. This resolves a long-standing ambiguity for companies running hybrid onshore-free zone structures.
Non-profit companies are formally recognised for the first time. Surplus must be reinvested rather than distributed to shareholders.
Anti-money laundering: a new law with lower thresholds
Federal Decree-Law No. 10 of 2025 on Anti-Money Laundering, Combating the Financing of Terrorism and Countering Proliferation Financing took effect on 14 October 2025, replacing Federal Law No. 20 of 2018. Its implementing regulations under Cabinet Resolution No. 134 of 2025 came into force on 14 December 2025.
The practical consequences for companies operating in 2026 include a lower awareness threshold for liability — a person or entity may now be held liable if they "reasonably should have known" that funds were connected to criminal conduct, rather than having actual knowledge. Proliferation financing is now a standalone offence on par with money laundering and terrorist financing. Managers of legal entities face personal criminal liability in certain circumstances.
Corporate fines for AML violations can reach AED 50 million. Individual penalties include imprisonment of 5 to 10 years and fines of AED 5 million to AED 50 million for the principal offences.
Companies in financial services, real estate, precious metals, legal and accounting services, and virtual asset services face the most direct impact. All regulated entities must integrate proliferation financing risk into their enterprise-wide risk assessments, customer due diligence, and transaction monitoring.
Emiratisation: higher penalties, higher minimum salary
The Emiratisation framework reaches its 2026 targets this year. Private sector companies with 50 or more employees are required to achieve a 10% Emiratisation rate for skilled positions by end of 2026, having increased at 2% per year since 2022.
The financial penalty for non-compliance has risen to AED 9,000 per month per missing Emirati employee (AED 108,000 annually). For companies with 20 to 49 employees in the 14 targeted sectors, penalties of AED 108,000 apply for failing to meet their 2025 hiring obligations, payable from January 2026.
Separately, MOHRE has raised the minimum monthly salary for Emiratis in the private sector from AED 5,000 to AED 6,000, effective 1 January 2026. New work permits, renewals, and amendments will not be processed below this threshold. Employers with existing Emirati staff below AED 6,000 must adjust contracts by 30 June 2026. From 1 July 2026, non-compliant employees will not count toward Emiratisation quotas, and the company may face a suspension of new work permits.
Fake Emiratisation — hiring UAE nationals without genuine integration — carries fines of AED 20,000 to AED 100,000 per worker under Cabinet Decision No. 43, with over 1,300 establishments already penalised. MOHRE's AI-powered monitoring system continues to detect violations at scale.
Capital markets: a new regulator
Federal Decree-Law No. 32 of 2025 establishes the Capital Markets Authority (CMA), replacing the Securities and Commodities Authority (SCA). Federal Decree-Law No. 33 of 2025 overhauls the regulatory framework for capital markets. Both took effect 1 January 2026, with a one-year transition period for firms regulated under the previous SCA regime.
The CMA has broader supervisory, policy-making, and enforcement powers than the SCA. Its mandate expressly covers virtual assets and has extraterritorial reach. Existing licences and regulatory decisions carry forward only to the extent they are consistent with the new laws. Licensed firms should conduct gap analyses against the new requirements during the transition window.
What companies should do next
The common thread across these changes is that compliance timelines are shorter, penalties are higher, and regulatory monitoring is more automated. Companies should prioritise the following:
Review VAT credit balances immediately. Identify credits by originating tax period and calculate when each five-year window closes. File refund applications before credits expire. The transitional deadline for 2018–2020 credits is 31 December 2026.
Reassess corporate constitutional documents. The new share class, governance, and capital contribution rules create opportunities — but only if constitutional documents are updated to take advantage of them. Companies that do not redraft their articles of association may miss out on the flexibility now available under the amended law.
Update AML compliance programmes. The new law's lower awareness threshold, expanded offences, and personal liability provisions require a refresh of risk assessments, policies, and training — particularly for companies in financial services, real estate, and professional services.
Confirm Emiratisation compliance. Verify that headcount targets are on track for the 10% threshold. Adjust Emirati salaries to AED 6,000 before 30 June 2026. Budget for the AED 108,000 annual penalty per shortfall if targets are not met.
Prepare for e-invoicing. Begin evaluating approved systems and service providers now, even though mandatory compliance for most businesses will not begin until 2027.
This article reflects the position under UAE federal law as at February 2026. Implementing regulations, executive decisions, and sector-specific guidance continue to be issued. Companies should monitor developments through the relevant authority — FTA, MOHRE, CMA, or supervisory body — and seek legal advice tailored to their structure and sector.
Related: What the 2026 UAE Tax Changes Mean for Your Business · How to Prepare Transfer Pricing Documentation for the UAE FTA · Employment Contract Drafting Requirements in UAE · Company Registration in Dubai
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