Moving a Business to the UAE | Ownership and Accounting Changes

Relocating to the UAE requires a strategic reset of ownership and accounting, removing legacy sponsors, realigning shareholding, resetting capital (as low as AED 1,000–50,000), adopting IFRS balance sheets, and ensuring transfer pricing compliance under the 9% corporate tax regime. Avoid costly missteps such as replicating old structures. With Arnifi, migration timelines are reduced by up to 50%, enabling faster, scalable growth in the UAE.

Introduction

Moving a business to the UAE requires far more than a change of address. It involves carefully re-engineering ownership structures and accounting frameworks to comply with UAE commercial laws, free zone regulations, and the 9% corporate tax regime, while fully leveraging advantages such as 100% foreign ownership and the absence of personal income tax. Founders transitioning from jurisdictions like India, the UK, or Singapore often underestimate these structural differences, which can lead to audit exposures, banking friction, and delayed expansion. This in-depth guide breaks down the underlying mechanics, highlights real-world scenarios, and outlines practical strategies to restructure effectively, remain compliant, and unlock sustainable growth in the UAE.

Ownership Structure Changes

Foreign businesses moving to the UAE often need to restructure shareholding to remove legacy local sponsors, which are no longer required following the 2021 reforms that permit 100% foreign ownership across most commercial and industrial mainland activities, subject to DED activity classifications and regulatory approvals. This process typically involves amending the Memorandum of Association to reflect the revised shareholder structure, obtaining No Objection Certificates (NOC) from existing stakeholders, and obtaining approvals from the DED or the relevant free zone authority. When managed correctly, the transition is usually completed within two to four weeks.

Many companies also adopt a holding and operating company model to optimise risk and scalability. A holding company can centralise ownership of intellectual property, real estate, or subsidiary stakes, insulating valuable assets from day-to-day operating risks. In contrast, the operating entity, such as an LLC or Free Zone Establishment, focuses solely on commercial activities like trading or service delivery. For example, a technology business may house its IP within a DMCC holding company and run operations through a mainland LLC, allowing for consolidated IFRS reporting and a cleaner structure for future investment rounds or mergers and acquisitions.

Share Capital and Valuation Reset

In the UAE, a clear distinction is maintained between issued capital, which represents the share capital stated in the Memorandum of Association, and paid-up capital, which reflects the actual cash or assets contributed and must be supported by bank certificates during audits. Many free zones, such as IFZA and RAKEZ, permit relatively low paid-up capital thresholds, typically ranging from AED 1,000 to AED 50,000, while mainland companies link capital levels more closely to the nature and scale of licensed activities. Any mismatch between declared capital and financial reality can attract scrutiny, particularly during FTA corporate tax filings.

When a business migrates to the UAE, historical foreign capital does not automatically transfer into the new entity. Instead, the newly incorporated company declares fresh issued capital on its trade licence, while some authorities do not require immediate proof at incorporation, any paid-up capital recorded in the accounts must later be fully supported by bank remittance evidence and audit confirmation. However, auditors will later require clear transactional evidence for any paid-up capital recorded in the accounts. For example, an Indian private limited company with INR 10 crore in historical share capital may reset its structure in the UAE with AED 300,000 as issued and paid-up capital. While this avoids legacy valuation complications, any assets or funds introduced must be transferred at fair market value to ensure they are not reclassified by the FTA  as undeclared capital contributions.

Accounting Transition Challenges

At the point of migration, companies must prepare an opening balance sheet fully aligned with IFRS, restating assets and liabilities from the previous GAAP to their fair values. This process includes reassessing inventory under IAS 2 and re-measuring receivables in line with IFRS 9’s expected credit loss framework. UAE transitional tax provisions under Cabinet Decision No. 116/2023 may permit a step-up in tax basis for qualifying assets, easing future tax exposure. However, certain items, particularly internally generated intangibles and goodwill, are typically reset to nil, which can limit deductible expenses in the first year post-migration.

Revenue recognition also undergoes a fundamental shift under IFRS 15, moving from traditional accrual concepts to a contract-driven approach. Businesses must identify distinct performance obligations and allocate transaction prices accordingly, a change that is especially significant for SaaS, consulting, and project-based models. For example, a construction company relocating to the UAE partway through a project may be required to defer previously accrued but unbilled revenue until the contractual milestones are achieved, which affects the profit recognition timing as well as transfer pricing and tax documentation.

Tax Residency and Profit Attribution

UAE corporate tax residency is established when an entity is incorporated in the UAE or when its place of effective management and control is exercised here, bringing worldwide taxable income above AED 375,000 within the 9% corporate tax regime effective from June 2023. Businesses relocating from other jurisdictions must carefully assess dual-residency exposure under OECD tie-breaker rules. For instance, a Singapore-headquartered company that appoints UAE-based directors and shifts strategic decision-making to the UAE may become UAE-resident, enabling tax-efficient profit repatriation while potentially triggering exit or termination of taxes in the home country.

Taxable profits are computed on an accrual basis, with strict transfer pricing requirements for related-party transactions. Dealings exceeding AED 4 million require formal disclosure, while transactions above AED 40 million mandate full transfer pricing documentation, including master and local files. Common practices include benchmarking intercompany services on a cost-plus margin of 5–10% to demonstrate arm’s-length pricing. Failure to comply with Federal Tax Authority requirements can result in significant penalties, including fines of up to 2% of annual turnover, making early structuring and documentation essential.

Common Founder Mistakes

Many founders replicate their legacy foreign structures without adapting them to the UAE framework, such as continuing with 51% local sponsor arrangements despite reforms allowing 100% foreign ownership. This hesitation often postpones sponsor buyouts and unnecessarily raises setup and restructuring costs by 20–30%. In addition, poorly drafted MOA provisions on share transfers or powers of attorney frequently stall bank account openings and visa processing.

Exit planning is also commonly overlooked. Combining holding and operating entities can leave core assets exposed to creditor claims and discourage venture capital investors, who prioritise clean, transparent capitalized tables. At the same time, insufficient attention to bank KYC requirements for multi-entity structures regularly results in post-incorporation delays of three to six months, slowing operations and growth.

Conclusion

Moving a business to the UAE is far more than a change of registration. It requires a deliberate re-engineering of ownership, accounting, and tax structures to support sustainable growth in one of the world’s most competitive markets. Arnifi leads this transformation with end-to-end restructuring, from precise MOA amendments executed through the UAE’s digital E-Channel systems to IFRS-compliant opening balance sheets that seamlessly transition legacy assets into the local regulatory framework.

Arnifi also designs tailored transfer pricing policies for sectors such as SaaS, technology, and clean energy, ensuring arm’s-length compliance while optimising cross-border profit allocation and reducing exposure to FTA audits. With experience across 47 jurisdictions and a client base of 250+ companies from Indian SaaS startups to UK professional services firms, Arnifi shortens migration timelines by up to 50%, preventing costly delays in banking, visas, and operational readiness.

Founders choose Arnifi over generic setup providers because the approach is built with the future in mind. Exit planning, ESOP readiness, and scalable holding structures are embedded from day one, whether operating in DMCC, other free zones, or mainland Dubai. By partnering with Arnifi, businesses convert relocation complexity into strategic advantage, ensuring their UAE entity operates efficiently under 100% foreign ownership and the 9% corporate tax regime.