The UAE is becoming a popular choice for global businesses looking to establish corporate structures that provide a base for investing in multiple countries.
For example, a business established in Dubai or Abu Dhabi could have manufacturing operations in India, joint ventures in Saudi Arabia, shareholdings in a logistics company in Africa and investments in other projects across the Middle East. Having a corporate structure in the UAE provides a central point for ownership, funding and control.
This is particularly useful for family businesses, private investors, multinational corporations, private equity firms and entrepreneurs. The UAE has several advantages for investment, including a strong financial framework, international connections, established corporate laws and a network of bilateral agreements.
However, what is important is ensuring that your corporate structure is designed to accommodate different legal systems. This can help protect your assets and facilitate the movement of funds without creating unnecessary legal or regulatory complications.
Selecting the Right Corporate Structure
There are several corporate investment structures available in the UAE. These include:
Holding Company
This is often used by groups with interests in multiple countries. A holding company owns shares in subsidiary companies or other businesses. It receives dividends and manages investments within the group. This can help with succession planning, changes in ownership and the sale of individual businesses.
If you have operations in multiple countries, a holding company can help separate ownership from the activities of your subsidiaries. If there is an issue in one of your operating businesses, it will not necessarily affect your other businesses, provided they are kept legally and financially separate. However, guarantees and other agreements can affect the extent of this protection.
Special Purpose Vehicles (SPVs)
These are generally established to hold a specific asset, investment, project or financing arrangement. An investor may wish to acquire a commercial property and hold it through an SPV. These vehicles can also be used for joint ventures, acquisitions and project financing.
The key benefit is risk segregation. Ownership, obligations and funding can be kept within a single legal structure. This makes it easier to identify the assets and liabilities associated with a particular transaction. An SPV does not automatically protect you from liability. Guarantees, cross-collateralisation and a failure to keep funds separate can affect the level of protection available.
Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC) have their own structures for this purpose. ADGM SPVs are passive holding vehicles used to separate financial and legal risks. They cannot be used to conduct ordinary operational activities or employ people.
ADGM removed its previous UAE and GCC nexus requirement for SPVs in September 2026, allowing international investors to establish these vehicles without demonstrating the former regional connection. However, non-exempt SPVs must still appoint an ADGM-licensed Company Service Provider to manage incorporation and ongoing statutory requirements.
DIFC also updated its Prescribed Company regime, opening up the structure to a wider range of applicants. The revised regulations came into force on July 24, 2026, removing the previous eligibility requirements. Most companies using this structure will need to appoint a DIFC-licensed Corporate Services Provider to manage their administration, although exemptions apply. Prescribed Companies are passive holding vehicles rather than operating businesses.
These developments give investors greater flexibility, but they will need to consider their investment objectives, governance requirements, ownership arrangements and costs when choosing between ADGM, DIFC and other jurisdictions in the UAE.
Regional Subsidiaries
Once you have decided on your parent or holding company, you will need to consider how you intend to establish an interest in individual countries.
Setting up subsidiaries can be a good option if you want to operate in another country, employ people, enter into commercial agreements and obtain local licences. This creates a separate legal entity in the country of incorporation while allowing the UAE parent company to retain ownership.
This can be particularly useful if you are looking to expand into GCC countries. Your UAE parent company may have separate subsidiaries in Saudi Arabia, Oman or Bahrain. Each will operate under the licensing, employment, tax and commercial regulations of the country in which it is established.
The same approach can be adopted when investing in Africa or South Asia. However, some countries impose restrictions on foreign ownership in certain sectors, require local participation or demand additional approvals from foreign investors. Some also have regulations governing the repatriation of dividends, interest, royalties and sale proceeds.
India has specific regulations governing foreign direct investment. These include sectoral limits, government approval requirements for certain activities and reporting obligations under its foreign exchange regulations. Having a holding company in the UAE does not remove these requirements. You will need to ensure that your investment is structured in accordance with the regulations governing the Indian entity and the movement of funds.
There has also been a significant change to India's foreign investment policy in 2026. Under Press Note 2 of 2026 and the subsequent amendment to the Foreign Exchange Management (Non-debt Instruments) Rules, non-controlling beneficial ownership of up to 10 per cent by investors from countries sharing a land border with India can qualify for the automatic route, subject to applicable conditions, sectoral caps and other requirements. This is a relaxation of the earlier approval framework and may be relevant to international investment structures involving multiple jurisdictions.
You will also want to consider whether to establish a branch, subsidiary or joint venture. Branches are generally treated as extensions of the parent company, whereas subsidiaries are separate legal entities. This distinction can affect liability, taxation, licensing and commercial obligations.
Joint Ventures and Protecting Your Investment
Investing in regional markets can be beneficial when you have an established local partner. Such a partner may provide market knowledge, distribution channels, an understanding of local regulations, an established customer base and access to projects.
Having a holding company in the UAE can provide an effective structure for investing in a joint venture. This could involve direct ownership of shares in an overseas company or investment through an intermediary subsidiary.
However, you will need to ensure that the company's constitutional documents and shareholders' agreement reflect the agreed control and economic rights. These should address matters such as:
- Board representation
- Reserved matters
- Capital contributions
- Dividend distribution
- Restrictions on share transfers
- Pre-emption rights
- Protection against dilution
- Deadlock provisions
If your governance documents are not properly drafted, a shareholder may have limited influence over the company's management despite holding substantial economic rights. Similarly, a minority investor may find it difficult to exit an investment if the agreement does not provide practical exit mechanisms.
You will also want to consider dispute resolution. This includes deciding which governing law will apply, which courts or arbitration tribunals will have jurisdiction, whether any resulting judgment or award can be enforced and where the relevant assets are located.
The UAE has an established international arbitration framework, making it an attractive option for regional commercial agreements. The UAE is also a party to the New York Convention, which provides a framework for the recognition and enforcement of foreign arbitral awards. However, choosing the UAE as the seat of arbitration does not automatically guarantee that an award will be recognised and enforced in another country. The laws and enforcement procedures of the country where recognition or enforcement is sought will also apply.
Funding Your Expansion From the UAE
Your investment platform may also be used to raise and deploy funds. A UAE holding company can provide equity to subsidiaries, extend shareholder loans or arrange structured financing. If multiple investors are involved, a dedicated SPV can be established to hold their collective investment.
For larger transactions, the funding structure may combine equity, debt, shareholder funding and third-party financing. Separating the borrowing entity can help lenders identify the assets, cash flows and security available for a particular transaction.
However, you will need to ensure that your documents clearly outline the relationship between the entities. Loan agreements should include details of repayment schedules, interest, default provisions and security arrangements. Intercompany funding also requires careful consideration, as transactions between related entities must comply with applicable transfer pricing requirements, including the arm's-length principle.
If your UAE entity is raising funds from external investors or providing financial services to third parties, additional regulatory requirements may need to be considered. Activities such as managing investments, arranging investments, issuing securities or providing other regulated financial services may require authorisation. Simply holding a licence to operate as a holding company does not mean that you can provide regulated financial services.
Corporate Tax and Substance
Corporate tax is an important consideration when structuring cross-border investments. However, you should not assume that all holding companies or free zone entities will be exempt from tax.
The UAE has a corporate tax regime that applies to UAE companies and other taxable persons, including free zone entities. The standard rate is 9 per cent on taxable income exceeding Dh375,000. However, Qualifying Free Zone Persons may benefit from a 0 per cent rate on qualifying income.
To qualify for this treatment, a free zone company must meet several requirements, including maintaining adequate substance in the UAE, deriving qualifying income, complying with transfer pricing rules and meeting other prescribed conditions. Non-qualifying income may be taxed at the standard rate.
Another important consideration is the participation exemption. Where an investor holds qualifying shares in UAE or overseas subsidiaries, dividends and capital gains may be exempt from corporate tax. Generally, this requires a minimum shareholding of 5 per cent, held for an uninterrupted period of at least 12 months. Alternatively, the minimum ownership requirement may be met where the acquisition cost of the shareholding is at least Dh4 million. Additional conditions relating to the subsidiary's taxation, assets and the investor's entitlement to profits and liquidation proceeds will also apply.
For groups operating in multiple countries, transfer pricing must be considered. Transactions between related companies, including management fees, royalties, interest payments, service charges and loans, will generally need to be conducted on an arm's-length basis. The Federal Tax Authority may request supporting evidence, while certain businesses will be required to maintain master and local files, depending on the applicable thresholds.
The UAE has an extensive network of double taxation agreements, which can help reduce withholding taxes and prevent the same income from being taxed twice. However, the availability of treaty benefits will depend on the individual agreement, the type of income, residency requirements and applicable anti-abuse provisions. Simply incorporating an intermediary company in the UAE does not automatically establish entitlement to benefits under these treaties.
Governance, Compliance and Risk
Your investment structure will only be as effective as its governance arrangements. Each entity will need to maintain proper corporate records, accounting systems, beneficial ownership information and the necessary licences.
You will also need to consider what happens if there are changes in ownership, management or control. What appears to be a straightforward transaction from the UAE side may trigger approval requirements, tax consequences or reporting obligations in the country where the underlying asset or subsidiary is located.
Banking arrangements also require careful attention. Banks will often ask questions about the source of funds, beneficial ownership, commercial purpose and expected flow of funds. If your holding company does not have a clear investment rationale or cannot provide credible supporting documentation, you may encounter difficulties opening accounts or transferring funds.
Within family-owned groups, succession planning is another important consideration. Using a holding company, foundation and carefully drafted shareholders' agreements can help ensure that ownership is transferred smoothly between generations. These arrangements can also clarify how family members exercise control and protect the business from fragmentation. The appropriate structure will depend on the family's assets, residency, applicable inheritance laws and the jurisdictions involved.
Using the UAE as an Investment Destination
The UAE is becoming an attractive investment destination because it allows businesses to connect their capital with opportunities across multiple markets. Through appropriate corporate structures, investors can separate ownership from operations, protect individual investments, establish subsidiaries and maintain a central point for funding and management.
With the expansion of the ADGM and DIFC regimes, together with the corporate tax framework and double taxation agreements, the UAE offers a range of options for businesses and investors.
However, selecting an investment structure is not simply a matter of choosing an incorporation package. You need to consider where your assets are located, where investment decisions are made, how profits will be distributed, which regulations apply to the underlying businesses and how you intend to realise your investment.
For companies planning to expand into the GCC, Africa and South Asia, the UAE may offer more than just another location from which to operate a business. It can serve as the legal and financial centre for an entire regional investment portfolio. With appropriate structuring and genuine commercial substance, this can offer considerably more than a convenient corporate address.
Dr. Sunil Ambalavelil is the Global Executive Chairman of Kaden Boriss, an international law firm specialising in franchise and business agreements. A seasoned legal adviser, he has advised and supported the international growth of numerous global brands, helping them navigate the legal complexities of cross-border expansion.
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