Despite recent regional geopolitical headwinds, the opportunities for UK businesses in the Middle East remain compelling – but understanding the underlying dynamics of the UAE market and undertaking rigorous forward planning is more critical than ever if those businesses are to thrive, writes Tommaso Barindelli, Director at global service provider Hawksford…
Prior to the recent conflict in the Middle East, the UAE had made great strides to position itself as a market of opportunity and a springboard for ambitious companies to pursue their global growth objectives – and this work has not been undone.
At an economic level, the UAE has made a concerted effort to move away from a focus on fossil fuels to encompass a greater diversity of sectors from fintech and renewables to life sciences. Earlier this year, a report highlighted that at the end of 2025 the UAE’s non-oil foreign trade exceeded one trillion dollars for the first time – a 25% increase over the previous year (Khaleej Times).
At a regulatory and practical level too, the UAE has successfully enhanced its infrastructure, tax regime, and business-friendly environment, while also developing a deep and diverse pool of talent.
In 2024, for example, the FATF removed the UAE from its ‘grey list’ of high-risk countries and in 2025 the EU followed suit, recognising its progress in introducing measures to tackle money laundering. Meanwhile trade agreements like the landmark UK-Gulf Cooperation Council Free Trade Agreement, agreed in May 2026, have the potential to increase UK trade with the GCC by at least 16% (GovUK).
As a result, UK businesses are continuing to look at the UAE as an attractive hub for supporting their international growth plans. In the first quarter of 2026 alone, Dubai attracted more than 560 new British companies, bringing the total number of British businesses registered with the Dubai Chamber to 10,334 – compared to 2,402 at the end of 2020 (British Chamber of Commers Dubai).
Success is not guaranteed though and, particularly against a persistent complex geopolitical backdrop, there are a number of considerations for UK businesses, if they are to realise their ambitions through the UAE.
Clarifying purpose
When it comes to setting out a strategy involving the UAE, a useful place to start is with a clear ‘purpose test’.
Company structures in the UAE differ significantly depending on whether the business intends to trade internationally, sell within the UAE, establish a regional headquarters, or operate a holding or special purpose vehicle. Clarity around what the business wants to achieve is critical in selecting the right structure from the outset.
The next step is selecting the right jurisdictional ‘operating envelope’. Free zones (more on these below) are highly efficient for international-facing activities, while mainland structures provide broader access to the domestic UAE market and eligibility for government contracts. In some cases, dual licensing can allow a free-zone company to operate beyond the zone.
Businesses should also avoid focusing solely on speed of set-up. While incorporation can be quick, long-term costs and complexity often arise in areas such as banking, KYC, and visa and office quotas, as well as ongoing compliance obligations. Taking a longer-term view at the outset can prevent costly restructuring later.
Free zones
As alluded to above, the ongoing expansion of free zones across the UAE has increased the region’s appeal by enabling expats and overseas investors to have full ownership of companies. Today, the free-zone landscape is extensive, with more than 40 free zones nationwide and over two dozen in Dubai alone.
However, this evolution has prompted a degree of fragmentation, creating meaningful differences in license scope, facilities, visa allocation ratios and renewal costs. As a result, UK businesses should compare free zones on a like-for-like basis before making a decision.
Many of the UAE’s most effective free zones function as strategic, sector-led hubs. For example, the Dubai Multi Commodities Centre (DMCC) offers more than 1,000 permitted business activities and reports over 25,000 member companies. It operates a fully digital, paperless set-up process, with incorporation typically completed in around two weeks, making it particularly attractive for internationally focused businesses.
Another notable example is the Dubai International Finance Centre (DIFC), widely recognised as the region’s leading financial hub. DIFC specialises in banking, asset management, fintech and insurance, and is home to more than 5,000 active companies, ranging from global financial institutions to start-ups. With a robust legal and regulatory framework based on English common law, and access to a wide pool of skilled professionals and world-class infrastructure, DIFC is especially appealing for businesses seeking to operate in the financial services sector.
It is also essential to understand the limits of onshore trading from a free-zone entity. While free-zone companies can access the UAE market through local agent or distributor arrangements, these structures have implications for revenue recognition, VAT treatment and overall commercial flexibility.
Evolving tax and regulatory landscape
The UAE has focused considerably in recent years on the sophistication of its fiscal and regulatory landscape, and businesses should ensure they are familiar with the new environment.
Corporate tax, for instance, forms a significant part of the UAE’s credibility story. A 9% corporate tax now applies to taxable income above AED 375,000 – a threshold designed to be SME-friendly – and businesses are expected to plan substance, governance and reporting fully from day one.
Meanwhile, compliance expectations have risen materially. Know Your Customer (KYC), Ultimate Beneficial Ownership (UBO) and Anti-Money Laundering (AML) requirements mean clearer ownership records and stronger internal controls, while economic substance requirements ensure tangible evidence of real economic activity.
Encouragingly, the policy environment remains pro-growth. New maritime, digital economy and industrial strategies actively support sectors such as logistics, fintech, advanced manufacturing and clean energy.
Trade and investment structuring also remains a major attraction. The UAE emphasises its network of Double Taxation Avoidance Agreements with 137 countries, alongside significant logistics advantages through the UAE’s ports and airports.
Support
Despite current geopolitical headwinds, the UAE continues to assert itself as a resilient and progressive market that is more than capable of supporting the growth ambitions of UK businesses. More than ever, though, when it comes to expanding into and onward from the UAE, forward planning and getting high quality guidance from experts ‘on the ground’ is absolutely critical.
The environment is attractive but evolving – and global service providers like Hawksford, who are in the region and close to local developments, can now only offer high quality technical advice around entity choice and licensing, as well as governance and compliance but also provide vital local insights, being cognisant of the nuances of the UK and UAE markets.
This article first featured in UAE|UK Emerging Opportunities 2027 – a publication produced by Allurentis Limited in partnership with the UAE-UK Business Council. You can download a copy of the full publication, which explores the dynamic relationship between two highly connected and ambitious markets, here.
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