The UAE has reshaped its approach to corporate transparency over the past five years. It has adopted key international frameworks, brought disclosure rules into line with OECD expectations, and pushed through reforms that move it away from the old offshore model. These shifts affect how UAE structures are used for holding assets and running cross-border businesses.
For investors, families and business owners, this raises new questions. What can you still do with a UAE entity? What has changed behind the scenes? And how do you balance compliance with operational needs?
A shift in policy and practice
The UAE’s removal from the FATF grey list in 2024 followed a wide set of updates, including tighter ownership reporting and greater cooperation with international tax authorities. These steps were part of a broader move to keep treaty benefits in place and maintain access to global capital.
Since 2020, key measures have included UBO registration, economic substance reporting, and participation in the OECD’s Common Reporting Standard. These now form the baseline for most UAE structures. The old assumptions about limited disclosure or anonymous control no longer apply.
UBO rules and what they require
Cabinet Resolution No. 58 of 2020 requires all UAE companies to declare their beneficial owners. That means identifying the individual who ultimately controls or benefits from the entity, typically someone holding 25 percent or more of the shares or voting rights. If no one meets that threshold, the most senior manager is named instead.
This applies across all jurisdictions, including free zones and offshore centres like RAK ICC and JAFZA Offshore. Each company must keep an internal register, submit it to the relevant authority, and update it within 15 days if ownership changes. Penalties apply for late or false reporting.
For most investors, this is now a basic compliance step. Ownership chains must be clear, and filings must match real control. Reviewing these details is part of ongoing risk management.
Reassessing offshore structures
Holding companies once offered a low-friction option for asset protection, trading or real estate. But that model has changed. Today, even offshore jurisdictions require full UBO disclosure and reporting under the Common Reporting Standard, and may still expect companies to demonstrate substance in line with international norms
Regulatory exceptions have narrowed, and filings are checked more closely. At the same time, onshore structures are gaining ground. Mainland entities and free zone companies can support day-to-day operations, contracts, staffing and VAT registration, which helps demonstrate substance. This is useful not just for compliance, but also for bank account opening and treaty eligibility.
Privacy still matters, but so does function. It’s worth weighing up whether legacy offshore setups still serve their needs, or if more flexible onshore options now make better sense.
When onshore makes more sense
There are several scenarios where onshore UAE entities offer clear advantages. Mainland companies licensed through the Department of Economy and Tourism (DET) in Dubai, for example, provide full access to the UAE market and no restrictions on doing business locally. This makes them a strong fit for operating businesses with customers, contracts or physical presence in the Emirates.
Free zones are another alternative. They offers sector-specific benefits, lower setup costs in some cases, and the ability to sponsor visas. They also offer structured environments for tech, trading, finance and professional services businesses. For international investors, free zone entities are often used in holding structures alongside mainland operating arms.
In both cases, the ability to demonstrate real activity, through lease agreements, payroll, utility bills and other records, helps meet economic substance and banking requirements. For tax treaty purposes, this can also support claims of residency and help unlock double tax relief or exemptions.
Common use cases and structuring models
Many international investors now adopt hybrid structures that blend offshore holding companies with onshore subsidiaries. For instance, a RAK ICC company may hold shares in a free zone or mainland business, with clear records showing ownership, governance, and functional purpose. This allows for easier repatriation of profits, tax efficiency, and a clearer reporting trail under CRS.
Others opt for fully onshore vehicles from the outset, especially when managing regional operations or seeking long-term residency. In such cases, choosing the right licence activity, ensuring the company is fully registered for VAT, and setting up formal employment contracts are all part of the compliance setup. These elements are often overlooked but are increasingly being reviewed by local authorities and foreign tax offices alike.
For family wealth planning, regulated foundation structures available in ADGM and DIFC are also gaining ground. These offer managed governance, succession planning, and UBO transparency in a format that aligns with international reporting frameworks. They are frequently used to hold UAE-based real estate or operating businesses, while maintaining controlled family oversight.
Cross-border reporting through CRS
The UAE signed up to the Common Reporting Standard in 2018. Banks and investment firms must now identify the tax residency of account holders, collect due diligence data and submit it to the Federal Tax Authority for onward exchange.
This covers both individuals and corporate account holders. Reportable information includes account balances, interest, dividends and capital gains. The goal is to allow tax authorities in other countries to track undeclared income or holdings.
This has reduced the privacy of international financial flows. Data once held locally now circulates across borders. Investors using UAE structures must ensure consistency between declared ownership, substance reporting and account-level information.
The role of substance in today’s compliance framework
While the Economic Substance Regulations (ESR) are no longer a statutory compliance requirement for UAE entities, they previously applied to activities such as asset holding, financing, and service centres. The shift away from mandatory ESR reporting reflects broader changes in how the UAE aligns with global transparency standards.
Even though ESR is no longer enforced as a filing obligation, its underlying principles, such as demonstrating real activity and governance, remain relevant in assessing substance and tax residency, especially for cross-border structures.
UBO and CRS rules form the core of the current compliance framework. Any inconsistencies between declared ownership, substance, and financial reporting can raise red flags, so it remains essential to keep records aligned and up to date.
How to move forward
Anonymous structures with limited oversight are no longer an option. UAE entities are expected to meet transparency standards and provide evidence of real control and purpose. Investors must treat disclosure, record-keeping and substance as part of the setup, not as a separate afterthought.
For those still relying on older structures, this may be the time to reassess. Compliance now shapes how useful a structure is in practice, how it is viewed by regulators and banks, and whether it meets the needs it was set up to serve.
