Buy an Existing Business in Dubai: Legal Checklist

If you want to buy an existing business in Dubai, the single most important decision is whether you purchase the shares in the licensed company or only its assets, because that choice determines which liabilities, contracts, and tax positions follow you after completion. Everything else in the transaction, from notarisation to VAT treatment to employee transfers, flows from that first fork in the road. This guide walks through the stage-by-stage legal checklist a buyer needs before signing anything.

Share Purchase vs Asset Purchase: The Decision That Shapes Everything

Before you look at price or premises, decide whether you are buying the company itself or cherry-picking its assets. This decision affects the trade licence, the liabilities you inherit, the tax treatment, and how long completion takes. Because the two structures diverge at almost every later stage, getting this right early avoids costly restructuring later.

In a share purchase, you acquire the membership interests or shares in the existing licensed entity. The licence number, bank accounts, contracts, and MOHRE quota generally continue uninterrupted. However, you also inherit every liability sitting inside that entity, including undisclosed debts, historic tax exposure, and pending litigation.

In an asset purchase, you select specific assets: stock, equipment, intellectual property, key contracts, and sometimes licence-linked goodwill. You typically need a new or amended licence in your name, and staff require fresh employment contracts. In exchange, you only take on the liabilities you expressly agree to assume, which is why many buyers prefer this route when the target’s financial history is uncertain.

Factor	Share purchase (buy the company)	Asset purchase (buy the business)
What you acquire	The membership interests / shares in the existing licensed entity	Selected assets: licence-linked goodwill, stock, equipment, contracts, IP
Liabilities	You inherit everything: debts, tax exposure, employee claims, litigation	You take only the liabilities you expressly agree to assume
Trade licence	Licence and licence number survive; ownership is amended on the register	Usually needs a new or amended licence in the buyer’s name
Governing law step	Notarised assignment of membership interest plus entry in the commercial register (Art. 79, Decree-Law 32/2021)	Asset transfer agreements; no pre-emption notice needed
Other shareholders	30-day pre-emption right must be cleared (Art. 80, Decree-Law 32/2021)	Not applicable
VAT	Transfer of shares is generally outside the scope of VAT	Can fall outside VAT as a transfer of a going concern under Art. 7(2), VAT Decree-Law 8/2017
Corporate Tax	Historic Corporate Tax positions and any FTA exposure stay with the entity	Business Restructuring Relief under Art. 27 may defer gains, with a two-year clawback
Employees	Contracts and MOHRE quota continue with the same establishment	Staff need new employment contracts and MOHRE Transfer Work Permits
Best for	Buyers who want continuity of licence, contracts, bank accounts and visas	Buyers who want a clean start and no inherited history

Share Transfer Mechanics: Article 79, Article 80, and the 2025 Amendments

If you choose a share deal, the mechanics are set by federal law rather than by negotiation alone. Understanding these steps in advance prevents delays once you have already agreed commercial terms.

Article 79: Notarisation and the Commercial Register

Under Article 79 of Federal Decree-Law No. 32 of 2021 on Commercial Companies, an LLC partner may assign their membership interest to another partner or a third party, but the assignment must follow an “official authenticated document” consistent with the Memorandum of Association. Importantly, the assignment “shall not be enforceable towards the Company or third parties except from the date of its entry in the commercial register with the Competent Authority.” In other words, a signed sale agreement alone does not transfer ownership; notarisation and registration are what make the transfer legally effective.

Article 80: The 30-Day Pre-Emption Window

Before you can register the transfer, existing partners may have a pre-emptive right to buy the interest first. Article 80 requires the selling partner to notify the other partners, through the company manager, of the buyer’s identity and the agreed terms. Each partner then has “thirty (30) days from the date of notifying the manager of the agreed-upon price” to redeem the interest instead. If more than one partner exercises this right, Article 80(3) divides the available interest “pro rata to their respective contributions in the capital.” Once the window lapses without any partner stepping in, the seller is free to complete the sale.

What Changed Under the 2025 Amendments

Federal Decree-Law No. 20 of 2025 amended 15 articles of the Commercial Companies Law, and several changes directly affect acquisitions. Notably, the amendments regulate drag-along and tag-along rights, allowing a majority shareholder to require minority shareholders to join a sale “under the same terms.” In addition, the lock-up period on disposal of shares in Private Joint Stock Companies dropped from two years to one year, and a new article now permits transferring a company’s registration between emirates and free zones “without the need for re-establishment or liquidation.” As of 2026, buyers should check whether the target has already been restructured under these provisions before assuming the older rules still apply. Full details sit on the Ministry of Economy and Tourism’s amendment summary and the companies legislation portal.

Tax Due Diligence Before You Buy an Existing Business in Dubai

Tax exposure is one of the hardest things to spot from the outside, so due diligence has to go beyond the licence and the financial statements. Because UAE Corporate Tax and VAT rules interact differently depending on deal structure, this section deserves its own checklist.

Corporate Tax Status and Filing History

UAE Corporate Tax operates under Federal Decree-Law No. 47 of 2022, applying to financial years beginning on or after 1 June 2023. Before completion, confirm the target’s Corporate Tax registration status and filing history through the Federal Tax Authority’s EmaraTax registration portal. A Qualifying Free Zone Person may benefit from a 0% rate on Qualifying Income, subject to eligibility, so it is worth verifying whether the target actually meets those conditions rather than assuming it does.

Business Restructuring Relief and the Two-Year Clawback

If the seller structures the deal as an asset transfer, they may elect for Business Restructuring Relief under Article 27 of the Corporate Tax Law, letting the transferor move the business without triggering a taxable gain or loss. This relief, implemented through Ministerial Decision No. 133 of 2023, has no ownership condition, so it can apply even between unrelated parties. However, if either party disposes of its ownership interest, or the business is transferred again, within two years of the original transfer, the relief is clawed back. The transaction is then treated as if it occurred at Market Value on the original date, and the resulting gain is added back to the transferor’s taxable income. The FTA’s Business Restructuring Relief guide sets out the mechanics in full, and any buyer relying on this relief should build the two-year condition into their own exit planning.

VAT: Transfer of a Going Concern

Article 7(2) of Federal Decree-Law No. 8 of 2017 on VAT excludes “the transfer of whole or an independent part of a Business from a Person to a Taxable Person for the purposes of continuing the Business” from the definition of a taxable supply. In practice, this means a qualifying asset sale can fall entirely outside VAT, provided the buyer continues the same business activity as a going concern. The FTA’s own public clarification on transfers of a business as a going concern spells out the conditions in more detail, and it is worth reviewing before assuming an exemption applies.

Employees, MOHRE, and Post-Completion Filings

Once the ownership question is settled, attention turns to the people running the business day to day. This stage is often underestimated, yet it can delay completion just as much as the corporate paperwork.

Transfer Work Permits

Where staff move to a new employing entity, as typically happens in an asset deal, MOHRE’s Transfer Work Permit process applies. The employee must be at least 18 years old and hold no active work permit elsewhere, the role must be compatible with the new establishment’s licensed activities, and the establishment “must maintain a valid license without any registered violations.” Importantly, the application must be submitted within 90 days of cancelling the previous permit. Annual fees range from AED 250 for Category 1 establishments to AED 1,200 for Category 2 and AED 3,450 for Category 3, with processing generally taking two working days.

Verifying the Licence Before You Sign

Before committing to any deal, confirm the seller’s trade licence, registered trade name, and approved activities through the UAE’s licence inquiry service. This is the first-line check on whether the business is legally entitled to operate as described. In addition, the National Economic Register lets you search trade name availability and pull instant information on existing companies across the nine licensing authorities in the UAE.

Foreign Ownership Considerations

Federal Decree-Law No. 32 of 2021 permits 100% foreign ownership of mainland companies for most activities, meaning you generally do not need a local partner to complete the purchase. That said, authorities can designate certain activities as having “strategic impact,” which may bring ownership restrictions, and full foreign ownership remains prohibited in sectors such as security, telecommunications, financial institutions, and commercial agencies. Consult the UAE government’s foreign ownership guidance before assuming your target sector qualifies.

Post-Completion Filings

After signing, the work is not finished. You still need to update the commercial register entry, notify the relevant free zone authority or DED if applicable, amend UBO records, update bank mandates and signatories, and confirm the Corporate Tax registration reflects the new ownership. Because these filings often carry their own deadlines, it helps to map them against a single completion timetable rather than handling them ad hoc. Firms experienced in mergers and acquisitions typically run this as a checklist alongside the main transaction, supported by proper legal due diligence earlier in the process.

Frequently Asked Questions

Can a foreigner buy an existing business in Dubai outright?

Yes, in most cases a foreign buyer can acquire 100% of a mainland company under Federal Decree-Law No. 32 of 2021, without needing a local partner. However, activities designated as having “strategic impact,” along with sectors such as security, telecommunications, and financial institutions, may carry ownership restrictions, so it is worth confirming your target’s activity code first.

How long does it take to transfer ownership of a Dubai company?

There is no fixed statutory timeline, and it depends heavily on structure and whether other partners exercise their pre-emption rights. In a share deal, the 30-day pre-emption window under Article 80 must run its course before the notarised assignment can be entered in the commercial register under Article 79, and asset deals add their own licensing and MOHRE steps.

Do the other shareholders have to approve the sale?

Not exactly approve, but they do get a right of first refusal. Article 80 requires the seller to notify other LLC partners of the buyer’s identity and price through the company manager, giving them 30 days to match the deal before it can proceed to a third party.

Is a share purchase agreement enough, or does it have to be notarised?

A signed share purchase agreement alone is not enough to complete a legal transfer. Article 79 requires the assignment to be made through an “official authenticated document” and entered in the commercial register before it becomes enforceable against the company or third parties.

Do I have to pay VAT when I buy a business in Dubai?

Not necessarily, if the transaction qualifies as a transfer of a going concern. Article 7(2) of the VAT Decree-Law excludes such transfers from the definition of a taxable supply, though the FTA’s public clarification sets specific conditions that must be met for the exemption to apply.

What happens to the existing employees and their visas?

In a share purchase, employment contracts and the MOHRE quota generally continue with the same establishment since the legal entity does not change. In an asset purchase, staff typically need new employment contracts and MOHRE Transfer Work Permits, which must be applied for within 90 days of cancelling their previous permit.

Can I keep the existing trade licence and licence number?

Only in a share purchase, where the licence and licence number generally survive and ownership is simply amended on the register. In an asset purchase, the buyer usually needs a new or amended licence in their own name.

What are the biggest hidden liabilities buyers find in Dubai acquisitions?

The most common surprises are undisclosed debts, unresolved employee claims, and historic Corporate Tax or VAT exposure sitting inside the target entity. Because a share purchase transfers the whole entity “as is,” thorough legal due diligence before signing is the main safeguard against inheriting problems you did not price into the deal.

Disclaimer: This article is for general informational purposes only and does not constitute legal, tax, or regulatory advice. Rules and fees in the UAE change frequently. Before acting on anything you read here, speak to a qualified advisor — we are happy to help.