Free‑Zone and Licensing Reforms

The Ministry of Finance issued Ministerial Decisions No. 229 and 230 of 2025, creating a much clearer tax framework for companies operating in designated free zones.
The regulations define how qualifying activities and economic substance are assessed, ensuring that businesses genuinely operating in free zones can still enjoy 0 % corporate tax.

The reforms also deliver:

• Flexible licences: multiple business activities can now be combined under one licence, reducing costs.
• Faster approvals: paperwork and amendment requests are streamlined across zones.
• Property rights: some free zones, such as the UAQ Free Trade Zone, have agreements allowing their companies to purchase property in Dubai.
• Defined tax rules: clear guidance on which free‑zone entities qualify for the zero‑tax rate improves certainty.

Visa Reform and Talent Mobility

The visa system has also been fine‑tuned for transparency and speed:

• Two‑year visa validity: work and residence visas issued by free zones now last two years instead of three.
• Simpler transfers: moving employees between free zones requires a new application, reducing fraudulent transfers.
• New options for founders and freelancers: investor, start‑up and remote‑work visas are simplified and extended.

These steps emphasise accountability and make it easier for international executives and specialists to relocate, while reducing administrative delays.

Investor Implications

For investors, the benefits are tangible:

• Protection of 0 % tax: defined criteria for qualifying free‑zone persons lower the risk of disqualification.
• Improved credibility: precise licensing improves banking relationships and access to financing.
• Structured economic substance rules: the new framework reduces shell companies and encourages genuine operations.

Tax Procedures and Corporate Tax Amendments (Effective Jan 1 2026)

Two Federal Decree‑Laws issued in late 2025 — Nos. 17 and 16 — overhaul the Tax Procedures Law and VAT Law. The amendments, effective 1 January 2026, aim to reduce disputes and align UAE tax practice with global best practices.

Key Points

1. Five‑Year Statute of Limitations: both taxpayers and the Federal Tax Authority (FTA) now have five years from the end of the relevant tax period to claim refunds or apply credits.
2. Transitional flexibility: businesses with credits that expired before or soon after January 1 2026 have a one‑year period (until Jan 1 2027) to submit refund applications.
3. Audit exceptions: the FTA may audit refund claims submitted in the final year and must complete the audit within two years.
4. Simplified compliance: companies no longer need to self‑issue tax invoices for certain imports, and many errors can be corrected directly on the tax return.
5. FTA binding directions: the FTA has authority to issue official directions on tax interpretation, providing consistency.
6. Research & Development Tax Credit: an expenditure‑based tax credit of 30 % to 50 % on eligible R&D costs will start for periods beginning Jan 1 2026, with potential refunds for companies meeting employment and revenue thresholds.

Business Impact

These changes give companies greater certainty, reduce the risk of retrospective disputes, and encourage innovation investment. The definitive five‑year window for refunds helps executives plan their cash flow and reduces the administrative burden of ongoing credits. The forthcoming R&D tax credit provides a powerful incentive for technology, biotech and manufacturing firms to conduct research within the UAE, particularly when combined with the country’s push for AI and advanced manufacturing.

AI and Energy Infrastructure: Building the Next Generation Economy

While policy reforms create legal certainty, the UAE is simultaneously investing heavily in AI infrastructure and energy projects, recognising that the data economy requires new sources of power and efficiency.

Energy Efficiency Through AI

At Abu Dhabi Finance Week in December 2025, Energy Minister Suhail Al Mazrouei highlighted how artificial intelligence is being deployed to manage energy consumption. According to the minister:

• AI has reduced electricity and water use in federal buildings by 28 % to 30 %, cutting waste and freeing capacity.
• The UAE aims to cut national energy use by over 30 % through smart management. Reduced consumption means additional capacity for AI‑intensive industries.
• Electricity demand in the Middle East and North Africa has tripled since 2000 and is forecast to rise another 50 % by 2035. AI-driven efficiency is therefore critical.

Renewable Mega‑Projects and Battery Storage

To meet rising demand while controlling emissions, the UAE is developing large renewable projects:

• A US $6 billion project launched in 2025 will combine 5 gigawatts of solar capacity with 19 gigawatt‑hours of battery storage to deliver 1 GW of continuous renewable power.
• The government is taking a dual approach, investing in renewables while using AI to reduce consumption, positioning the UAE ahead of global competitors.

Data Centres and AI Campus

Although official details remain limited, public announcements in 2025 indicate that Abu Dhabi plans to build a 10-square-mile AI campus with up to 5 gigawatts of data centre capacity. Initial phases, including a 200 MW expansion, are planned for 2026. Such projects will make the UAE one of the world’s largest providers of high‑performance compute capacity and underscore the need for robust regulatory frameworks and green power.

Implications for Businesses and Investors

Why the Policy & Infrastructure Changes Matter

1. Regulatory certainty: clarified free‑zone and tax rules remove ambiguity, enabling informed long‑term planning and reducing compliance risk. A defined five‑year statute of limitations for tax claims offers businesses more predictability.
2. Competitive tax environment: qualifying free‑zone businesses retain access to 0 % corporate tax, and new R&D credits encourage innovation.
3. Talent mobility and immigration: two‑year visas and simplified transfer rules make it easier to attract global talent, including remote and freelance professionals.
4. Energy and sustainability: the combination of AI-driven efficiency and large renewable projects will reduce operating costs for energy-intensive sectors, including data centres and manufacturing.
5. Market reach: positioning in the UAE offers proximity to Europe, Africa and Asia. Improved free-zone rules and unified tax procedures help companies service mainland UAE and European clients through a single hub.

How Auctora Analytica Helps

Auctora Analytica is uniquely positioned to guide businesses through this evolving landscape. Our advisory services include:

Regulatory and Policy Navigation: we interpret new free‑zone and tax regulations, ensuring businesses qualify for incentives and avoid penalties. We help clients identify the right free zone, compile economic substance documentation, and maintain compliance.

Corporate Setup and Licencing: through partnerships with UAE government agencies and free‑zone authorities, we streamline licensing, corporate formation, visa issuance and bank opening processes.

Due Diligence and Verification:  our intelligence-led approach verifies potential partners, investors and suppliers, using proprietary databases and on-the-ground research. We screen for sanctions risks, financial integrity and compliance with UAE and EU regulations.

Strategic Market Entry:  we develop cross-border market strategies, leveraging the UAE’s role as a bridge to Europe, Africa and Asia. This includes supply-chain design, tax structuring, and risk assessment.

Energy and AI Advisory: as the UAE invests in AI campuses and renewable energy, we help businesses evaluate energy agreements, assess data centre opportunities, and integrate AI-driven efficiency into their operations.

R&D Credit and Incentives: our experts assist in applying for the new R&D tax credit and other government incentives, ensuring projects meet the qualifying criteria and maximise benefit.

Looking Ahead: 2026 and Beyond

The 2025 reforms signal that the UAE is shifting from rapid liberalisation to disciplined, innovation-focused growth. Key trends to watch in 2026 include:

• Full implementation of the Tax Procedures amendments: businesses will need updated systems to track the five-year refund period and new correction processes.
• Activation of R&D tax credits: companies should prepare R&D pipelines to capitalise on the 30–50 % credit.
• Data centre expansion: the first large-scale phases of the AI campus could come online, requiring partnerships with global hyperscalers and energy providers.
• Tightening of ESG and sustainability requirements: the UAE is preparing mandatory disclosures and climate reporting, aligning with global standards. Companies will need robust ESG strategies to remain competitive.
• Continued visa and talent reforms: watch for further simplification of remote-work visas and possibly longer-term residency pathways for executives and investors.

The Path Forward

The UAE’s 2025‑2026 policy cycle represents the most comprehensive business reform in the country since the launch of the free-zone system. New tax procedures, clarified free-zone rules, flexible licences, and a pioneering R&D credit combine with AI-driven energy efficiency and ambitious data-centre plans to create a landscape where regulatory certainty meets technological ambition.

For global businesses seeking expansion into Europe or the Middle East, there has rarely been a more opportune time to establish a base in the UAE. With deep local knowledge and a focus on intelligence-led advisory, Auctora Analyticastands ready to ensure that companies don’t just enter the market,  they thrive in it.