Introduction
Throughout 2025, the United Arab Emirates (UAE) introduced a number of significant legal and regulatory developments. From sweeping financial sector reforms and enhanced anti-money laundering measures to pioneering ESG mandates, the UAE is redefining its position as a global investment hub. These changes seek to align with international standards, strengthen governance, and embrace the digital economy. This article is intended to highlight some of the significant legislative developments arising in 2025 in the UAE.
Reforms to Modernise and Consolidate the Financial Regulatory Framework
Significant reforms were enacted, effective 16 September 2025, to the financial sector by the introduction of Federal Decree-Law No (6) of 2025 Regarding the Central Bank and the Regulation of Financial Institutions, Activities and Insurance Business (New CBUAE Law).
The New CBUAE Law consolidates the regulation of the banking and insurance sectors under the Central Bank of the UAE (CBUAE) in one legislative instrument, repealing and replacing Federal Decree-Law No 14 of 2018 Regarding the Central Bank and the Regulation of Financial Institutions and Activities, and Federal Decree-Law No 48 of 2023 Regarding the Regulation of Insurance Activities.
Significant changes under the New CBUAE Law include the following:
- Introduction of Criminal Penalties: A notable development includes the introduction in the New CBUAE Law of a criminal penalty for any person that engages in regulated financial activities without a licence from the CBUAE. Any person engaging in a licensed financial activity without the relevant licence may face imprisonment and/or a fine of between AED50,000 and AED500 million. This change reflects the UAE’s commitment to strengthening the deterrent framework for unlicensed financial activities.
- Broadening of the “Licensed Financial Activities” Definition: The financial activities subject to licensing by the CBUAE cover, for example: receiving deposits; providing credit and financing facilities, currency exchange and money transfer services, stored value services, retail payments and digital currency services; arranging, marketing or promoting licensed financial activities; and acting as a principal in financial products that affect the financial position of the licensed financial institution. As part of the consolidation of legislative instruments, the definition of licensed financial activities was expanded by the New CBUAE Law to include providing insurance, reinsurance and insurance-related professions, businesses and services. Most notably, the definition now includes the providing of open finance services and the providing of payment services using virtual assets, reflecting the UAE’s pivot towards a digitally enabled financial ecosystem.
- Regulation of Technology Providers Facilitating Licensed Financial Activities: The CBUAE’s regulatory perimeter has also been significantly broadened to capture any person who directly or indirectly practises, offers, issues, or facilitates any licensed financial activity regardless of the means, technology, or form used. Therefore, licensed financial activities provided through emerging technologies, such as decentralised finance platforms, or technology providers that facilitate, intermediate or enable the provision of licensed financial activities will now be subject to the CBUAE’s licensing, regulatory, and supervisory authority under the New CBUAE Law.
- Integration of Insurance Specific Regulations: Another major change is the integration of detailed insurance regulations into the New CBUAE Law. While the prior law was amended to make reference to insurance, the New CBUAE Law has a dedicated section (Articles 78-106) governing the insurance sector.
- Enhanced Supervisory and Enforcement Powers: The CBUAE has also been equipped with stronger supervisory tools, including “early intervention” powers to address risks before they escalate. The maximum administrative fine for licensed financial institutions was substantially increased from AED200 million to AED1 billion.
This new framework marks a significant shift in the UAE’s regulatory landscape in the financial sector. It introduces a more robust framework for dealing with emerging technologies like virtual assets and open finance, and substantially strengthens the CBUAE’s supervisory and enforcement powers.
All entities and persons subject to the New CBUAE Law have a one-year grace period, until 16 September 2026, to regularise their status and obtain the necessary licences. The New CBUAE Law does not, however, apply to financial free zones within the UAE or financial institutions subject to the supervision of the authorities of financial free zones.
A Strengthened Combatting Financial Crime Regime
Building on its successful removal from the Financial Action Task Force (FATF) “grey list” in February 2024, the UAE enacted Federal Decree-Law No (10) of 2025 Regarding Combating Money Laundering Crimes, Combating the Financing of Terrorism and the Financing of Arms Proliferation (New AML Law), effective from 14 October 2025. The New AML Law is supported by Cabinet Resolution No (134) of 2025 (New AML Executive Regulations), which specifies the procedures, rules, and controls for implementing the provisions of the New AML Law.
The New AML Law and New AML Executive Regulations (New AML Framework) aim to strengthen the UAE’s existing anti-money laundering (AML) and counter-terrorist financing (CTF) regime, as well as align with the FATF’s framework for combatting arms proliferation financing (CPF). The New AML Framework substantively expands the scope of criminalised activities, enhances the powers of regulatory bodies, increases penalties, and explicitly incorporates regulations for emerging technologies like virtual assets. This shift reflects the UAE’s commitment to aligning with the highest international standards, such as those set by FATF, and addressing a more complex and digitised financial landscape.
Significant changes under the New AML Framework include the following:
- Expanded Criminal Scope: The New AML Framework now expressly criminalises arms proliferation financing as a standalone offence, and specifically identifies terrorist financing, arms proliferation financing and tax evasion as a predicate offence for money laundering. It also recognises that financial crimes can be committed through digital systems and virtual assets, and adds “Operators of Commercial Games” to the list of Designated Non-Financial Businesses and Professionals that must comply with the New AML Framework, including customer due diligence and suspicious transaction reporting obligations, when carrying out any single financial operation or several related operations equal to or exceeding AED11,000.
- Further UBO Transparency: The AML Framework seeks to address misuse of nominee structures to obscure ultimate beneficial ownership by requiring Nominee Directors and Nominee Shareholders to disclose their status and the identity of their nominator to the company within 15 working days of any change.
- No Limitation Periods: The New AML Law reaffirms there is no statute of limitations for criminal proceedings relating to crimes of money laundering, financing terrorism or arms proliferation financing and explicitly extends this position to civil proceedings.
- Empowered FIU: The Financial Intelligence Unit (FIU) is an independent body established in the Central Bank. The head of the FIU has had its powers significantly enhanced, including the ability to, without prior notice, freeze assets for up to 30 days and suspend transactions for up to ten working days.
- Increased Penalties: The New AML Law imposes harsher penalties, with fines for legal entities of up to AED100 million, or the equivalent value for the relevant criminal property, whichever is greater, for money laundering, terrorist financing, or arms proliferation financing. The requirement for the court to order the mandatory dissolution of the legal person has now been extended from legal persons convicted of a crime of terrorism financing to include a legal person convicted of arms proliferation financing.
These reforms, coupled with the National Strategy for AML/CTP/CPF (2024-2027) approved by the UAE Cabinet on 2 September 2024, signal a sustained focus on enforcement, particularly ahead of the next FATF mutual evaluation for the UAE anticipated in 2026.
Thresholds for Merger Control Regime Announced
While a new competition law framework was introduced by Federal Law No (36) of 2023 Regarding the Regulation of Competition (New Competition Law) with effect from 29 December 2023, the updated implementing rules in Cabinet Decision No 3 of 2025 were released in 2025 with effect from 1 April 2025.
The implementing rules clarified the ratios relevant to determining if a transaction constitutes an “Economic Concentration”. Unless exempted, if, during the last fiscal year, the parties have combined annual sales in the “relevant market” in the UAE of more than AED300 million or a market share that exceeds 40% of the overall transactions in that relevant market, the Ministry of Economy must be notified of the transaction.
The Ministry of Economy has 90 days to review the application and provide its decision, and such period may be extended by 45 days or upon request for additional information. A failure by the Ministry of Economy to issue a decision within the review period now results in a deemed rejection, a significant reversal from the previous “silence implies approval” doctrine.
Until such time as the Ministry of Economy provides its approval, the parties are prohibited from initiating any actions or proceedings to complete the transaction. Transaction parties that meet the economic concentration thresholds, but do not notify the Ministry of Economy or proceed with the transaction without first obtaining the Ministry of Economy’s approval will be subject to a fine of no less than 2% and no more than 10% of the total annual sales revenue of the goods or services the subject of the violation generated during the prior fiscal year. If it is not possible to determine the amount of relevant revenues, the fine will be set as a fixed amount between AED500,000 and AED5,000,000.
This reform transforms antitrust reviews from a procedural formality into a critical pre-deal strategic consideration for material M&A transactions.
Resilient Capital Markets and Evolving Corporate Governance
While the UAE’s initial public offering (IPO) market remains resilient, the focus in 2025 has shifted towards deepening market sophistication and strengthening corporate governance. The pipeline for IPOs remains strong for 2026, with market sentiment indicating an expected increase in secondary offerings from major shareholders as recently listed companies mature.
Governance reforms in 2025 include Securities and Commodities Authority Decision No (24) of 2025, which introduces to Securities and Commodities Authority Decision No (3/RM) of 2020 Regarding the Approval of the Public Joint Stock Companies’ Governance Manual a conditional exception to the prohibition of an individual holding both Chair and CEO roles for companies listed on, for example, the Abu Dhabi Securities Exchange or the Dubai Financial Market. Under this new amendment, a Chair-CEO dual role is permitted, but only under stringent conditions, such as requiring 75% board independence, all members of the permanent board committees being independent directors, a special resolution of the general assembly to approve the combined role, and establishing a new board-level governance committee.
Federal Decree-Law No (20) of 2025 was implemented, amending a number of key provisions of the Federal Decree-Law No (32) of 2021 On Commercial Companies (CCL). The CCL now expressly permits:
- the establishment of non-profit companies, subject to the issuance of a Cabinet decision specifying the purposes and regulating the provisions and forms of such companies (Article 8(3)(b));
- the inclusion of drag-along and tag-along style provisions in the memorandum or articles of association of limited liability companies or private joint stock companies (Article 14(4)(a));
- the inclusion of mechanisms for dealing with the transfer of shares or interests upon death of a partner of shareholder (Article 14(4)(b));
- re-domiciliation within the UAE, facilitating companies to transfer their registration between Emirates or from a free zone to the mainland, and vice versa (Article 15 bis);
- private subscription offerings and listings on financial markets in the UAE by private joint stock companies (Article 32), and the removal of the lock-in period in Article 226(1) for such companies (Article 266(4)); and
- different classes of shares for limited liability companies (Article 76), and allows the Cabinet to issue a decision facilitating different classes of shares for public joint stock companies (Article 208).
We are awaiting the release of further decisions in relation to the conditions and controls governing the redomiciliation of companies within the UAE and the private subscription offerings and listings of private joint stock companies, which may be issued in 2026.
The CCL also clarifies that free zone companies operating outside the zone and within the UAE must carry on activities via a branch or representative office that is subject to the CCL and other mainland laws.
Corporate Tax Regime Developments
The UAE’s 9% federal corporate tax on taxable income exceeding AED375,000 has now moved into its first full implementation cycle, with the first major filing deadline for companies being 30 September 2025 for entities with a 31 December year end.
A pivotal development for 2025 is the introduction through Cabinet Decision No (142) of 2024 of a Domestic Minimum Top-up Tax (DMTT) effective for fiscal years starting on or after 1 January 2025. Aligning with the OECD’s Pillar Two framework, the DMTT imposes a 15% minimum effective tax rate on UAE-based entities of multinational enterprises (MNEs) with global consolidated revenues exceeding EUR750 million in two of the last four fiscal years. This ensures that even MNEs benefiting from nil or low tax rates or other incentives in the UAE could be subject to a “top-up” tax to meet the global minimum, with the resulting DMTT collected in the UAE.
Looking ahead to 2026, the tax landscape is anticipated to continue to evolve further with the possible introduction of new incentives to support sustainable growth, innovation, and investment.
- Following public consultation, the Ministry of Finance announced in December 2024 that it is considering an expenditure-based research and development (R&D) tax incentive, offering a potential refundable credit of 30-50% on certain qualifying R&D activities within the UAE, for tax periods starting on or after 1 January 2026.
- Another incentive being considered is a refundable tax credit for high-value employment activities to encourage businesses to engage in activities that deliver significant economic benefits, stimulate innovation, and enhance the UAE’s global competitiveness.
The E-Invoicing Mandate of 2026
The UAE is moving forward with the digital transformation of its VAT system by implementing a mandatory electronic invoicing regime (e-invoicing). Following amendments to Federal Decree-Law No (8) of 2017 on Value Added Tax in late 2024, the legal foundation is now set for a phased rollout.
In October 2025, two ministerial decisions were released announcing that a taxpayer working group will commence a pilot programme on 1 July 2026 for the purpose of testing and implementing the e-invoicing system under the supervision of the Ministry of Finance. Voluntary adoption is also permitted from this date.
- Persons subject to e-invoicing with annual revenue of at least AED50 million must appoint an Accredited Service Provider (ASP) by 31 July 2026 and fully implement e-invoicing for all business-to-business (B2B) and business-to-government (B2G) transactions by 1 January 2027.
- Persons subject to e-invoicing with annual revenue below AED50 million must appoint an ASP by 31 March 2027 and implement e-invoicing by 1 July 2027.
The system will leverage the international Pan-European Public Procurement Online (PEPPOL) network, requiring businesses to use an ASP to issue and transmit invoices in a structured digital format (XML or JSON). Failure to comply will lead to penalties and, critically, may invalidate invoices for the purpose of recovering input tax. Businesses are advised to begin preparations to ensure system readiness and avoid disruptions.
Mandatory ESG: The Climate Change Law
In a defining legislative move, the UAE enacted Federal Decree-Law No (11) of 2024 on the Reduction of Climate Change Effects, effective 30 May 2025. This is the nation’s first legally binding climate action framework and shifts consideration of environment, social and governance (ESG) themes from a voluntary endeavour to a mandatory obligation for all entities, including public and private companies in both mainland and free zones.
Key requirements include:
- Measurement and Reporting: Businesses must regularly measure, document, and report their greenhouse gas (GHG) emissions through a new platform managed by the Ministry of Climate Change and Environment (MOCCAE).
- Emissions Reduction: Entities are legally obligated to implement measures to reduce emissions, such as improving energy efficiency or using clean energy. Based on a proposal from the MOCCAE, the Cabinet will set annual, sector-based reduction targets.
- Record-Keeping: Emissions data and records must be retained for at least five years.
Entities have a one-year grace period until 30 May 2026 to ensure full compliance. Non-compliance will attract significant penalties ranging from AED50,000 to AED2 million.
Modernising Family Law: The New Personal Status Law of 2025
In a landmark social and legal reform, Federal Decree Law No (41) of 2024 on Personal Status came into force on 15 April 2025. This new law replaced the previous 2005 legislation and introduced sweeping changes to family matters for both citizens and expatriates. The reforms aim to align family law with modern societal values while enhancing personal autonomy and fairness.
Key amendments include:
- Governing Law: Non-nationals can choose the law governing their personal status matters, including marriage and divorce; however, if no such choice is made, UAE law will apply by default.
- Marriage Provisions: The minimum legal age for marriage is now firmly set at 18 for both men and women. Significantly, non-Muslim women may marry without a guardian’s consent if permitted by their home country’s law, and couples can choose the legal framework that governs their marriage.
- Divorce Reforms: The law streamlines divorce proceedings by reducing the arbitration period from 90 to 60 days. It also introduces new grounds for divorce, such as substance abuse, certain medical conditions, and family abandonment, with shorter notice periods.
- Child Custody Rights: Custody rights have been extended until the child reaches 18 for both boys and girls, a significant change from the previous age limits that differed by gender. Children aged 15 and above are now granted the right to choose which parent to live with, subject to the court’s assessment of their best interests. Either parent can choose to travel with a child for up to 60 days per year without the other parent’s consent, with the court’s authorisation.
Conclusion
The UAE’s 2025 legislative overhaul marks a decisive step toward creating a modern, resilient, and globally competitive legal framework. These reforms form part of a broader strategy to strengthen financial integrity, embrace technological innovation, and embed sustainability at the core of economic activity. Whether it is adapting to the expanded licensing regime under the New CBUAE Law, meeting stringent AML obligations, preparing for e-invoicing, or aligning with mandatory ESG requirements, the coming year will demand strategic planning and operational readiness. As the UAE positions itself for its next FATF evaluation and deepens its integration with global standards, those who act early will not only mitigate risk but may also be able to unlock new opportunities in a rapidly evolving market.