Praxity Regional Review: UAE & the Middle East
Set against the backdrop of our global Alliance, our Regional Review zooms in on a region of interest per quarter, spotlighting the emerging trends, changing regulations, and growing opportunities in the market.
Today, Azim Mukadam - Managing Partner of Griffin Nagda & Company - shares his insights on the changing financial landscape in UAE and the Middle East. Amidst increasing diversification, this Regional Review focuses on the dynamism of the area, particularly in relation to innovation, emerging sectors, and ambitious plans for growth, all of which open up new avenues for investment.
Continue reading to hear Azim’s thoughts below.
Overview of the UAE
“The UAE is renowned not only for its lavish lifestyles and status as a premier tourism hub in the Middle East but also for being one of the fastest-growing economies in the region—and arguably the world. Founded in 1971, the UAE has consistently set trends in the region, thanks to the forward-thinking vision of its founding ruler, HH Sheikh Zayed Bin Sultan Al Nahyan, whose legacy of prosperity continues to inspire progress.
Although oil played a pivotal role in the UAE’s early economic development, the country recogniszed the need for diversification early on. In the 1970s, the government began reinvesting oil revenues in infrastructure, education, and technology. This strategic shift from reliance on oil to a broader portfolio—including real estate, finance, tourism, and manufacturing—has cultivated a resilient economy. Today, substantial investments in luxury hotels, resorts, and entertainment further diversify the real estate market, with over 700 branded residence projects globally delivering higher returns by 2024.
To attract foreign investment, the UAE established numerous free zones offering tax exemptions, full ownership rights, and minimal regulations. These incentives made the UAE an attractive destination for international businesses and entrepreneurs, resulting in a significant influx of foreign direct investment (FDI) that spurred innovation and economic growth.
Further demonstrating its commitment to global participation, the UAE amended its commercial laws to allow 100% foreign ownership for companies incorporated on the mainland, replacing the previous requirement of 51% local ownership. Additionally, the workweek has shifted from Sunday–Thursday to Monday–Friday, with weekends now on Saturday and Sunday. This change, unique among Gulf Cooperation Council members, has bolstered the UAE’s reputation as a dynamic player in the global economy.”
Embracing Emerging Technologies
“The UAE has always been a pioneer in adopting emerging technologies. In 2021, the Dubai Government became the first government in the world to go completely paperless for all its transactions, setting a benchmark for others. For the fiscal year 2025, the government has allocated AED 5.51 billion to enhance healthcare through centralizsed medical records, virtual medicine services, robotic pharmacies, and AI-driven diagnostic imaging. These innovations have improved operational efficiency, reduced wait times, and enhanced disease prevention and early detection—boosting healthcare sustainability and community well-being. Furthermore, the UAE is among the first countries to amend its banking laws to permit the issuance and holding of digital currency by its Central Bank.”
Taxation & Regulatory Developments
“A hot topic in the UAE is the introduction of a 9% Corporate Tax—one of the lowest in the region. Until 2017, the UAE only taxed foreign banks and businesses involved in natural resource extraction. This policy shifted with the introduction of Excise Tax, followed by VAT in 2018, and now Corporate Tax in 2023. Since the implementation of VAT, the Federal Tax Authority has approved over 450,000 VAT registrations and witnessed a 95% growth in indirect tax revenue. Although the introduction of Excise Tax and VAT presented challenges, the FTA has continually evolved its systems, relying on a fully digital, faceless approach.
The introduction of Corporate Tax brings new challenges and opportunities. Unlike many countries with centraliszed regulatory bodies, the UAE features multiple regulators—each free zone in its seven Emirates acts as its own authority, totaling over 50. Developing federal legislation to administer Corporate Tax has been complex, yet the UAE Government has managed this task successfully. Despite the federal tax levies, the government has honored local commitments by providing tax breaks to companies established in UAE free zones. Companies engaged in qualifying activities may reduce their tax rate to 0%, and even those that do not qualify benefit from provisions such as low thresholds for participating interests, exemptions on dividends from local companies (eliminating double taxation), and generous rules for transferring tax losses. To further encourage foreign investment, the withholding tax rate remains at 0%.
Previously, the UAE did not have transfer pricing regulations. However, with the introduction of Corporate Tax, the country has now adopted the OECD’s transfer pricing guidelines. This change presents a new challenge for practitioners: educating the market on the importance of formal accounting systems, investing in staff training to comply with evolving regulations, and ensuring proper transfer pricing documentation.”
Evolution of the Accounting Profession
“The accounting profession has evolved significantly over the years, and accountants have consistently been at the forefront of adopting new technology. Although as accountants we may not always develop new tools ourselves, we have consistently been early adopters of innovations that enhance our practice. The industry has witnessed firsthand the transformation from handwritten working papers to today’s automated solutions. As businesses grow and financial data volumes increase, technology remains essential to keeping public accounting relevant. In keeping with the UAE’s forward-looking spirit, we have embraced a paperless system for audits and other engagements, relying heavily on automated tools for audits and regulatory compliance.”
Future Growth & Investment Prospects
“The accounting profession thrives in an environment of growth, and as the UAE continues to expand, the profession is poised to flourish alongside it. With initiatives like “We the Emirates 2031,” the country aims to strengthen its position as a global partner and a leading economic center. A key milestone of this initiative is the ambitious goal of increasing the country’s GDP from AED 1.49 trillion to AED 3 trillion and boosting non-oil exports to AED 800 billion. Already, for fiscal year 2025, the UAE has budgeted AED 9.99 billion for education, AED 2.53 billion for promoting the UAE as an industrial hub and talent magnet, and AED 26.61 billion for infrastructure development. As we work steadily toward these goals, the future looks promising. Moreover, these strategic investments, combined with a robust regulatory framework and an innovation-driven environment, position the UAE as an outstanding investment hub and a prime destination for global business and growth.”