Are you spending time trying to understand the company setup rules in Dubai? Starting a business in Dubai looks promising, but the steps are rarely straightforward. Many entrepreneurs feel confused by the legal structure for companies in the UAE. From foreign ownership rules to company formation processes in the UAE, it can be overwhelming without the right help. Many businesses suffer delays, penalties, or lost opportunities due to simple mistakes. But there’s a way to make the system work in your favour.
We at Jitendra Business Consultants (JBC) specialise in helping businesses navigate the parent-subsidiary structure under UAE laws quickly and efficiently.
The Business Setup Structure in the UAE
The UAE attracts global investors because of its flexible legal framework and strong economic stability. For many international groups, setting up a company in the UAE through a parent-subsidiary structure is legal and tax-efficient. The introduction of Cabinet Decision No. 55/2025 has further supported this structure. As of 14 May 2025, the UAE corporate tax exemption extends to foreign subsidiaries wholly owned by exempt UAE persons. This means a UAE-based holding company that owns a foreign subsidiary can retain 100% of its repatriated profits without paying corporate tax. This change has driven more global companies to establish UAE holding companies and subsidiaries.
A typical parent-subsidiary structure allows for better control, easier capital allocation, and improved governance. It also protects the parent company from the subsidiary’s direct liabilities. Whether a foreign investor or a regional business expanding within the GCC, this structure gives you options to scale without losing control.
Choosing the Right Legal Structure for Companies in the UAE
Depending on your needs, there are different legal forms for company formation in the UAE. Mainland companies allow full access to the UAE markets. Free zones offer sector-specific incentives, and offshore structures support international holdings. Forming a UAE holding company for a parent company makes strategic sense as it centralises ownership of different subsidiaries under one legal umbrella.
Depending on the kind of activities you want to carry out, your UAE holding company can be based in a free zone like DMCC, JAFZA, or DIFC. Starting a subsidiary in the UAE under this holding can then be done either on the mainland or within another free zone. Each decision affects licensing, visas, taxation, and reporting obligations. This is why defining the correct corporate structure in UAE is vital from the beginning.
Why Parent-Subsidiary Structure Is Gaining Preference in Dubai
Dubai is not just about ease of doing business. It also offers legal certainty. The UAE legal system now recognises special purpose vehicles (SPVs), family foundations, and other new holding forms under recent reforms. This has made subsidiary company formation Dubai more flexible for both local and foreign investors.
The benefits of parent-subsidiary setup in UAE are especially relevant for international groups and family-owned enterprises. Some key benefits include:
- Full control over business units while reducing risk
- Easier management of funding, licensing and HR from a central office
- Better brand protection and asset ring-fencing
- Cleaner auditing and financial reporting for each entity
- Ability to apply for tax exemptions for certain subsidiaries
- Support for expansion into different Emirates or international locations
Such a model also supports future merger or sale plans, making the business more attractive to investors.
Foreign Ownership and Regulatory Framework in 2025
Foreign ownership rules in the UAE have changed significantly. Most sectors now allow 100% foreign ownership without a local partner, especially for free zones and professional mainland entities. This has made subsidiary company formation in Dubai more accessible than ever. Still, certain sectors remain restricted or require special approvals. Understanding these sectoral rules is key.
The UAE Commercial Companies Law, recently updated in June 2025, clearly provides for special vehicles like SPVs and acquisition companies. These formats are now recognised, helping businesses with specific investment or structuring needs. It’s a welcome move, particularly for businesses looking to start holding and operating firms under one roof. Another notable change is the reduced statutory reserve requirement. Businesses now need to allocate only 5% of their net profits instead of 10%. Over time, this allows more funds to be invested in operations or held by the parent company.
Jitendra Business Consultants: Helping You Build Smart Corporate Structures in Dubai
Planning to set up a holding and subsidiary company in the UAE? At Jitendra Business Consultants (JBC), we support you through every step, from strategy, legal paperwork, and licensing to post-setup compliance. With deep experience in UAE business setup, we help clients avoid costly errors while ensuring complete compliance. If you’re unsure how to set up a parent company in the UAE or want to start multiple units under a UAE holding company and subsidiary, we tailor the process to your goals.
