UAE Hits 1.4 Million Companies. Here's What Every Business Must Do for 2026 Compliance

UAE Hits 1.4 Million Companies: What Every Business Must Do for 2026 Compliance

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UAE hits 1.4M active companies with 250K new setups in 2025. In 2026, compliance on tax, e-invoicing, and Emiratisation is imperative for business setup.

The UAE now hosts more than 1.4 million active companies, with around 250,000 new firms registered in 2025 alone, according to WAM.
Minister Abdulla bin Touq Al Marri confirmed the figures alongside a decade-long official target to reach 2 million companies.
Federal Decree-Law No. 20 of 2025 amended the Commercial Companies Law across 15 articles and took effect in October 2025.
Emiratisation obligations have expanded: firms with 20 to 49 employees must employ at least two UAE nationals by end-2025, or face contributions of AED 108,000.
The Federal Tax Authority requires all companies to retain tax-related records for a minimum of seven years.
E-invoicing is expected to begin a phased rollout from July 2026, with broader mandatory requirements anticipated from January 2027.

Federal Decree-Law No. 20 of 2025 Anchors a New Era for UAE Business

The UAE's record company formation figures arrive alongside a period of significant legislative change. Federal Decree-Law No. 20 of 2025 has updated the foundations of the Commercial Companies Law, modernising how businesses register, structure, and operate across onshore and free-zone environments. The UAE Ministry of Economy and Tourism has positioned these reforms as central to sustaining the country's competitive advantage and long-term economic diversification.

For businesses already active in the UAE - or planning to establish here - the 2026 regulatory environment demands closer attention than previous years. The Federal Tax Authority has reinforced its record-keeping expectations, NAFIS-administered Emiratisation targets now reach smaller employers, and an e-invoicing framework is moving towards rollout. Taken together, these three compliance pillars define the operating baseline for every company in 2026.

250,000 New Companies Registered in a Single Year

The UAE closed 2025 with more than 1.4 million active companies on its commercial register - a milestone confirmed by WAM, the UAE state news agency. Approximately 250,000 of those firms were established during 2025 alone, marking one of the country's highest annual formation rates on record.

Speaking at a media briefing linked to the Commercial Companies Law reforms, Minister of Economy and Tourism H.E. Abdulla bin Touq Al Marri attributed much of the sustained growth to the 2021 liberalisation of the law. According to Khaleej Times, the minister stated that nearly 760,000 companies entered the UAE market between September 2021 and end-2025 - a 118.7% increase in the total company count. The government has set a formal ambition to reach 2 million companies over the coming decade. WAM also reported that UAE-national-owned SMEs grew by 63% over the past five years, reflecting strong domestic entrepreneurial momentum alongside continued foreign investment inflows.

What Changed in the 2025 Commercial Companies Law Overhaul

The formation surge coincides with a substantive legislative update. Federal Decree-Law No. 20 of 2025 was issued on 1 October 2025 and took effect the day after its publication in the Official Gazette on 14 October 2025. It amends Federal Decree-Law No. 32 of 2021, the original Commercial Companies Law that underpinned the 2021 ownership liberalisation.

The Ministry of Economy and Tourism confirmed the update spans 15 articles and introduces a new provision permitting companies to transfer their registration between commercial registers. Law firm Gibson Dunn notes the amendments modernise the corporate environment and address the interface between onshore and free-zone business structures. Free-zone entities continue to operate under their own rulebooks, though the changes carry specific implications where free-zone companies conduct activities in mainland UAE. Legal advisors recommend reviewing corporate constitutions to confirm alignment with the updated law.

Emiratisation - Tighter Rules Now Cover Smaller Employers

Emiratisation - the government's requirement for private-sector firms to hire UAE nationals - has expanded significantly in scope. According to official NAFIS guidance from the Emirati Human Resources Competitiveness Council, companies with 50 or more employees face a 2% annual increase in Emirati hires for skilled roles, with an overall 10% target set for 2026. The obligations now extend to smaller employers as well.

The UAE government portal confirms that firms with 20 to 49 employees must employ at least one UAE national by end-2024 and at least two by end-2025. MOHRE has confirmed this second obligation must be satisfied before 1 January 2026. Non-compliance carries financial consequences: NAFIS documents contributions of AED 96,000 for failing the 2024 requirement and AED 108,000 for failing to employ two Emiratis by end-2025. Businesses in scope should manage and document their obligations through the Nafis platform.

Corporate Tax Record-Keeping - A Seven-Year Obligation

The Federal Tax Authority (FTA) has confirmed that all entities subject to UAE corporate tax must retain relevant records for a minimum of seven years after the end of the relevant tax period. This applies to both Taxable Persons and Exempt Persons, as set out in an FTA media release from August 2025. The requirement covers accounting records, contracts, invoices, and all supporting documentation - and these materials must be maintained in an audit-ready state.

For companies filing UAE corporate tax for the first time, practitioners recommend treating record-keeping as a long-term programme from the outset, rather than addressing it retrospectively. Establishing structured document management processes now will reduce compliance risk and the administrative burden at each subsequent filing cycle.

E-Invoicing - Start Preparing for a July 2026 Rollout

The UAE is moving towards mandatory electronic invoicing, with a phased rollout anticipated to begin around 1 July 2026. Market guides from Hawksford and Meydan Free Zone describe this initial phase as a voluntary or pilot adoption period, providing businesses time to adjust systems before broader requirements take effect. Some compliance guides reference January 2027 as the point at which mandatory e-invoicing extends to larger businesses - potentially those with annual revenues above AED 50 million.

Multiple sources reference Ministerial Decisions 243 and 244 of 2025 as the primary instruments defining the rollout's scope and technical specifications. However, businesses should treat the detailed thresholds and phasing dates as indicative until the FTA publishes definitive implementation notices. The practical step for all businesses is to begin internal readiness assessments now - evaluating accounting software compatibility and updating invoicing processes ahead of the rollout window.

What Clients are Asking their Advisors

How many companies are registered in the UAE as of 2025?

The UAE had more than 1.4 million active companies on its commercial register at the end of 2025, according to the state news agency WAM. Around 250,000 of those firms were newly registered during 2025 alone, as confirmed by the Minister of Economy and Tourism.

Does Emiratisation apply to a company with 30 employees in the UAE?

Yes. Private-sector companies with 20 to 49 employees in targeted sectors must employ at least two UAE nationals by end-2025, a requirement confirmed by MOHRE. Failure to comply can result in a financial contribution of AED 108,000, administered through the NAFIS framework.

How does the 2025 Commercial Companies Law amendment affect free-zone businesses in the UAE?

Free-zone companies continue to operate under their own separate regulatory regimes. However, Federal Decree-Law No. 20 of 2025 has specific implications where a free-zone entity also conducts business activities on the UAE mainland, and legal advisors recommend reviewing corporate structures to assess any impact.

When does mandatory e-invoicing start in the UAE and who is affected first?

The UAE's e-invoicing rollout is expected to begin with a voluntary or pilot phase around 1 July 2026, with mandatory requirements anticipated from January 2027 for larger businesses. Market guides reference Ministerial Decisions 243 and 244 of 2025 as the governing framework, but businesses should await official FTA confirmation before treating specific dates and revenue thresholds as definitive.