The UAE has introduced a stronger compliance framework for SMEs in 2025, reshaping the responsibilities of new and existing businesses.
Major Compliances
→ Mandatory health insurance now applies to all employees, including part-timers, and labour contracts must follow updated MoHRE templates. Minimum wage guidelines for skilled workers have been formalised, with penalties and visa service suspensions for non-compliance.
→ Minimum wage guidelines for skilled workers have been formalised, with penalties and visa service suspensions for non-compliance.
→ The government has also expanded 100% foreign ownership rights for mainland businesses, increasing the need for clear shareholder agreements and governance structures.
→ Corporate tax enforcement has tightened: businesses earning over AED 375,000 are now subject to 9% federal tax, while free zone companies must meet qualifying activity rules to retain incentives. Misclassification or late filing can void tax benefits.
→ On the workforce front, Emiratisation requirements now cover private companies with over 50 employees, who must ensure at least 1% Emirati staffing by July 2025. Non-compliance may result in fines or hiring restrictions, pushing SMEs to adjust recruitment strategies and expand local talent development efforts.
How the reforms affect UAE Businesses
Together, these reforms signal a shift toward greater accountability in business setup and operations. While setting up a company is now more accessible—especially with the removal of mandatory local sponsorship—entrepreneurs must be more vigilant with documentation, HR compliance, and post-licensing legal obligations.
