How to Buy an Existing Business in Dubai, UAE: Due Diligence, Share vs Asset Deal & Tax (2026)

Buying an existing business looks faster than starting one. It can be, and it can also hand you someone else's tax debt, unpaid gratuity and a lawsuit you never saw. The difference is one decision most guides skip past: are you buying the shares of the company or the assets of the business? That single choice decides which liabilities you inherit, whether the deal attracts VAT, whether you keep the target's tax losses, and how the seller is taxed.

Almost none of the content ranking for this topic gets to the tax, because most of it predates UAE corporate tax. That is the gap. Since 2023 there is a real tax layer on a business sale: a seller's gain can be exempt or taxable depending on structure, an asset sale can be VAT-free or carry 5%, and the target's carried-forward losses can vanish the moment you change what the business does. We cover all of it.

Since 2013, our team has set up and restructured companies across the UAE, so the traps here come from real files. This is a guide, not legal or tax advice on your specific deal, which turns on facts we cannot see.

Share deal or asset deal? The decision everything hangs on

Get this right first, because it changes the liabilities, the tax and the paperwork.

A share purchase means you buy the shares of the existing company. It is legally the same company under new ownership, so the trade licence, contracts, bank accounts, staff and every liability, known and unknown, carry over automatically. This is the more common structure in UAE deals, because it avoids re-licensing and re-contracting.

An asset purchase means you buy specific assets, the equipment, stock, goodwill, contracts, through an asset purchase agreement. You leave the liabilities behind with the seller's entity, but you need a new trade licence, you re-paper contracts one by one, and you terminate and re-hire the staff, which triggers the seller's gratuity payout.

Here is the comparison no competitor page assembles:

Real Talk: The instinct of a cautious buyer is the asset deal, because you leave the liabilities behind. The instinct of a seller is the share deal, because it is clean for them and often tax-efficient. Which you end up with is a negotiation, and the tax consequences below often decide it. Do not agree a structure before you understand what each one does to your tax bill and your risk. Talk through the structure before you sign→

What liabilities do you inherit in a share deal?

Everything, because you are buying the same legal person. There is no separate "successor liability" doctrine at work here; it is simply that the company continues and you now own it.

The specific exposures your due diligence must find:

• Corporate tax and VAT. Outstanding assessments and any filing gaps transfer with the company. A common trap: corporate tax registration deadlines were tied to the month the trade licence was originally issued, not to any change of ownership, so a target may already carry a registration or compliance gap you inherit.
• End-of-service gratuity. In a share deal no termination happens, so the staff and their accrued gratuity carry over. Under Federal Decree-Law 33 of 2021 that is 21 days of basic salary per year for the first five years and 30 days thereafter, on basic salary only. Balance-sheet provisions for this are often lighter than the real exposure, so recalculate it independently.
• Bank loans and guarantees, which transfer with the entity. Check facility agreements for change-of-control clauses that let the bank accelerate or renegotiate on a change of ownership.
• Supplier debts, pending litigation, labour claims and lease obligations, all of which follow the company.
• A questionable free zone 0% status. A seller may represent Qualifying Free Zone Person status that does not actually meet the substance and activity tests, leaving you exposed to a retroactive 9% assessment. Verify it, do not take it on trust.

Common Mistake: Trusting the balance sheet on gratuity and assuming a clean tax file. Gratuity is frequently under-provisioned, and a company can look compliant while carrying an unregistered-for-corporate-tax problem or an undisclosed FTA dispute. Our end-of-service gratuity guide covers how the liability builds.

Is the sale of a business subject to VAT?

Only sometimes, and getting it wrong risks a 5% assessment on the whole price. This is the single most under-covered point in the market.

A share sale is outside the scope of VAT by its nature. The company's assets never move; only the shareholder changes, which is not a supply of goods or services.

An asset sale is a supply, and normally carries 5% VAT, unless it qualifies as a transfer of a business as a going concern. Under Article 7(2) of the VAT Decree-Law, and clarified in FTA Public Clarification VATP015, the transfer of the whole or an independent part of a business is not treated as a supply, so no VAT applies, where three conditions are met [1]:

1. The transfer is of the whole business or an independent part capable of operating on its own, not just a bundle of assets
2. The recipient is a taxable person, meaning VAT-registered or required to be
3. The buyer intends to continue the same kind of business

Common Mistake: Assuming an asset deal is automatically VAT-free, or assuming it automatically carries 5%. Neither is safe. If you buy the equipment and stock but not enough of the business to run it, or you intend to do something different with it, it fails the going-concern test and becomes a normal taxable supply, and the FTA can assess 5% on the full consideration after the fact. Structure the asset deal deliberately to meet the conditions, or price the VAT in. Our VAT registration and compliance guide covers registration.

On registration continuity: in a share deal the company keeps its existing TRN and corporate tax registration. In an asset deal you register your own entity for VAT once over the threshold, and the seller may need to deregister within the FTA's window or face a late-deregistration penalty.

Can you use the target's tax losses? The trap nobody flags

Usually not if you change what the business does, and this catches buyers who acquire a loss-making company to repurpose its licence.

UAE corporate tax lets losses carry forward indefinitely, offsetting up to 75% of taxable income in a later period. But using an acquired company's carried-forward losses is restricted by two tests [2]:

• The ownership continuity test. The same shareholders must hold at least 50% of the share capital from the start of the loss period to when the loss is used.
• The same-or-similar-business test, which is the fallback when ownership changes by more than 50%. The losses survive a change of control only if the company keeps carrying on the same or a similar business, judged on continued use of the same assets and whether the change is natural development rather than a wholly new activity.

Quick Math: You buy 100% of a company sitting on AED 2 million of carried-forward losses, planning to pivot its licence into a different line of business. Buying 100% breaks the ownership continuity test by definition, so your only route to keep those losses is the same-or-similar-business test, and pivoting to a new activity fails it. Those AED 2 million of losses, which you may have paid something for in the price, evaporate. If instead you keep running substantially the same business, they survive. The plan for the business after completion directly decides whether an asset on the balance sheet is real. Get the loss position checked before you price it→

How is the seller taxed, and why does it change the price?

Because a share sale can be tax-free for a corporate seller while an asset sale is not, which shifts their pricing.

On a share sale, a corporate seller's gain is taxable at 9% above the threshold unless the Participation Exemption applies [3]. That exemption removes the gain from taxable income where the seller held at least a 5% interest (or the acquisition cost was at least AED 4 million), for at least 12 months, in a company itself subject to tax at 9% or more, subject to an asset-composition test. A corporate seller who qualifies is largely indifferent to price allocation on a share deal, which can make them more flexible.

On an asset sale, there is no equivalent exemption. A gain on selling business assets is ordinary taxable income for the seller, so an asset structure can leave the seller with a tax cost a share deal would have avoided, and they will often want to price that in.

Two reliefs worth knowing but narrower than they sound: Qualifying Group Relief (Article 26) allows tax-neutral transfers within a 75%-owned group, and Business Restructuring Relief (Article 27) allows a tax-neutral transfer of a whole business in exchange for shares, both with a two-year clawback [2]. These matter for share-for-share deals and intra-group reshaping before a sale, not for a straightforward cash purchase of an unrelated business. Our corporate tax filing guide covers the wider regime.

What does UAE due diligence actually check?

The financials, and a specific list of UAE items that hide real money.

Beyond three to five years of financials, tax returns and a normal legal review, the UAE-specific checklist:

• Trade licence: current validity, that the activity matches what the business actually does, and its history of any suspensions or DET fines
• Establishment card: validity, because an expired immigration file accrues penalties that transfer with the entity
• Visa quota: how many visas the licence can sponsor, and note the quota is tied to the licence and does not transfer to another entity, which matters in an asset deal
• Immigration fines: overstays and uncancelled visas for departed staff
• VAT and corporate tax: registration status, filing accuracy and any FTA disputes
• UBO records: the beneficial ownership register under Cabinet Resolution 109 of 2023, with changes reportable within 15 days and penalties up to AED 100,000 [5]
• Ejari and lease: validity and any change-of-control or early-termination clause
• MOHRE labour file and WPS: valid work permits, wage protection compliance and any pending labour complaints
• Bank statements versus reported revenue, because cash businesses are prone to under-reporting
• Ownership itself: confirm from the licence and shareholder register that the seller actually owns the shares, free of undisclosed pledges or disputes
• Change-of-control clauses across customer, supplier, lease and financing contracts, any of which can let a counterparty walk on a change of ownership

Pro Tip: Verify the trade licence independently on the official Invest in Dubai or National Economic Register before you pay any deposit. There are documented cases of forged trade licences used to solicit "investment," and a two-minute check defeats them. Our documents for mainland setup guide covers what a real file looks like.

How do you protect the payment?

Warranties, indemnities and, for onshore deals, escrow tied to the completion mechanics.

Escrow is not a feature of every UAE deal, but it is commonly used for onshore share transfers specifically, because the notarised transfer process creates a timing gap where the money needs to be held pending completion. The main protections sit in the sale agreement: warranties on the accounts, assets, contracts, staff and compliance, backed by indemnities for known risks the due diligence surfaced, and often a retention of part of the price or an earn-out tying part of the payment to post-completion performance.

A well-drafted UAE share purchase agreement increasingly builds in local-specific protection: a gratuity indemnity, warranties on WPS and Emiratisation compliance, and explicit verification of any Qualifying Free Zone Person status. These are the clauses that catch the liabilities the balance sheet hides.

Note for larger deals only: since 31 March 2025 a transaction where combined UAE turnover exceeds AED 300 million or combined market share exceeds 40% needs pre-closing merger notification to the Ministry of Economy. This will not touch an ordinary SME purchase, but it is a real gate on a large one.

What is the business actually worth?

Less precisely knowable than the seller's spreadsheet implies, because there is no public transaction data.

UAE SME valuation is informal and private-sale prices are rarely disclosed, so comparable benchmarking is genuinely hard. As a rough guide from general practice, small owner-operated businesses tend to trade on Seller's Discretionary Earnings at around 1.5 to 4 times, and larger businesses on EBITDA at around 3 to 8 times depending on sector and quality of earnings, with recurring revenue and a diversified customer base pushing the higher end. Treat those as informed ranges, not data.

Real Talk: Two warnings. First, do not anchor on the multiples you see for listed companies; a listed healthcare group might trade near 19 times earnings while a private clinic sells at 5 to 7, and private companies also carry a discount for lack of marketability of roughly 20% to 30% against public comparables. Second, there is no reliable public database of UAE private-business sale multiples, so anyone quoting you a precise sector number is estimating. Value on the target's own current earning power, verified against its bank statements, not on the seller's projection.

What does the process cost?

Two layers: the transfer mechanics, and the professional work that stops you overpaying for a problem.

Transfer mechanics. A mainland LLC share transfer needs a notarised Arabic share transfer agreement, an amended and notarised memorandum, and DET registration, with the whole transfer commonly quoted at around five to fifteen working days. Reported government, notary and licence-amendment costs sit in a range of roughly AED 3,000 to 8,000, from consultancy sources rather than a published schedule, so confirm current fees. Free zones run their own share-transfer process through their portals; JAFZA offshore, for example, is a fixed low per-transaction fee, while onshore free zones vary.

Professional work, which is where the money is well spent. Financial due diligence on a straightforward SME is commonly cited at AED 20,000 to 80,000, and legal fees for a mid-sized deal at AED 30,000 to 100,000 or more. Broker commissions in the UAE are not published as a standard percentage; global business-broker benchmarks of roughly 5% to 15% are not a UAE figure and should not be assumed here.

Quick Math: Spending AED 60,000 on proper due diligence feels painful on an AED 800,000 deal until it finds AED 200,000 of unprovisioned gratuity, an unregistered tax position, or a lease that terminates on change of control. The due diligence is not a cost of buying the business. It is the price of not buying the wrong one.

How do buyers get burned?

Predictably, and almost always on things due diligence would have caught.

• The shelf-company or ready-made-company trap: a cheap entity offered as a shortcut that either does not exist on the register or carries hidden debts you inherit by taking it over.
• Hidden liabilities: unpaid loans, overdue supplier invoices, unpaid salaries and gratuity, and undisclosed fines or litigation.
• Inflated revenue and profit claims, often paired with urgency and pressure to "act now," which is itself the red flag.
• Forged licences. A documented UAE case involved a fake trade licence used to solicit a large "investment," which is why the independent licence check above is not optional.

Real Talk: The common thread is that the buyer trusted a representation instead of verifying a record. Every one of these is defeated by checking the licence on the official register, reading the bank statements against the reported revenue, and having a professional confirm the tax and labour position. If a seller resists that verification, that is your answer.

What about foreign ownership and finding a business?

Most mainland companies can now be bought 100% by a foreign buyer, and there are dedicated marketplaces, though the list still matters.

Since the 2021 reform, 100% foreign ownership is available for most mainland commercial and industrial activities, so a foreign buyer can acquire an entire mainland company in most sectors [4]. The exception is the strategic-impact list, which still restricts full foreign ownership in areas such as security and defence, telecommunications, banking and insurance, commercial agencies, Hajj and Umrah services, and fishing. If the target's licensed activity sits on that list, a 100% share acquisition may not be possible, which you check before you fall in love with the deal.

Businesses for sale are listed on dedicated UAE marketplaces and general classifieds, and on brokers who often also do company formation. We do not endorse any platform or broker; verify a broker's actual transaction track record rather than assuming a formation agent is an M&A specialist. Our free zone versus mainland guide helps you assess where the target sits.

What are the steps?

1. Define what you are buying and whether a share or asset structure fits your risk and tax position.
2. Verify the trade licence on the official register before any money changes hands.
3. Sign an NDA and get initial financials, then a heads of terms or letter of intent.
4. Run financial, legal and tax due diligence, allowing three to six weeks.
5. Decide share versus asset on what the diligence finds, especially liabilities, VAT and tax losses.
6. Negotiate the agreement with warranties, indemnities and any retention or earn-out.
7. Handle the transfer: notarised share transfer and DET registration, or new licence and asset transfer.
8. Update UBO, notify the bank and the FTA, and register or deregister for VAT as the structure requires.
9. Transfer or re-issue staff visas and confirm the establishment card and quota.
10. Complete, with funds released against the completed transfer.

What documents do you need?

• Passport and Emirates ID of the buyer
• Target's trade licence, establishment card and memorandum
• Three to five years of financials and tax returns
• VAT and corporate tax registration details and filing history
• UBO register and shareholder register
• Ejari, key contracts and any financing agreements
• Employee list with salaries and gratuity accruals
• The signed sale agreement and, for a share deal, the notarised transfer and amended memorandum

Real Client Stories

The buyer who inherited a tax problem with the shares. A client bought 100% of a trading company on a clean-looking balance sheet. Due diligence, which he nearly skipped, found the company had never completed its corporate tax registration and carried an accruing penalty, plus gratuity provisions well below the real figure for its long-serving staff. He renegotiated the price down by more than the cost of the diligence and took an indemnity for the tax exposure. Had he taken the balance sheet at face value, all of it would have been his.

The pivot that killed the losses. A client bought a company partly for its AED 1.8 million of carried-forward tax losses, intending to switch it to a new activity. Buying 100% broke the ownership continuity test, and changing the business failed the same-or-similar-business test, so the losses he had valued in the price were worthless to him. Had he kept the business doing substantially the same thing, they would have survived. The tax rule, not the accounts, decided whether the asset was real.

The asset deal that attracted VAT nobody planned for. A buyer structured a purchase as an asset deal to avoid inheriting liabilities, buying the equipment and stock but not enough of the operation to run it as a going concern, and intending a different use. Because it failed the going-concern conditions, it was a normal taxable supply, and 5% VAT applied to the whole consideration, which none of the parties had priced. We now scope asset deals against the VATP015 conditions at the term-sheet stage, not after signing.

Buy your Dubai business with the risks and the tax mapped

Since 2013, BusinessDubai.ae has completed 700+ company registrations across the UAE and handled ownership transfers and restructurings. We will help you choose the share or asset structure that fits your risk and tax position, run the UAE-specific due diligence that finds the gratuity, tax and licence exposures a balance sheet hides, structure an asset deal to meet the going-concern conditions where that saves VAT, check whether the target's tax losses actually survive your plans, and handle the transfer, UBO, FTA and visa steps, with clear itemised pricing. Talk to a setup expert→ for a plan. If the business you are looking at is struggling, our what happens if your business fails and company liquidation guides are worth reading first, and post-setup services covers what comes after completion.

Frequently Asked Questions

Should I buy the shares or the assets of a Dubai business?

It depends on risk and tax. A share purchase gives you the whole company including all its liabilities and keeps its licence and TRN. An asset purchase lets you leave liabilities behind but needs a new licence and registration, and may attract 5% VAT unless it qualifies as a transfer of a going concern. Share deals are more common in the UAE, but the tax consequences often decide the structure.

What liabilities do I inherit when I buy a company's shares?

All of them, because it is the same legal entity under new ownership: outstanding corporate tax and VAT, end-of-service gratuity for staff, bank loans and guarantees, supplier debts, pending litigation, labour claims and lease obligations. There is no separate successor-liability doctrine; the company simply continues and you now own it, which is why due diligence matters so much in a share deal.

Is buying a business subject to VAT in the UAE?

A share sale is outside the scope of VAT because the company's assets never move. An asset sale is a supply and normally carries 5%, unless it qualifies as a transfer of a business as a going concern under Article 7(2) and VATP015, which requires transfer of the whole or an independent part of the business to a taxable person who continues the same business [1].

What is a transfer of a going concern?

It is an asset transfer that is treated as not a supply, so no VAT applies. Under FTA Public Clarification VATP015 it requires three things: the whole business or an independent part capable of operating alone is transferred, the buyer is a taxable person, and the buyer intends to continue the same kind of business [1]. Fail any condition and it becomes a normal supply with 5% VAT on the price.

Can I inherit the seller's tax losses?

Only with conditions, and often not. Buying more than 50% of a company breaks the ownership continuity test, so the losses survive only under the same-or-similar-business test, which requires you to keep carrying on substantially the same business [2]. If you buy a company to repurpose it into a different activity, its carried-forward losses are lost.

Does the seller pay tax when they sell?

On a share sale, a corporate seller's gain is taxable at 9% above the threshold unless the Participation Exemption applies, which needs a 5% interest or AED 4 million cost, held 12 months, in a company taxed at 9% or more [3]. On an asset sale there is no equivalent exemption, so a gain on the assets is ordinary taxable income. This difference often shapes the seller's pricing.

What is the Participation Exemption?

A corporate tax relief that removes the gain on selling a qualifying shareholding from taxable income. The conditions are a holding of at least 5% (or an acquisition cost of at least AED 4 million), held for at least 12 months, in a company subject to tax at 9% or more, subject to an asset-composition test [3]. It is why a qualifying corporate seller may be relaxed about a share deal's pricing.

What does UAE due diligence cover?

Financials and tax returns, plus UAE-specific items: trade licence validity and history, establishment card and any accrued immigration fines, visa quota, VAT and corporate tax registration and disputes, the UBO register, Ejari and lease terms, the MOHRE labour file and WPS compliance, bank statements against reported revenue, verification that the seller owns the shares, and change-of-control clauses in key contracts.

How do I check a Dubai trade licence is genuine?

Verify it independently on the official Invest in Dubai or National Economic Register before paying any deposit. Forged trade licences have been used to solicit "investment," and an independent check is the simplest defence. Do not rely on a copy the seller sends you.

Is escrow used in UAE business sales?

Not universally, but commonly for onshore share transfers, because the notarised transfer process creates a timing gap where the consideration is held pending completion. Beyond escrow, the main protections are warranties and indemnities in the sale agreement, plus a retention of part of the price or an earn-out.

What is a change-of-control clause and why does it matter?

A clause in a contract, such as a lease, loan, or customer or supplier agreement, that lets the counterparty terminate or renegotiate if ownership of the company changes. In a share deal these can be triggered on completion, so due diligence must screen key contracts for them, or you can complete a purchase and immediately lose a lease or a major customer.

How much is a business worth in Dubai?

There is no public transaction data, so precision is illusory. As a rough guide, small owner-operated businesses trade around 1.5 to 4 times Seller's Discretionary Earnings, and larger businesses around 3 to 8 times EBITDA depending on sector and earnings quality. Do not anchor on listed-company multiples, which are far higher than private SMEs sell for, and value on the target's verified current earnings.

How much does buying a business cost beyond the price?

The transfer mechanics for a mainland share deal run around AED 3,000 to 8,000 in government, notary and licence fees, over roughly five to fifteen working days. The larger spend is professional: financial due diligence commonly AED 20,000 to 80,000 and legal fees AED 30,000 to 100,000 or more. That professional cost is what stops you overpaying for a hidden problem.

Can a foreigner buy 100% of a Dubai company?

For most mainland activities, yes, since the 2021 ownership reform. The exception is strategic-impact activities such as security and defence, telecommunications, banking and insurance, commercial agencies, Hajj and Umrah services, and fishing, where full foreign ownership may still be restricted. Check whether the target's licensed activity is on that list before you commit.

What is the gratuity trap in a share deal?

In a share purchase no termination happens, so staff and their accrued end-of-service gratuity transfer to you. The liability is 21 days of basic salary per year for the first five years and 30 days thereafter, and balance-sheet provisions for it are often lighter than the real figure, especially for long-serving staff. Recalculate it independently during due diligence.

Do I keep the company's VAT registration when I buy the shares?

Yes. In a share deal the company is the same taxable person, so it keeps its TRN and corporate tax registration; you update the ownership and UBO records. In an asset deal you register your own entity for VAT once over the threshold, and the seller may need to deregister within the FTA's window to avoid a penalty.

What are Qualifying Group Relief and Business Restructuring Relief?

Qualifying Group Relief (Article 26) allows tax-neutral asset transfers within a 75%-owned group, and Business Restructuring Relief (Article 27) allows a tax-neutral transfer of a whole business in exchange for shares, both with a two-year clawback [2]. They apply to intra-group moves and share-for-share deals, not to a straightforward cash purchase of an unrelated third party.

Do merger control rules apply to my purchase?

Only to large deals. Since 31 March 2025, a transaction where combined UAE turnover exceeds AED 300 million or combined market share exceeds 40% requires pre-closing notification to the Ministry of Economy. An ordinary SME acquisition is well below these thresholds and is not caught.

How long does it take to buy a business?

Due diligence for a small SME typically runs three to six weeks, and a mainland share transfer around five to fifteen working days once terms are agreed, longer where corporate shareholders or activity-specific approvals are involved. The negotiation and the diligence, not the mechanical transfer, are usually the longest part.

How do buyers get scammed?

By trusting representations instead of verifying records: shelf companies that carry hidden debts or do not exist on the register, undisclosed liabilities, inflated revenue claims paired with pressure to act fast, and forged licences. Every one is defeated by checking the licence on the official register, reading the bank statements against the reported revenue, and having a professional confirm the tax and labour position.

Where can I find businesses for sale in Dubai?

On dedicated UAE business-for-sale marketplaces and general classifieds, and through brokers, many of whom also offer company formation. Verify a broker's actual M&A track record rather than assuming a formation agent is a transaction specialist, and run full due diligence on any listing regardless of where you found it.

References

[1] Federal Decree-Law No. 8 of 2017 on VAT, Article 7(2), and FTA Public Clarification VATP015 on the transfer of a business as a going concern. tax.gov.ae

[2] Federal Decree-Law No. 47 of 2022 on Corporate Tax, on tax losses (carry-forward, ownership continuity and same-or-similar-business tests) and Articles 26 and 27 on Qualifying Group Relief and Business Restructuring Relief. tax.gov.ae

[3] Federal Decree-Law No. 47 of 2022 on Corporate Tax, Article 23, Participation Exemption. tax.gov.ae

[4] u.ae, full foreign ownership of commercial companies and the strategic-impact exceptions. u.ae

[5] Cabinet Resolution No. 109 of 2023 on Ultimate Beneficial Owner procedures. mof.gov.ae

Last Updated: July 2026