UAE Legal Insights & Expert Commentary

Tag: VAT Law (Value Added Tax)

  • Landmark Reforms to the DIFC Courts: Dubai Law No. 2 of 2025 Takes Effect

      Dubai Law No. (2) of 2025 Concerning the Dubai International Financial Centre (DIFC) Courts will come into force on October 30, 2025. This pivotal new legislation repeals and consolidates the founding statutes of the DIFC Courts, marking a significant step toward streamlining judicial processes, expanding jurisdictional reach, and elevating alternative dispute resolution mechanisms within the DIFC. 

      Read more: Landmark Reforms to the DIFC Courts: Dubai Law No. 2 of 2025 Takes Effect


      The Law introduces wide-ranging changes that solidify the DIFC Courts’ position as a globally aligned, English common law jurisdiction, enhancing judicial efficiency and reinforcing legal clarity for businesses and individuals operating in the region. 
      Key Provisions and Changes Introduced by the Law
      The new law introduces several core reforms aimed at modernizing the court framework and enhancing the mechanisms for dispute resolution and enforcement. 

      1. Enhanced and Clarified Jurisdiction
        The Law provides greater clarity regarding the DIFC Courts’ jurisdiction, notably expanding the scope for non-DIFC related cases: 
      • Expanded Consent Jurisdiction: The Law explicitly permits the DIFC Courts to hear cases that do not have a direct connection to the DIFC, provided that both parties consent in writing to resolve their dispute within the DIFC Courts. This codifies and clarifies a crucial element of the DIFC Courts’ “opt-in” jurisdiction. 
      • Interim Remedies for Foreign Proceedings: The legislation confirms the DIFC Courts’ independent jurisdiction to grant interim and precautionary measures (such as freezing orders, disclosure orders, and injunctions) in support of proceedings, claims, or arbitrations brought outside of the DIFC. This provides a powerful tool for claimants seeking to protect assets within Dubai, regardless of where the main dispute is seated. 
      • Arbitration Supervision: The Law clarifies the DIFC Courts’ supervisory powers over arbitration, specifically confirming their exclusive jurisdiction over applications for the ratification or recognition of arbitration awards in accordance with DIFC arbitration law. 
      1. Statutory Mediation Centre and Enforceable Settlements ⚖️
        A significant development is the introduction of a formal structure for alternative dispute resolution: 
      • Establishment of a Mediation Centre: The Law provides for the creation of a statutory Mediation Centre, which will be available for resolving civil, commercial, and labour disputes. This move reinforces the DIFC’s commitment to encouraging amicable dispute resolution. 
      • Compulsory Enforcement of Settlements: Settlement agreements that are either approved by the Mediation Centre or ratified by the DIFC Courts are now granted enforceability, treating them akin to court judgments and significantly boosting the effectiveness of mediation. 
      1. Procedural and Administrative Updates
        The new framework introduces several procedural updates to enhance efficiency and transparency: 
      • Virtual and Remote Proceedings: The Law formalizes the use of virtual hearings and remote testimony, aligning the DIFC Courts with global judicial trends and improving access to justice, particularly for cross-border litigation. 
      • Contempt of Court: A clearer framework is established for what constitutes Contempt of Court, including the failure to comply with a judgment, decision, or order of the DIFC Courts, along with associated penalties. 
      • Court Assessors: Judges are empowered to appoint independent Court Assessors—experts in technical fields like engineering or valuation—to provide non-binding advice on complex matters, ensuring specialist insight without compromising procedural fairness. 
        Practical Implications
        The implementation of Dubai Law No. 2 of 2025 marks a transformative moment for the DIFC’s legal landscape. For businesses, the key implications include:
      • Greater Flexibility: The expanded consent jurisdiction provides local and international parties with a highly sophisticated, English common law option for dispute resolution, even if their contract or assets are outside the DIFC. 
      • Stronger Enforcement: The enhanced powers for interim relief and the compulsory enforcement of mediated settlements strengthen the security and enforceability of commercial agreements. 
      • Emphasis on Mediation: The focus on a statutory Mediation Centre encourages parties to consider a quicker, less costly alternative to traditional litigation, with the assurance that signed settlements are legally enforceable.

    • A New Era of Financial Security: Understanding UAE Federal Decree-Law No. 10 of 2025 on Anti-Money Laundering

        The United Arab Emirates (UAE) has once again demonstrated its unwavering commitment to global financial security and compliance by enacting Federal Decree-Law No. 10 of 2025 regarding Combating Money Laundering Crimes, Combating the Financing of Terrorism (CFT), and the Financing of Arms Proliferation. This new legislation builds upon previous legal frameworks, introducing enhanced measures, broader scope, and significantly tougher penalties to solidify the UAE’s position as a robust, globally compliant economic hub. 

        Read more: A New Era of Financial Security: Understanding UAE Federal Decree-Law No. 10 of 2025 on Anti-Money Laundering

        Key Provisions and Enhanced Compliance
        Federal Decree-Law No. 10 of 2025 represents a comprehensive strengthening of the nation’s Anti-Money Laundering (AML) and CFT regime, closely aligning it with the latest recommendations from international bodies like the Financial Action Task Force (FATF). 

        1. Expanded Scope and Obligated Entities
          The law reaffirms and often expands the rigorous obligations on a wide range of entities, including:
        • Financial Institutions (FIs): Banks, insurance companies, exchange houses, and other licensed financial services providers. 
        • Designated Non-Financial Businesses and Professions (DNFBPs): This crucial sector includes real estate brokers and agents, dealers in precious metals and gemstones, independent accountants and auditors, and trust and company service providers. 
        • Virtual Asset Service Providers (VASPs): The framework increasingly integrates the regulation of virtual assets, recognizing the emerging risks in this space. 
          These entities must adhere to core AML requirements, including Customer Due Diligence (CDD), Suspicious Transaction Reporting (STRs), Record-Keeping, and the implementation of a Risk-Based Approach (RBA). 
        1. Sharper Investigative and Enforcement Tools
          The Decree-Law equips authorities with greater power and clarity to investigate and prosecute financial crimes:
        • Enhanced Investigative Powers: It explicitly grants law enforcement agencies and the Public Prosecution greater authority to obtain information, including third-party data and records, to effectively trace illicit financial flows.
        • “Controlled Delivery” Principle: The law formalizes the use of “controlled delivery,” a technique that permits authorities to allow criminal transactions to proceed under supervision to trace their flow and identify the broader criminal network.
        • Streamlined Asset Freezing: New mechanisms are introduced, potentially involving the Governor of the Central Bank, to expedite the freezing of suspected funds, minimizing the risk of asset dissipation.
          Increased Penalties and Corporate Accountability
          A defining feature of the new legislation is the significant increase in both financial and criminal penalties, serving as a powerful deterrent.
        1. Corporate Liability
          The maximum penalties for legal persons (companies) have been notably raised:
        • Administrative Fines: A fine no less than AED 500,000 and potentially not exceeding AED 50,000,000 can be imposed on a legal person whose representative, director, or agent commits a related crime. 
        • Compulsory Liquidation: In extreme cases, particularly those involving terrorist financing, the court may order the compulsory liquidation of the legal entity.
        1. Criminal Liability
          For individuals convicted of money laundering:
        • Repatriation for Foreigners: A foreigner convicted of an imprisonment sentence for money laundering or related felonies shall be repatriated from the UAE. 
        • Non-Lapse of Penal Claim: The penal claim for money laundering, financing terrorism, or financing illegal organizations shall not lapse by limitation (statute of limitations), emphasizing the permanent nature of the state’s pursuit of these crimes.
          Implications for Businesses
          The introduction of Federal Decree-Law No. 10 of 2025 signals that AML compliance is no longer a check-box exercise but a strategic imperative for any business operating in the UAE. Firms must proactively:
        • Review and Update Policies: Ensure their internal AML/CFT manuals, procedures, and controls are fully aligned with the requirements of the new Decree-Law and its Executive Regulations.
        • Prioritize Training: Implement mandatory, regular AML/CFT training for all relevant employees, particularly those in compliance, sales, and senior management, to maintain a high level of awareness. 
        • Strengthen Technology: Invest in robust technological solutions, such as sophisticated transaction monitoring systems and tools for verifying Ultimate Beneficial Ownership (UBO), to effectively identify and mitigate risks.
          This ambitious legislative update reinforces the UAE’s dedication to upholding the highest standards of financial integrity, ensuring that its economy remains both open for legitimate business and closed to illicit financial activities.

      • Regulating the Future: How the UAE Governs Banking Innovation Through FinTech


          The UAE has cemented its position as a global financial hub, not by resisting the tidal wave of financial technology (FinTech), but by actively embracing it. The nation’s regulatory bodies, led by the Central Bank of the UAE (CBUAE), recognize that FinTech is a powerful tool for enhancing financial inclusion, market efficiency, and customer experience. Instead of imposing static rules, the UAE regulates banking innovation by creating proactive, innovation-centric frameworks that guide disruption rather than restrict it. 
          Here is a breakdown of how the UAE actively governs the banking sector through regulatory innovation:

          Read more: Regulating the Future: How the UAE Governs Banking Innovation Through FinTech

          The Central Bank’s Approach: Guided Disruption
          The Central Bank of the UAE (CBUAE) has moved beyond traditional oversight to become an enabler of digital finance, focusing its strategy on infrastructure and open standards.

           
          A. Mandating Open Finance and Interoperability
          The most significant move has been the introduction of regulations that mandate openness. The Open Finance Regulation (Circular No. C 7/2023) is a game-changer. It requires licensed financial institutions to create secure interfaces (APIs) for sharing customer data (with explicit consent) with approved third-party providers (TPPs). 

          Impact on Consumers: This regulation drives competition, forcing banks to integrate with FinTechs to offer better, personalized services.

          Impact on Businesses: It allows FinTechs to build innovative products like real-time working capital solutions (e.g., invoice financing) using up-to-the-minute business data, leading to faster credit decisions and less friction.


          B. Modernizing Core Infrastructure
          Innovation in regulation also means modernizing the rails upon which money moves. The CBUAE’s Financial Infrastructure Transformation (FIT) program aims to create a highly efficient, future-proof financial ecosystem. Key projects include: 

          Instant Payments: Developing a domestic instant payment platform to allow real-time movement of funds between banks and payment providers. 

          Digital Currency: Exploring and piloting a Digital Dirham to enhance wholesale and cross-border payments efficiency using distributed ledger technology (DLT). 


          C. Governing New Payment Methods
          To ensure safety in the shift to a cashless society, the CBUAE actively regulates digital assets used for payment. The Payment Token Services Regulation ensures that digital wallets and stored value facilities operate within a clear, secure legal framework, protecting consumer funds and maintaining stability. 

            Impact: This approach encourages foreign FinTech firms to choose the UAE by significantly reducing the cost and risk of launching groundbreaking technologies, accelerating the time to market.


            D. Dedicated Virtual Asset Regulation
            The free zones have pioneered clear frameworks for digital assets that were previously unregulated. ADGM was an early mover in issuing comprehensive rules for Virtual Asset Service Providers (VASPs). Similarly, the establishment of the Virtual Assets Regulatory Authority (VARA) in Dubai (under Law No. 4 of 2022) provides a dedicated, specialized license for firms dealing with cryptocurrencies, NFTs, and other digital assets, signaling a commitment to integrating this asset class into the formal economy securely. 
            Conclusion: A Framework for Economic Diversification
            The UAE’s regulatory strategy is clear: FinTech is not just a technological change; it is an economic growth driver. By embedding open banking standards, modernizing national payment systems, and providing dedicated testing grounds for innovation, the regulators are successfully shifting the banking sector from reactive compliance to proactive innovation. This balanced approach ensures that consumers and businesses benefit from world-class financial convenience, while the system remains stable, secure, and compliant with international standards for anti-money laundering (AML) and consumer protection.