Will a Pakistani apostille work for a Dubai company?

No, and this is the single most common false economy in the process. Pakistan did accede to the Hague Apostille Convention — the HCCH status table records an accession deposited on 8 July 2022 with entry into force on 9 March 2023. But an apostille only helps when both countries are parties, and the United Arab Emirates is not a contracting party to that Convention at all; it does not appear in the status table, unlike Bahrain, Oman and Saudi Arabia. So a Pakistani document bound for the UAE still needs the full legalisation chain: the issuing authority, then legalisation on the Pakistan side, then the UAE Embassy in Pakistan, then attestation by the UAE Ministry of Foreign Affairs once the document reaches the UAE, plus legal translation where required.

Can a Pakistani citizen own 100% of a company in Dubai?

Yes. Free zone companies have always allowed full foreign ownership, and since the Commercial Companies Law reform — Federal Decree-Law No. 26 of 2020, consolidated in No. 32 of 2021 — most mainland activities also permit 100% foreign ownership with no Emirati partner. A short list of activities designated as 'strategic impact' can still carry conditions, so the activity on your licence is what decides it.

What is section 109A and does it apply to a Dubai company?

Section 109A of the Income Tax Ordinance 2001 is Pakistan's controlled foreign company rule. It attributes a non-resident company's income to a resident person where cumulative conditions are met, including — in the FBR's published text — that 'tax paid ... on the income derived or accrued, during a foreign tax year, by the non-resident company to any tax authority outside Pakistan is less than sixty percent of the tax payable on the said income under this Ordinance'. Because UAE corporate tax runs at 0% up to AED 375,000 and 9% above, that condition needs testing rather than assuming. Other conditions apply — ownership thresholds, an active business carve-out, a listing test and de minimis rules. Whether it reaches you is a question for a Pakistan adviser.

Is there a tax treaty between Pakistan and the UAE?

Yes. The Federal Board of Revenue publishes the Convention between the United Arab Emirates and the Islamic Republic of Pakistan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income. Its cover page records that it was signed on 7 February 1993, entered into force on 30 November 1994, and is effective 'in Pakistan, from July 1, 1995. In the U.A.E., from January 1, 1995'. The FBR also publishes a synthesised text showing the Convention as modified by the Multilateral Instrument. A treaty existing is not the same as a treaty helping you in a given set of facts — take that reading from a Pakistan adviser.

Mainland or free zone for a founder based in Pakistan?

Free zone suits businesses serving international, online or export markets — full foreign ownership, simple setup, and duty-free movement of goods within the zone. Mainland suits businesses that need to sell directly to UAE customers across the country or take UAE government contracts. A free zone company can reach the UAE mainland market, but usually through a licensed distributor or a mainland branch rather than directly. Answer the customer question first; the licence follows from it.

Do I pay corporate tax on a Dubai company?

UAE corporate tax applies at 9% on taxable income above AED 375,000 and 0% below, for financial years starting on or after 1 June 2023. A free zone company that qualifies as a Qualifying Free Zone Person can achieve 0% on its qualifying income, but it still has to register for corporate tax and file — the 0% is a rate, not an exemption from the system, and late registration carries an AED 10,000 penalty.

What are the corporate tax filing and record-keeping duties for a new Dubai company?

Registration is mandatory for every taxable person, and the penalty for failing to submit a tax registration application within the timeframe set by the Federal Tax Authority is AED 10,000 — item 14 of the schedule to Cabinet Decision No. 75 of 2023, added by Cabinet Decision No. 10 of 2024. The return and payment fall due within nine months of the end of the tax period. On records, the Tax Procedures Executive Regulation (Cabinet Decision No. 74 of 2023, Article 3(1)(c)) requires accounting records for seven years from the end of the tax period; capital-asset records run ten years under Article 60(2) of Federal Decree-Law No. 8 of 2017, and real-estate records fifteen years under Article 71(2) of the VAT Executive Regulation as amended.

Which accounting standard must a new Dubai company use?

Ministerial Decision No. 114 of 2023 sets the accounting standards and methods for UAE corporate tax purposes. Full IFRS is the default. A taxable person with revenue at or below AED 50 million may instead apply IFRS for SMEs, and one with revenue at or below AED 3 million may use the cash basis of accounting. Whether audited financial statements are required is governed separately by Ministerial Decision No. 84 of 2025. For most founders the practical answer is IFRS for SMEs from year one, because it is lighter to run and it is what the corporate tax computation starts from — but choose deliberately when the books are opened, not at the first year end.

Can I open a UAE business bank account as a Pakistani shareholder?

Yes, but expect thorough compliance checks. UAE banks scrutinise new companies and non-resident shareholders closely, and account opening can take several weeks. A clear business activity, a credible plan and a clean, documented source-of-funds story are what shorten the process — particularly the documented part, because a source-of-funds narrative with paperwork attached moves faster than an assertion. Budget patience here as much as money.

What happens if my Dubai free zone company fails the 0% conditions?

The consequence is five years, not one. Under Article 5(2) of Ministerial Decision No. 229 of 2025, a free zone person that fails the Qualifying Free Zone Person conditions loses qualifying status for the relevant tax period and for the four tax periods that follow, and is taxed at the standard rate throughout. Ministerial Decision No. 229 of 2025 repealed the earlier Ministerial Decision No. 265 of 2023 at its Article 6, and audited financial statements are a condition under Ministerial Decision No. 84 of 2025. Running the business from Karachi or Lahore while claiming zone substance in Dubai is the fastest way to trigger that outcome.

Business Setup in Dubai From Pakistan: 2026 Founder Guide

Key takeaways

100% foreign ownership of a UAE mainland company is now the norm — no Emirati partner is required for most activities.
Pakistan acceded to the Hague Apostille Convention with effect from 9 March 2023 — but the UAE is not a party, so an apostille does not shorten the UAE chain at all.
Pakistan's section 109A controlled foreign company rule bites where foreign tax paid is under 60% of the tax payable under the Ordinance — a live question at UAE rates.
A Pakistan–UAE tax treaty has been in force since 30 November 1994, effective in the UAE from 1 January 1995.
UAE corporate tax is 9% above AED 375,000 and 0% below; registration is mandatory even for a 0% free-zone company, with an AED 10,000 late-registration penalty.
Equity investment abroad by Pakistani residents is governed by State Bank policy — ask your Authorised Dealer bank before you commit capital.

Dubai has a long, close relationship with Pakistan — trade, family ties, and one of the largest Pakistani business communities anywhere outside the country. That familiarity is an advantage, and it is also a trap: it makes the setup feel more casual than it is.

Three things shape a Pakistani founder’s timeline more than the licence application does, and none of them is about the licence. Documents take longer than founders expect, for a reason most people get wrong. Pakistan’s own tax code has a rule aimed squarely at low-taxed foreign companies. And capital leaving Pakistan runs through exchange-control policy rather than through a bank transfer.

This guide covers the UAE side in full, and names the Pakistan-side instruments precisely enough for a Pakistan adviser to work from. It does not attempt Pakistan tax or exchange-control advice.

The apostille that will not help you

Start here, because this is where weeks get lost.

Pakistan did join the Hague Apostille Convention. The HCCH status table records an accession deposited on 8 July 2022 with entry into force on 9 March 2023. A number of contracting states — among them Austria, the Czech Republic, Denmark, Finland, Germany, Greece, the Netherlands and Poland — lodged objections to that accession, which means the Convention does not operate between Pakistan and those states. Pakistan also notified the HCCH on 3 March 2023 that it was “still in the process of completing the formalities for issuance of the Apostille Certificates”, while confirming it would honour incoming apostilles from the entry-into-force date.

None of that is the point for a Dubai setup, because of a simpler fact that sits above all of it.

Source: HCCH status table for the Apostille Convention, checked 5 August 2026.

So the chain is the full chain, and it cannot be shuffled. Each link has to be completed before the next will accept the document, which is why a founder who couriers originals to Dubai before the Pakistan-side steps are done gets the envelope back.

Stage	Where it happens	What it does
1. Issuing authority	The Pakistani body that issued the document	Confirms the document is genuine
2. Pakistan-side legalisation	The relevant Pakistan authority	Legalises the document for use abroad
3. UAE Embassy in Pakistan	The Embassy	Accepts the document for UAE use — the step an apostille cannot replace
4. UAE Ministry of Foreign Affairs	Inside the UAE	Final attestation UAE authorities act on
5. Legal translation, where required	A UAE-approved legal translator	Arabic version for the DED or free zone authority

The UAE end of that chain is set out in our MOFA attestation guide. Because the obstacle sits on the UAE side rather than the origin country’s, the chain keeps the same five-stage shape wherever the document starts — only the first two links change name. The equivalent sequence for an Egyptian-issued degree or power of attorney is walked through in our guide to business setup in Dubai from Egypt.

Which documents actually need it depends entirely on the activity and the visa route. Confirm the exact list with the licensing authority before spending money on a chain you do not need.

Document	Typically legalised?	When it is needed
Passport	No	Copies suffice for licensing and visas
Degree certificate	Yes, where required	Certain professional licences and visa categories
Power of attorney	Yes, always	Where someone signs in the UAE on your behalf
Corporate shareholder documents	Yes	Where a Pakistani company holds the shares
Marriage or birth certificate	Yes	Family residence visa applications
Bank reference letter	Sometimes	Some free zones and most bank onboarding

[[chart:pk-setup-steps]]

A sole shareholder incorporating personally may need almost none of this. A Pakistani company joining the UAE cap table has a document project running in parallel that will decide the completion date, because nothing on the UAE side moves until the legalised pack arrives. Knowing which of those two you are, before you choose a structure, is worth more than any zone comparison.

What Pakistan asks about a low-taxed foreign company

This is the section most Dubai marketing aimed at Pakistani founders leaves out, and it is the one a Pakistan adviser will open with.

Pakistan has a controlled foreign company rule: section 109A of the Income Tax Ordinance 2001. It brings the income of a non-resident company into a resident person’s taxable income where a set of conditions is met. The FBR publishes the text, and the conditions are cumulative.

Section 109A(2) condition	Text as the FBR publishes it
(a) Ownership	”more than fifty percent of the capital or voting rights of the non-resident company are held, directly or indirectly, by one or more persons resident in Pakistan or more than forty percent of the capital of the or voting rights of the non-resident company are held, directly or indirectly, by a single resident person in Pakistan”
(b) Tax paid	”tax paid, after taking into account any foreign tax credits available to the non-resident company, on the income derived or accrued, during a foreign tax year, by the non-resident company to any tax authority outside Pakistan is less than sixty percent of the tax payable on the said income under this Ordinance”
(c) Active business	”the non-resident company does not derive active business income as defined under sub-section (3)“
(d) Listing	”the shares of the company are not traded on any stock exchange recognized by law of the country or jurisdiction of which the non-resident company is resident for tax purposes”

Source: Federal Board of Revenue, Section 109A: Controlled foreign company, checked 5 August 2026.

Read condition (b) against the UAE rates. UAE corporate tax is 0% up to AED 375,000 and 9% above, and a Qualifying Free Zone Person can reach 0% on qualifying income. Whether that clears or fails the sixty-percent comparison is a computation, not an assumption — and it is a computation only a Pakistan adviser can run, because the denominator is the tax payable under the Pakistani Ordinance.

Two further points matter and both cut in the founder’s favour. Condition (c) means an entity deriving genuine active business income falls outside the rule, which is another reason real substance in Dubai is worth building rather than faking. And the section contains de minimis rules — attributable income is treated as zero where the resident’s holding is below ten percent, and the company’s income is treated as zero below a stated rupee figure.

The treaty that already exists

Pakistan and the UAE have had a tax treaty for three decades, which is longer than most founders assume.

Milestone	Position as the FBR publishes it
Signed	7 February 1993
In force	30 November 1994
Effective in Pakistan	From 1 July 1995
Effective in the UAE	From 1 January 1995
Modified by	The Multilateral Instrument — the FBR publishes a synthesised text

Source: Federal Board of Revenue, Pakistan – United Arab Emirates Income Tax Treaties, 1993 Income Tax Convention, checked 5 August 2026. The treaty also appears on the UAE Ministry of Finance’s published schedule of its 137 double taxation agreements.

A treaty existing is not the same as a treaty helping in a given set of facts, and it interacts with section 109A in ways that are well outside UAE advice. What it does mean is that a founder moving from Pakistan is not in the position of, say, an American founder — the position for business setup in Dubai from the USA is that no income tax treaty exists at all.

Moving the capital: the step to check before you commit

Funding a Dubai company from Pakistan is not simply a bank transfer. Equity investment abroad by residents of Pakistan sits within State Bank of Pakistan exchange-control policy, and that policy is amended from time to time.

The State Bank’s own circulars listing shows FE Circular No. 01 of 2024, dated 11 July 2024, titled “Amendment in Policy for Investment Abroad by Residents to facilitate Exports”, issued by its Exchange Policy Department.

We are going to leave a deliberate gap here rather than fill it. We could not retrieve the current consolidated text of the relevant Foreign Exchange Manual chapter from the State Bank’s website to quote it, and we are not going to paraphrase a rule we have not read in its current form. Get the position in writing from your Authorised Dealer bank and a Pakistan adviser before capital moves. Sequencing this after incorporation rather than before it is the version that is expensive to unwind.

First decision: mainland or free zone

Almost everything downstream flows from this one choice, so make it on the basis of where your customers and staff really are.

A free zone company is fully foreign-owned, quick to set up, and can trade within its zone and internationally, with goods moving into the zone free of customs duty. It suits consultancies billing overseas clients, online businesses, trading and holding companies. Its limitation is the domestic market: to sell directly across the UAE mainland, a free zone company generally works through a licensed mainland distributor or a mainland branch.

A mainland company, licensed by the Emirate’s Department of Economic Development, can trade directly across the whole UAE market and bid for government contracts. Thanks to the reform of the Commercial Companies Law, most mainland activities now allow 100% foreign ownership — the old requirement for a majority Emirati shareholder is gone, and foreign-company branches no longer need a UAE national service agent.

The reform removed the main historical reason founders defaulted to a free zone. If ownership was your only argument for the zone, that argument is gone, and the choice reverts to where your customers are.

Question	Mainland	Free zone
Invoice UAE customers directly across the country?	Yes	Usually via a distributor or a mainland branch
Bid for UAE government contracts?	Yes	No
Foreign ownership	100% for most activities since the reform	100%, always
Premises	A tenancy in the emirate, registered	A facility inside the zone, per the package
Corporate tax position	Standard regime	Standard regime, with conditional QFZP treatment available

Answer the first question honestly and the rest usually follows. A founder in Lahore selling software to European clients has a free zone answer; a founder importing goods to sell to Dubai retailers has a mainland one; and no amount of package pricing changes either.

Our detailed Dubai business setup guide walks through the mechanics of both routes; the choice between a Dubai free zone company and a mainland company is where most of the cost difference lives.

The UAE tax picture for a new company

The UAE has no personal income tax on individuals’ salaries — that part is true and unchanged. But your company sits inside two tax systems.

Corporate tax. Under Federal Decree-Law No. 47 of 2022, UAE corporate tax applies at 9% on taxable income above AED 375,000 and 0% below, for financial years starting on or after 1 June 2023. A Qualifying Free Zone Person can achieve 0% on qualifying income — but it still has to register and file. Missing the registration deadline carries a AED 10,000 administrative penalty. Getting the corporate tax registration done on time is the cheapest compliance win available.

VAT. The standard rate is 5%. Registration becomes mandatory once taxable supplies and imports exceed AED 375,000 over the previous 12 months, and is available voluntarily from AED 187,500. The VAT registration thresholds are worth reading before you cross them, not after.

[[chart:uae-thresholds-pk]]

AED 10,000

Fixed penalty for failing to submit a corporate tax registration application in time — the most avoidable cost in the whole project

Source: Item 14, schedule to Cabinet Decision No. 75 of 2023, added by Cabinet Decision No. 10 of 2024

The compliance calendar a new Dubai company inherits

The licence is the beginning of a schedule, not the end of one. Nationality changes nothing in this table.

Obligation	Rule	Timing
Corporate tax registration	Mandatory for every taxable person, including a 0% free zone company	Within the FTA timeframe; AED 10,000 penalty for a late application
Corporate tax return and payment	FDL 47 of 2022	Within 9 months of the end of the tax period
VAT registration	Mandatory above AED 375,000 of taxable supplies in 12 months	On crossing; voluntary from AED 187,500
VAT returns	Per the FTA-assigned period	Monthly or quarterly
Accounting records	Cabinet Decision No. 74 of 2023, Art 3(1)(c)	7 years from the end of the tax period
Capital asset records	FDL 8 of 2017, Art 60(2)	10 years
Real estate records	VAT Executive Regulation, Art 71(2), as amended by Cabinet Decision No. 100 of 2024	15 years
Accounting standard	Ministerial Decision No. 114 of 2023	IFRS for SMEs at or below AED 50m revenue; cash basis at or below AED 3m
Audited financial statements	Ministerial Decision No. 84 of 2025	Where the Decision requires them
Small business relief	Ministerial Decision No. 73 of 2023	Elective, for tax periods to 31 December 2026
Trade licence renewal	The licensing authority	Annually
UBO register	The licensing authority	On incorporation and on any change

The AED 10,000 penalty is a fixed administrative charge under item 14 of the schedule to Cabinet Decision No. 75 of 2023, added by Cabinet Decision No. 10 of 2024, for failing to submit a tax registration application within the timeframe the Federal Tax Authority specifies. UAE fines are also non-deductible in the corporate tax computation, so the cost lands twice.

The small business relief line has a date worth diarising. Ministerial Decision No. 73 of 2023 makes the relief available for tax periods ending on or before 31 December 2026. A company incorporated now may qualify for its first period and not for its second, which changes the shape of the first two tax years.

The free zone 0% has a five-year tail

The free zone route is often sold on the strength of “0% tax”. The rate is real, but it is a conditional rate, and the condition carries a penalty period that rarely appears in a sales conversation.

A Qualifying Free Zone Person is taxed at 0% on qualifying income under Federal Decree-Law No. 47 of 2022, with the conditions in Ministerial Decision No. 229 of 2025 — which repealed the earlier Ministerial Decision No. 265 of 2023 at its Article 6. Article 5(2) is the provision to read twice: a free zone person that fails the conditions loses the status for the relevant tax period and for the four following tax periods. One bad year costs five.

Question	Answer for a free zone company
Is registration required at 0%?	Yes — the 0% is a rate, not an exemption from the system
Is filing required at 0%?	Yes, annually
What makes the rate conditional?	Qualifying income, adequate substance in the zone, and the other conditions in MD 229 of 2025
What happens on failure?	Status lost for the relevant period and the four following, per Art 5(2)
Does running the business from Pakistan help?	No — it undermines the substance test directly, and it weakens the section 109A active-business position too

That last row is the practical point for anyone planning to register in Dubai and operate from Karachi or Lahore. A flexi-desk with no people behind it is not substance, the exposure it creates is not a one-year problem, and the same thin footprint that fails the UAE test also weakens the case that the company derives active business income for Pakistani purposes. The full test is in our QFZP checklist.

What a UAE bank actually asks a non-resident shareholder for

Account opening is where a well-planned Dubai setup most often stalls, and the reason is rarely nationality. It is that the file does not answer the questions a UAE compliance team has to answer about every new account.

What the bank is testing	What satisfies it
Who owns and controls the company	Licence, MOA, shareholder register, passports, UBO declaration
What the business actually does	A plan that matches the licensed activity, not a generic template
Where the money will come from	Named counterparties, expected volumes, expected countries
Source of the shareholder’s funds	Bank statements, salary or dividend evidence, sale documents — dated and consistent
Whether there is a real UAE footprint	Tenancy or zone facility, visas, a UAE mobile number and address
Whether the story holds together	The licence, the plan, the projected flows and the CV all saying the same thing

Two things shorten a Dubai onboarding more than anything else. The first is consistency: an application saying the business exports software while the licence says general trading invites a second review that no amount of follow-up calls will shorten. The second is a source-of-funds narrative with documents attached rather than an assertion — which, for capital moving from Pakistan, means being able to show where the money was earned and how it moved, in that order.

What does not help is volume. Sending forty documents in place of the eight that answer the questions above makes the file slower to assess, not faster. Our guide to opening a UAE business bank account sets out the working pack.

Visas, and the one most founders actually need

Setting up a company gives you access to investor or employment residence visas for yourself and, in many cases, staff and family. Quotas depend on the licence and, for free zones, on office space — so the premises decision made at step one quietly caps how many people you can sponsor in year two.

The Golden Visa gets the attention, but the standard investor or partner residence visa that comes with the licence is the one that supports daily life here: bank account, Emirates ID, tenancy, schooling and dependants. Almost every founder starts with that and considers the Golden Visa later, if at all. The published Golden Visa categories, terms and the divergence between ICP and GDRFA on the property route are set out in our guide to business setup in Dubai from the UK and in more detail in Golden Visa through business setup.

Where this leaves you

For a founder moving from Pakistan, the winning order of operations is: decide the business model, pick mainland or free zone to match it, start the legalisation chain immediately, confirm the capital route with your Authorised Dealer bank, licence the right activity, sort visas and banking, then get the UAE tax registrations in place before any deadline bites.

Then treat the Pakistan side as its own project with its own adviser. Section 109A, your tax residency, obligations to the FBR and State Bank exchange-control policy are Pakistani questions, and a UAE accounting firm improvising on them would be doing you no favours.

This is exactly the ground our business setup advisory team covers — choosing the jurisdiction against your actual customer base, getting the licence, legalisation and visas right first time, and standing up the accounting and bookkeeping and corporate tax registrations so nothing is filed late, in a form your Pakistan adviser can read. If cost is the deciding factor, our guide to low-cost business setup in Dubai shows where the real savings — and the false economies — are. Get a quote and we will map the UAE-side steps to your business.

Disclaimer: This article is published by Velmont Crest, a DED-licensed UAE accounting firm and an authorised channel partner of Meydan Free Zone and RAKEZ, and a referral partner elsewhere. We are not a tax agent, an FTA-registered representative, or a licensed financial, legal or auditing firm, and we do not provide Pakistan tax, legal or exchange-control advice.

The content above is general information about UAE company formation and UAE-side compliance and does not constitute tax, legal or financial advice. The Pakistan material is quoted from FBR and State Bank of Pakistan sources for orientation only; your Pakistan residence, tax, section 109A and remittance position must be discussed with a qualified Pakistan adviser and your Authorised Dealer bank. UAE setup and tax decisions should be taken with reference to the relevant UAE legislation, Federal Tax Authority guidance and your own qualified advisors.

References

HCCH — Status table, Apostille Convention (Pakistan in force 9 March 2023; the UAE is not a contracting party)
Federal Board of Revenue — Section 109A: Controlled foreign company
Federal Board of Revenue — Pakistan–UAE 1993 Income Tax Convention
State Bank of Pakistan — Exchange Policy Department circulars (FE Circular No. 01 of 2024, 11 July 2024)
The UAE Government — Full foreign ownership of commercial companies
UAE Ministry of Foreign Affairs — Attestation service
Ministry of Finance — Corporate Tax in the UAE
Federal Tax Authority — VAT registration

Velmont view

The best outcome for a founder moving from Pakistan comes from separating two questions that routinely get tangled: what the UAE requires, and what Pakistan requires. On the UAE side the path is genuinely clear — pick the jurisdiction to match your customers, licence the right activity, start the legalisation chain early, sort visas and banking, and get the tax registrations done on time. That is our work. The Pakistan side — your tax residency, section 109A, obligations to the FBR, and how capital moves under State Bank policy — belongs with a Pakistan professional and an Authorised Dealer bank, and it is a mistake to ask a UAE firm to improvise on it. Keep the two lanes separate and the project runs smoother. The most common avoidable cost is still a late corporate tax registration: an AED 10,000 penalty that is entirely preventable.

— Velmont Crest editorial

Frequently asked questions

Will a Pakistani apostille work for a Dubai company?: No, and this is the single most common false economy in the process. Pakistan did accede to the Hague Apostille Convention — the HCCH status table records an accession deposited on 8 July 2022 with entry into force on 9 March 2023. But an apostille only helps when both countries are parties, and the United Arab Emirates is not a contracting party to that Convention at all; it does not appear in the status table, unlike Bahrain, Oman and Saudi Arabia. So a Pakistani document bound for the UAE still needs the full legalisation chain: the issuing authority, then legalisation on the Pakistan side, then the UAE Embassy in Pakistan, then attestation by the UAE Ministry of Foreign Affairs once the document reaches the UAE, plus legal translation where required.
Can a Pakistani citizen own 100% of a company in Dubai?: Yes. Free zone companies have always allowed full foreign ownership, and since the Commercial Companies Law reform — Federal Decree-Law No. 26 of 2020, consolidated in No. 32 of 2021 — most mainland activities also permit 100% foreign ownership with no Emirati partner. A short list of activities designated as 'strategic impact' can still carry conditions, so the activity on your licence is what decides it.
What is section 109A and does it apply to a Dubai company?: Section 109A of the Income Tax Ordinance 2001 is Pakistan's controlled foreign company rule. It attributes a non-resident company's income to a resident person where cumulative conditions are met, including — in the FBR's published text — that 'tax paid ... on the income derived or accrued, during a foreign tax year, by the non-resident company to any tax authority outside Pakistan is less than sixty percent of the tax payable on the said income under this Ordinance'. Because UAE corporate tax runs at 0% up to AED 375,000 and 9% above, that condition needs testing rather than assuming. Other conditions apply — ownership thresholds, an active business carve-out, a listing test and de minimis rules. Whether it reaches you is a question for a Pakistan adviser.
Is there a tax treaty between Pakistan and the UAE?: Yes. The Federal Board of Revenue publishes the Convention between the United Arab Emirates and the Islamic Republic of Pakistan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income. Its cover page records that it was signed on 7 February 1993, entered into force on 30 November 1994, and is effective 'in Pakistan, from July 1, 1995. In the U.A.E., from January 1, 1995'. The FBR also publishes a synthesised text showing the Convention as modified by the Multilateral Instrument. A treaty existing is not the same as a treaty helping you in a given set of facts — take that reading from a Pakistan adviser.
Can I move money from Pakistan to fund a Dubai company?: Not without checking the current exchange-control position first. Equity investment abroad by residents of Pakistan sits within State Bank of Pakistan policy, and that framework is amended periodically — the State Bank's circulars listing shows FE Circular No. 01 of 2024, dated 11 July 2024, titled 'Amendment in Policy for Investment Abroad by Residents to facilitate Exports', issued by its Exchange Policy Department. We could not retrieve the current consolidated text of the relevant Foreign Exchange Manual chapter to quote it here, so we are deliberately not summarising it. Get the position in writing from your Authorised Dealer bank and a Pakistan adviser before you commit capital.
Mainland or free zone for a founder based in Pakistan?: Free zone suits businesses serving international, online or export markets — full foreign ownership, simple setup, and duty-free movement of goods within the zone. Mainland suits businesses that need to sell directly to UAE customers across the country or take UAE government contracts. A free zone company can reach the UAE mainland market, but usually through a licensed distributor or a mainland branch rather than directly. Answer the customer question first; the licence follows from it.
Do I pay corporate tax on a Dubai company?: UAE corporate tax applies at 9% on taxable income above AED 375,000 and 0% below, for financial years starting on or after 1 June 2023. A free zone company that qualifies as a Qualifying Free Zone Person can achieve 0% on its qualifying income, but it still has to register for corporate tax and file — the 0% is a rate, not an exemption from the system, and late registration carries an AED 10,000 penalty.
What are the corporate tax filing and record-keeping duties for a new Dubai company?: Registration is mandatory for every taxable person, and the penalty for failing to submit a tax registration application within the timeframe set by the Federal Tax Authority is AED 10,000 — item 14 of the schedule to Cabinet Decision No. 75 of 2023, added by Cabinet Decision No. 10 of 2024. The return and payment fall due within nine months of the end of the tax period. On records, the Tax Procedures Executive Regulation (Cabinet Decision No. 74 of 2023, Article 3(1)(c)) requires accounting records for seven years from the end of the tax period; capital-asset records run ten years under Article 60(2) of Federal Decree-Law No. 8 of 2017, and real-estate records fifteen years under Article 71(2) of the VAT Executive Regulation as amended.
Which accounting standard must a new Dubai company use?: Ministerial Decision No. 114 of 2023 sets the accounting standards and methods for UAE corporate tax purposes. Full IFRS is the default. A taxable person with revenue at or below AED 50 million may instead apply IFRS for SMEs, and one with revenue at or below AED 3 million may use the cash basis of accounting. Whether audited financial statements are required is governed separately by Ministerial Decision No. 84 of 2025. For most founders the practical answer is IFRS for SMEs from year one, because it is lighter to run and it is what the corporate tax computation starts from — but choose deliberately when the books are opened, not at the first year end.
Can I open a UAE business bank account as a Pakistani shareholder?: Yes, but expect thorough compliance checks. UAE banks scrutinise new companies and non-resident shareholders closely, and account opening can take several weeks. A clear business activity, a credible plan and a clean, documented source-of-funds story are what shorten the process — particularly the documented part, because a source-of-funds narrative with paperwork attached moves faster than an assertion. Budget patience here as much as money.
What happens if my Dubai free zone company fails the 0% conditions?: The consequence is five years, not one. Under Article 5(2) of Ministerial Decision No. 229 of 2025, a free zone person that fails the Qualifying Free Zone Person conditions loses qualifying status for the relevant tax period and for the four tax periods that follow, and is taxed at the standard rate throughout. Ministerial Decision No. 229 of 2025 repealed the earlier Ministerial Decision No. 265 of 2023 at its Article 6, and audited financial statements are a condition under Ministerial Decision No. 84 of 2025. Running the business from Karachi or Lahore while claiming zone substance in Dubai is the fastest way to trigger that outcome.

Filed under: Business Setup, Dubai, Pakistani Founders, Free Zone, Attestation, Corporate Tax

Published 26 July 2026 · Updated 5 August 2026

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