UAE business exit options: share sale (buyer acquires the company) or asset sale (buyer acquires specific assets). UAE CT on capital gains: exempt if participation exemption applies (5%+ ownership held 12+ months). Share transfer: DED or free zone authority approval required. Timeline: 2–6 months from heads of terms to completion. Due diligence by buyer covers VAT, CT, WPS, and AML compliance.
Share sale vs asset sale in UAE
- Share sale: The buyer purchases the shares of the company. The company (and all its assets, liabilities, contracts, licences, and employees) transfers to the buyer. Simpler from the seller’s perspective. More complex for the buyer — they inherit all historical liabilities (including any undisclosed VAT, CT, or WPS exposure). Most UAE SME exits are structured as share sales.
- Asset sale: The buyer picks specific assets (equipment, inventory, brand, customer list) rather than the company entity. The company continues to exist (or is then liquidated by the seller). Cleaner for the buyer — no hidden liabilities. More complex for the seller: the company pays CT on any gains from the asset sale, then the seller pays again when extracting the proceeds (unless via a dividend).
UAE CT on business exit
- Participation exemption — share sale: If a UAE company sells shares in another company in which it holds a 5%+ stake for at least 12 months, the capital gain on the share sale is exempt from CT. This is the participation exemption. For a founder holding shares personally (not through a corporate holding): individual shareholders are not subject to UAE CT on share sales — there is no capital gains tax on individuals in UAE.
- Asset sale — no exemption: Gains on an asset sale (not shares) are included in taxable profit and taxed at 9%. This is a key reason why share sales are generally preferred by sellers in UAE.
- QFZP share sale: If the selling entity is a QFZP, gains on share sales that qualify as qualifying income under the QFZP rules may also be exempt. Seek advice on your specific QFZP qualifying income scope.
UAE business sale process
1. Heads of terms / LOI
Non-binding letter setting out the key commercial terms: price, structure (share/asset), exclusivity period, and due diligence conditions. Typical exclusivity: 30–60 days.
2. Due diligence
Buyer reviews financial statements (audited preferred), VAT returns and FTA compliance, CT registration and returns, WPS records, MOHRE filings, lease agreements, and material contracts. Clean compliance records directly affect price.
3. SPA drafting
Share Purchase Agreement (for share sales) or Asset Purchase Agreement drafted by UAE legal counsel. Includes representations and warranties (seller’s promises about the company’s state), indemnities, and completion conditions.
4. DED / free zone authority approval
Share transfer in a mainland LLC: DED must approve the change of shareholder — MOA amendment, notarisation, and DED registration. Free zone: free zone authority must approve the share transfer — typically 5–15 business days. Some free zones charge a transfer fee.
5. Completion
Share transfer documents signed, purchase price paid (escrow arrangements common), authority registrations completed. Employees are informed (their contracts transfer with the company in a share sale — TUPE-equivalent principles apply in UAE).
Preparing to sell your UAE business?
We advise on CT planning, prepare due diligence-ready accounts, and support the transaction from start to completion. Fixed fee.
Frequently asked questions
Is there capital gains tax on selling a UAE company?
For individual founders selling shares personally: no — UAE has no personal capital gains tax. The gain is not taxed. For a corporate entity selling shares: the gain is exempt from CT if the participation exemption applies (5%+ stake held 12+ months in the company being sold). Asset sales (not share sales) are taxable gains at 9% CT at the corporate level.
How long does it take to complete a UAE business sale?
2–6 months is typical from signing heads of terms to completion. Drivers of the timeline: (1) buyer due diligence — 4–8 weeks; (2) SPA negotiation — 2–4 weeks; (3) DED or free zone authority registration — 2–4 weeks. Complex transactions (multiple entities, DIFC or ADGM entities, large workforces) take longer. Simple free zone company with one shareholder and no employees: can complete in 4–6 weeks.
What happens to employees when a UAE company is sold?
In a share sale, employees automatically transfer with the company — their contracts continue unchanged. The buyer becomes the new employer. In an asset sale, employees do not automatically transfer — they would need to be terminated by the seller (with proper end of service gratuity) and re-hired by the buyer. Most UAE business sales are structured as share sales to avoid the complications of employee termination and re-hiring.
Does the buyer need to worry about historical UAE tax liabilities?
Yes — this is the biggest risk in a UAE share acquisition. The buyer inherits the company’s complete historical VAT, CT, WPS, and AML compliance history. A buyer who pays AED 5M for a company and then discovers AED 500,000 in unresolved FTA VAT liabilities has a serious problem. This is why due diligence is non-negotiable — and why sellers benefit from commissioning a pre-sale compliance review before putting the business on the market.