Asset Sale vs. Share Sale in the UAE: Which Has Better Tax Implications for You?
Planning to sell your business in Dubai? Here’s the twist: how you sell it matters just as much as finding a buyer.
One route could save you a fortune in taxes. The other? It might lock you into legal and financial baggage you never asked for.
Most business owners rush into a deal without understanding the difference between an asset sale and a share sale. That’s risky.
This guide unpacks both options in plain language and shows you which one could work better for your kind of business. Stick around. The details could change how you sell business in Dubai, and how much you walk away with.
Overview: Asset Sale vs. Share Sale
Trying to sell your business in Dubai or restructure it? Before you dive into offers, you need to know what kind of sale you’re making. The difference between an asset sale and a share sale isn’t just legal; it has serious tax and risk implications.
Asset Sale
In an asset sale, you’re not selling the whole business, but only the parts. The buyer picks and chooses: inventory, property, machinery, licenses, IP, whatever makes sense.
Only selected assets (and sometimes specific liabilities) get transferred. The original company stays with you. For those looking to sell a business in Dubai piece by piece or clean up their balance sheet before exiting, this can be a smart move. But watch out — VAT and capital gains might hit differently here.
Share Sale
A share sale is a full handover. You sell the company’s shares, and the buyer takes everything: your assets, debts, contracts, risks, and goodwill. They step into your shoes.
It’s simpler on paper. Less to carve out. If your goal is to sell my business in the UAE as a whole and walk away, this is your route. But it also means the buyer inherits every past liability. That can affect valuation or kill the deal entirely.
Legal and Transactional Differences
Here’s where things get real — the paperwork, approvals, and risk.
Asset Sale
In an asset sale, the buyer picks what they want and leaves what they don’t. This means every asset must be transferred individually: contracts, licenses, property, even staff agreements. That takes time.
Want to sell your business in Dubai but keep certain assets for another venture? This method gives you control. But be ready for detailed due diligence, approvals, and fresh documentation for every single item.
Share Sale
A share sale is simpler — legally, at least. The buyer acquires your shares. The company, as a legal entity, stays intact. All contracts, licenses, and obligations continue under the same name.
But there’s a catch: they also inherit every liability, known or unknown. That’s why buyers doing a buy and sell business in Dubai deal through share sales often demand detailed warranties or indemnities before signing.
Taxation in the UAE: The Latest Landscape
Understanding the tax backdrop is key before you sell a business in Dubai — or anywhere in the UAE, really. Tax rules have shifted fast in the past two years, and they hit asset and share deals differently.
Here’s what’s on the table now:
- Corporate Tax (CT): The UAE now applies a 9% corporate tax on taxable income over AED 375,000. This came into effect in June 2023. If you’re selling a business, the deal structure could change how much of that tax applies, especially in asset sales where gains might be recognized directly by the seller.
- Domestic Minimum Top-Up Tax (DMTT): Starting January 2025, multinational groups with global revenue above EUR 750 million may face a 15% minimum tax. This could impact deal planning for large corporate groups looking to buy and sell businesses in Dubai.
- Free Zone Companies: Some companies based in UAE free zones may still qualify for 0% CT, but only if they’re classified as a Qualifying Free Zone Person (QFZP). That status depends on who they trade with and whether they meet substance and reporting requirements. Share sales in such entities can be tax-efficient, which is one reason investors prefer this model when looking to sell a business under a free zone setup.
Tax Implications of Asset Sale
Planning to sell a business by breaking it down into assets? Here’s what you need to know about the tax bite.
- Corporate Tax (CT): If your gains from the sale exceed AED 375,000, you’ll face the 9% corporate tax. This includes profits from selling assets like equipment, inventory, or customer lists. For many looking to sell a business in Dubai in parts, this is where most of the tax risk sits.
- Capital Gains: Selling intangible assets, such as trademarks, goodwill, or software, can also trigger capital gains tax. Relief may apply if the assets were held before the UAE’s CT law came into effect, but that depends on your situation and records.
- Real Estate: If property is part of the deal, don’t forget the 4% Dubai Land Department (DLD) transfer fee. This applies on top of any tax obligations. For asset-heavy businesses, especially in hospitality or retail, this fee can make a big dent in your net gain.
If you’re selling a business this way, get clear tax advice early. Asset sales can look simple — until they’re not.
Tax Implications of Share Sale
Selling shares instead of assets can lead to a much leaner tax bill if you meet the right conditions.
- Corporate Tax (CT): Gains from share sales can be exempt under the Participation Exemption. If your company has owned at least 5% of the shares in the sold entity for 12 consecutive months, the profit from that sale is usually not taxed. This makes share deals attractive for corporates who are looking to sell business in Dubai without triggering a big tax hit.
- Individuals: Here’s where the UAE still holds an edge if you’re an individual and not running a commercial share trading business; capital gains on shares aren’t taxed. This is a major plus for founders or owners hoping to sell a business in the UAE and move on without losing a chunk to tax.
Practical Tax Scenarios
Let’s bring this to life with real-world situations because theory is nice, but deals don’t happen on paper alone.
Scenario 1: The Free Zone Tech Company
A buyer wants a sleek UAE-based tech business but only for its IP and software. That’s an asset sale, and here’s the catch: it may trigger VAT on the transferred assets and partial corporate tax if gains exceed the threshold.
If, instead, the seller offers shares, and the company qualifies as a Qualifying Free Zone Person, they might dodge both taxes. Many founders prefer share deals when they sell a business in Dubai from a free zone.
Scenario 2: The Foreign Parent Exit
Imagine a foreign shareholder offloading their UAE subsidiary. If the sale is structured right, tax can be minimized, either through the UAE’s network of double tax treaties or the Participation Exemption.
For investors planning to buy and sell business in Dubai, especially through offshore entities, this structure can reduce exposure and improve returns.
Which Structure Is Better for Tax?
| Aspect | Asset Sale | Share Sale |
|---|---|---|
| Corporate Tax | 9% on gains (limited reliefs) | 9% on gains, but an exemption is possible |
| VAT | May apply unless TOGC (not elaborated here) | Typically exempt |
| Transfer Complexity | High — asset-by-asset basis | Simpler — all shares transferred at once |
| Liabilities | Retained by the seller unless transferred | Buyer inherits all the company’s liabilities |
| Real Estate Fees | 4% DLD fee | 4% DLD fee (if real estate holding company) |
| Free Zone Benefits | 0% CT possible if QFZP | 0% CT possible if QFZP |
Strategic Tax Planning Tips
Looking to sell a business in Dubai smartly, not just quickly? Here’s how to get ahead of the taxman and keep more of what’s yours:
- Use the Participation Exemption: If you’re eligible, this exemption can wipe out corporate tax on share sales entirely. Plan ahead by holding at least 5% of shares for 12 months before the sale.
- Structure Free Zone deals wisely: Want to sell your business in Dubai from a free zone? Make sure the entity still qualifies as a QFZP. One slip, like too many mainland clients, and your 0% tax rate vanishes.
- Watch holding periods and share thresholds: Time matters. So does ownership percentage. If you’re targeting a tax-free share sale, make sure you meet the conditions early.
- Restructure smartly within the group: Intra-group transfers during reorganizations may qualify for restructuring relief, but only if aligned with the new UAE corporate tax rules.
- Never skip due diligence: Whether you’re buying or planning to sell my business in the UAE, dig deep. Tax liabilities often hide in employee costs, lease obligations, or unpaid VAT.
Risks and Due Diligence
Deals fall apart when risks are ignored. Whether you’re choosing an asset sale or a share sale, here’s what needs your full attention.
Asset Sale Risks
Buyers often prefer asset deals because they avoid historical liabilities. But there’s a catch. Every contract, license, or asset needs to be transferred one by one. If something is missed, the buyer may not get what they paid for.
For anyone looking to sell a business piece by piece, this step needs serious legal support to avoid delays or disputes.
Share Sale Risks
With a share sale, the buyer gets it all. That includes assets, debt, tax liabilities, and any old skeletons hiding in the books. If your company had unresolved tax issues or legal claims, they now belong to the buyer.
Thorough due diligence is essential. This is especially true when selling a business based in a Free Zone or involving foreign shareholders. Skipping this step can be an expensive mistake.
Recent Changes and 2025 Updates
If you’re planning to sell your business in Dubai in the coming months, these new updates could directly impact your deal strategy.
- DMTT (15%)
Starting January 2025, multinational groups with global revenue over EUR 750 million will be subject to a 15% Domestic Minimum Top-Up Tax. This will affect large buyers and sellers involved in cross-border deals and may influence their approach to acquisitions in the UAE. - Ministerial Decision No. 84 of 2025
This update introduces stricter corporate tax disclosures, especially around restructuring and intra-group transactions. If you’re preparing to sell my business in the UAE, make sure your financials and group structure are transparent and audit-ready. - Free Zone Clarifications
The rules keep shifting. New updates continue to redefine what qualifies as a QFZP. These affect both eligibility for the 0% corporate tax rate and access to the Participation Exemption. For Free Zone sellers planning to sell a business in Dubai, staying updated is not optional.
How ADEPTS Can Help
Tax rules in the UAE are evolving fast, and deals aren’t forgiving of mistakes. That’s where ADEPTS steps in.
We don’t do guesswork. We build tax strategies that work in the real world.
Whether you’re planning to sell a business in Dubai, acquire one, or restructure your group, we guide you through every layer of tax complexity with clarity and precision.
Here’s what we bring to the table:
- Smart structuring for tax-efficient exits and acquisitions
- Clear validation of your Participation Exemption eligibility
- Strategic support for group restructuring and relief planning
- Tailored tax guidance for Free Zone and cross-border transactions
- End-to-end tax risk assessment and bulletproof due diligence
ADEPTS doesn’t just give you advice. We help you close with confidence.
FAQs:
You’ve got to hold at least 5% of the company for 12 straight months. If you’re planning to sell your business in Dubai through a share sale, getting this timing right is key for the exemption to apply.
No stamp duty at all. But if you’re including property in the deal, there’s a 4% DLD fee in Dubai. A lot of people looking to sell business in Dubai forget about this real estate cost.
It doesn’t affect everyone—only huge multinationals with global revenues over EUR 750 million. But if you’re in a Free Zone and want to keep that 0% rate, you must meet QFZP rules before selling your business.
You’ll need proof of ownership, audited accounts, and documents showing you weren’t just flipping the company. Don’t skip the paper trail if you plan to sell my business in the UAE under the Participation Exemption.
Foreign sellers might face tax unless there’s a treaty or the deal’s structured properly. If you’re planning to buy and sell a business in Dubai as a non-resident, the right structure can save you a lot.
Resources
- Business Restructuring Relief. https://tax.gov.ae/Datafolder/Files/Guides/CT/Business%20Restructuring%20Relief%20-%2017%2004%202024.pdf.
- Corporate Tax UAE. https://u.ae/en/information-and-services/finance-and-investment/taxation/corporate-tax.
- ‘Double Taxation Agreements’. Ministry of Finance – United Arab Emirates, https://mof.gov.ae/double-taxation-agreements/.
- Dubai Land Department – Home. https://dubailand.gov.ae/en/.
- Exempt Income: Dividends and Participation Exemption. https://tax.gov.ae/Datafolder/Files/Guides/CT/CT%20-%20Exempt%20Income%20-%20Dividends%20and%20Participation%20Exemption%20-%2016%2010%202023.pdf.
- Free Zone Persons. https://tax.gov.ae/Datafolder/Files/Guides/CT/Free%20Zone%20Persons%20-%2020%2005%202024%20final%20for%20GCD.pdf.
- Free Zones. https://www.moet.gov.ae/en/free-zones.
- Ministerial Decision No. 84 of 2025 on Audited Financial Statements for the Purposes of Federal https://mof.gov.ae/wp-content/uploads/2025/04/Ministerial-Decision-No.-84-of-2025-on-Audited-Financial-Statements.pdf.
