Published 2026-07-13 · Last updated 2026-07-13 · By GCI Research Desk, DIFC, Dubai
Due diligence on a Dubai business follows four checks, in order. First, confirm the entity is real and legally transferable by verifying the trade licence with the issuing authority. Second, reconcile the seller's stated revenue and profit to audited statements, bank records, and tax filings. Third, confirm every regulatory claim in writing. Fourth, price the risks that survive. Skip the order and you price a deal on numbers you have not proven.
Step 1: Verify the entity and its licence
Start with the trade licence, because everything else depends on the business being what the seller says it is. In Dubai, mainland licences are issued by Dubai Economy and Tourism. Free zone licences are issued by the specific free zone authority, for example DMCC, JAFZA, DIFC, DAFZA, Meydan or IFZA. A DIFC or ADGM entity sits under a separate common law framework with its own registry.
Confirm five things against the authority record and match them to the entity you are buying:
- The exact legal name and licence number.
- The listed business activities. Buying a business to run an activity that is not on the licence means a licence amendment, not a purchase.
- The licence status and expiry date.
- The registered shareholders and their share split.
- Any registered branches, and whether the assets you are buying belong to this entity or a related one.
On ownership: across most mainland activities and all free zones, full foreign ownership is now permitted. A short list of strategic activities still requires a local partner or agent. The rule depends on the specific activity code, not on the sector in general, so confirm it with the authority before you sign.
Step 2: Reconcile the financials to evidence
Seller stated numbers are a claim, not a fact. The job is to reconcile them to independent records. Request the following and cross check them against each other:
| Document | What it proves | Source |
|---|---|---|
| Thirty six months of audited financial statements | Revenue, margin and profit trend | Company auditor |
| VAT returns | Declared turnover, matched to revenue | Federal Tax Authority |
| Corporate tax registration and filings | Taxable income position | Federal Tax Authority |
| Twelve months of bank statements | Cash actually received, matched to revenue | Company bank |
| Tenancy contract and Ejari | Occupancy right, rent, lease term | Dubai Land Department |
| Employee records and WPS | Headcount and end of service liability | MOHRE |
Two reconciliations matter most. Match declared VAT turnover to the revenue in the accounts. Match the accounts to twelve months of bank inflows. Where cash revenue is significant, expect the bank record to be softer than the stated figure, and price from the number you can prove, not the number you are told.
Corporate tax applies at nine percent on taxable income above AED 375,000. VAT is five percent. If the seller claims a free zone qualifying income position for a reduced corporate tax rate, that is a regulatory claim, not a given, and it belongs in Step 3.
Step 3: Confirm every regulatory claim in writing
Value in a GCC deal often rests on a regulatory position. A qualifying free zone tax rate. VAT zero rating on exported services. A sector licence that the buyer assumes will transfer. Each of these is an assumption until it is confirmed in writing by a licensed advisor on letterhead.
Watch the sector licences in particular, because they do not transfer automatically on a change of ownership. A change of shareholders triggers a review by the authority, not an automatic transfer. Common examples in Dubai:
- A healthcare clinic licence sits with the Dubai Health Authority, and in Abu Dhabi with the Department of Health.
- A hotel establishment licence sits with Dubai Economy and Tourism, and a liquor licence is separate and does not transfer automatically.
- A restaurant needs food safety approval from Dubai Municipality alongside the trade licence.
A written advisory opinion has a real cost, typically in the range of AED 5,000 to AED 50,000 depending on complexity. That cost is small next to pricing a deal on a tax position that turns out not to hold.
Step 4: Price the risks that survive
Whatever survives Steps 1 to 3 is the real risk profile. Four patterns recur in Dubai businesses and each deserves an explicit line in your model:
- Customer concentration. If one client is more than half of revenue, stress test the loss of that client, even when the client is a government entity or a prestigious anchor.
- Key person dependency. If a single founder or manager holds the relationships, require a retention mechanism: a lock in of at least twenty four months, equity rollover, a non compete, and a succession plan.
- Seasonality. Revenue concentrated in part of the year, a single event, or a single catchment, needs a working capital plan for the quiet months.
- Undisclosed liabilities. End of service gratuity, supplier disputes, and tax exposure travel with the entity in a share purchase. An asset purchase can ring fence some of this, and the structure choice belongs in the term sheet, not after signing.
How GCI helps you check the business before you buy
You have found a Dubai business worth a closer look. Before you spend on lawyers and accountants, Gulf Commercial Insights screens that specific deal for you. The conviction engine reads the whole opportunity, argues the case for buying against its strongest counter arguments, and flags every figure that is assumed rather than proven. You get back a source graded verdict of CONVICTION, PROCEED WITH CONDITIONS, WATCH, READY or AVOID, with each claim tagged VERIFIED, ESTIMATED or REPORTED.
For a buyer, that answers the three questions that matter:
- Should you walk away, renegotiate the price, or move to full due diligence?
- What are the specific risks that could sink this deal, ranked, with the evidence behind each?
- What should you put to the seller in writing before you sign?
So your time and your advisory budget go only to the deals worth it, and you go into the negotiation knowing what you are buying. We are a technology and research firm, not a DFSA regulated financial services firm.
Checking a Dubai business?
Start with a free Deal Health Score on the specific deal, then get the full Conviction Report with a clear verdict and evidence tiered findings, priced to your mandate. See the public record of past verdicts first.