As of 2026, more and more Turkish companies are looking to set up in Dubai and Abu Dhabi, or to trade with these markets, with the numbers growing every year. The correct order of operations is this: first clarify your commercial model (export, local sales, or a holding structure), then choose the right vehicle (free zone or mainland) to match that model, and only then put in place a legal advisory process that moves forward on the Turkish and UAE sides at the same time. Companies that reverse this order tend to run into problems after incorporation, retroactively, on matters such as capital movement notifications or tax liability.
Why the Picture Has Changed for Dubai and Abu Dhabi
In recent years, the way Turkish entrepreneurs and SMEs view the Gulf region has shifted markedly. It is no longer only large holding groups weighing this up; mid-sized exporters and service companies are now also considering building a regional base through Dubai or Abu Dhabi.
Take, for example, a Bursa-based exporter of machine spare parts. To cut down on the customs delays and payment lags it faces shipping directly from Turkey, it is considering setting up a trading company in Dubai. The first mistake at this stage is rushing into incorporation simply because “everyone is doing it,” and moving straight to choosing a structure before the commercial model has been clarified.
There is no single reason behind this shift. Logistics advantages, easier access to regional markets, and recent regulatory changes are all playing a part together. But none of these changes automatically works in a Turkish company’s favour; each situation carries its own legal and financial consequences that need to be assessed separately.
Free Zone or Mainland? That Is Not the Right Question
Most guides present “free zone or mainland” as a binary choice. In reality, the right question is what the company’s commercial model actually is. For a company that will only trade outside the local market and focus on exports, a free zone structure is generally the faster and less complex starting point.
By contrast, for a company planning to sell directly into the local market, sign contracts with local customers, or bid on local tenders, a mainland structure becomes practically unavoidable. A construction materials supplier wanting to sell directly to local contractors in Abu Dhabi is a classic example of this mainland requirement.
The critical point here is that the line between free zone and mainland can shift over time as regulations change. For that reason, the choice of structure must be confirmed against the rules in force at the time of incorporation, together with a local legal adviser active in the relevant jurisdiction; the general principles set out here cannot substitute for that up-to-date confirmation before any concrete filing is made.
The Obligation That Gets Overlooked on the Capital Outflow Side From Turkey
Most Turkish companies setting up in Dubai or Abu Dhabi focus their attention on the UAE side of the process and overlook the notification obligation on the Turkish side. Under Decree No. 32 on the Protection of the Value of Turkish Currency, when a company resident in Turkey incorporates a company abroad, takes a stake in an existing foreign company, or opens a branch abroad, this is a transaction that must be reported to the relevant authorities on a specific information form.
Here is a concrete example: when an Istanbul-based software company takes a stake in a Dubai free zone company, it should not treat that outbound capital transfer as complete simply because the bank transfer has gone through. Failing to meet the notification obligation on time can create problems for the company later, during an audit or some other official procedure.
This step is usually handled alongside the accounting and financial advisory process, but it is important for the legal side to be tracked in parallel as well, particularly where the company’s shareholding structure in Turkey is complex.
The Tax Dimension and Double Taxation Risk
Since 2023, corporate profits in the UAE have become subject to corporate tax. This is a significant change compared with previous years and one that Turkish investors need to factor into their planning. That said, the specific rate, thresholds and exemption conditions can change over time, so this information should not be relied upon as a fixed basis for decisions; it must be verified against current official sources.
There is a double taxation treaty in force between Turkey and the United Arab Emirates. How income earned in Dubai by a company or individual treated as a tax resident of Turkey is assessed in Turkey depends largely on that person’s or company’s residency status.
For example, an entrepreneur resident in Turkey who assumes, simply because “there is no tax in the UAE,” that income from their Dubai free zone company can be left out of their Turkish tax declaration would be taking an approach that conflicts with the residency-based taxation principle. Tax planning has to be done by reading the legislation of both countries together.
The Dual Legal Desk Model: Why One-Sided Advice Is Not Enough
The most common mistake made by a Turkish company setting up operations in Dubai or Abu Dhabi is engaging an adviser only on the UAE side and neglecting the Turkish side, or doing the exact opposite. In reality, this process requires two separate legal systems to be read in parallel.
In practical terms, this means working at the same time with an adviser versed in local rules on company structure, licensing and contracts on the UAE side, and with an adviser versed in Turkish law on capital movement notifications, tax residency and company law on the Turkish side. Letting these two tracks run independently of one another is where contractual or tax inconsistencies most often arise.
Suppose a textile company signs a contract with a European buyer through the company it has set up in Dubai. Questions such as which law will govern the contract, or which court or arbitration body will have jurisdiction in the event of a dispute, cannot be answered correctly by looking at the law of a single country alone. On this point, an assessment on the Turkish side in the area of commercial contracts is an integral part of the process.
Overlooked Issues in Shareholding Structure and Contracts
The shareholding structure of a company set up in Dubai is directly linked to whether the parent company in Turkey is a limited liability company or a joint stock company. For instance, the internal approval process a joint stock company in Turkey must follow when deciding on an outbound investment works differently from that of a limited liability company.
The scope of directors’ authority also becomes critical at this stage. The question of how far a director holding signing authority for the Dubai company can bind the parent company in Turkey needs to be clarified separately within the framework of directors’ powers and responsibilities. General powers of attorney granted without this clarification can later lead to unwanted commitments.
Another concrete scenario: if a local partner in the Dubai company wants to change, and the impact of that change on the parent company’s financial statements and shareholding structure in Turkey has not been planned in advance, the share transfer process can end up taking far longer than expected. Changes of this kind in the ownership structure are a matter that also needs separate assessment on the Turkish side, from the standpoint of corporate and commercial law.
A Practical Roadmap: Which Step, in What Order
A general sequence that a Turkish company looking to set up or trade in Dubai and Abu Dhabi can follow may be summarised as below. This sequence will not apply identically to every company, but in most cases it is the right starting point.
- Clarify the commercial model: export/trade, local sales, or a regional holding structure?
- Based on that model, determine whether a free zone or mainland structure is appropriate, confirming this against current local sources.
- Align the shareholding and governance structure of the parent company in Turkey with the needs of outbound investment.
- Clarify the notification obligations in Turkey before any capital leaves the country.
- Assess the impact of tax residency and the double taxation treaty on your specific situation, separately in each country.
- Organise your UAE-side and Turkey-side advisers to work in parallel from the outset, before the process begins.
Companies that skip this sequence and move straight into incorporation often find themselves, in the second or third year, having to retroactively fix a point that was overlooked at the outset, whether that is a notification requirement, tax residency, or contract law. This ends up being a far heavier burden, in both time and cost, than a process that was structured correctly from the start.
Dubai and Abu Dhabi are markets that offer real opportunities for Turkish companies. But making sound use of those opportunities calls for more than a quick incorporation; it requires planning that reads the law of both countries together. Before taking any concrete step, it is advisable to review the current position on both the UAE and Turkish sides together with a lawyer.
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