UAE to open an economic zone for space companies at Masdar City

The UAE Space Agency and Masdar have teamed up to establish the country’s first space economic zone in Abu Dhabi’s Masdar City in a bid to encourage the growth of SpaceTech start-ups and allow its private sector to tap into the burgeoning space industry.

The new zone will create an integrated business ecosystem to further the growth of space industry. It will create a competitive private sector, build national capabilities and contribute to the country’s economic growth, the entities said in a joint statement on Thursday.

Space is the next frontier of business growth set to propel the national economy for the next 50 years, Sarah bint Yousif Al Amiri, UAE Minister of State for Advanced Technology and chairwoman of the UAE Space Agency, said.

“This programme is a game-changer that will take our flourishing space industry to the next level while simultaneously building on the UAE’s established position as a global hub for talent, investment and innovation,” she said.

The new space economic zone will offer world-class infrastructure and an enabling environment to encourage the development of the national space industry.

It will offer businesses an integrated package of benefits including incubation, office space, mentorship, networking, investment opportunities, priority access to government contracts and closer co-operation with global research centres.

“Our aim is not only to drive entrepreneurship and economic development within the fast-growing space sector, but to attract and foster the most talented professionals from across the region and beyond,” Masdar chief executive Mohamed Al Ramahi said.

The strategic agreement between the UAE Space Agency and Masdar was signed at Abu Dhabi Sustainability Week 2022.

Under the scheme, the Masdar City free zone will issue tailor-made business licences for space-related companies across the launch sector, satellite communication, logistics, data analysis, science, technology, engineering and much more, according to a media statement.

Masdar City is home to several education, strategic research centres, businesses and serves as the headquarters of the UAE Space Agency and the International Renewable Energy Agency.

The UAE Space Agency’s space economic zone programme has four key pillars – the space economy accelerator group, space labs, space government services and work space.

It aims to create a sustainable and effective framework to facilitate public-private partnerships, build an attractive and integrated business environment for local and global companies, support the growth of national space technologies and services, and stimulate innovation.

The new agreement “underpins our high-impact strategy to enhance the competitiveness of the private sector and stimulate innovation”, Salem Butti Salem Al Qubaisi, director general of the UAE Space Agency, said.

“We are excited about this new stage of growth for the space industry which will power the UAE during our next 50 years of human progress.”

Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks.

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.

8. Pillar 2 implementation

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

UAE to open an economic zone for space companies at Masdar City

The facility aims to boost entrepreneurship and innovation in the space sector

Ten tax points to be aware of in 2026