Dubai’s New Licensing Law for Contractors From 2026

Dubai’s new licensing law for contractors brings compulsory registration, certification, and a compliance-linked classification system. The regulation applies from January 2026 and covers all construction activity across mainland Dubai and free zones. 

Dubai has issued a new Law No. 7, 2025 to regulate the Emirate’s contracting sector. Law No. 7 has introduced compulsory contractor registration, professional certification requirements, and subcontracting controls.  

It applies to all construction-related activities across mainland Dubai, free zones, and the Dubai International Financial Centre (DIFC), except airport-linked projects. The regulation would come into force in January 2026, with a one-year compliance window.  

Registration and certification now mandatory 

This new law has a new classification system linked to a central Contractor Register managed by Dubai Municipality and integrated into the Invest in Dubai digital platform. Contractors must be formally registered and licensed to carry out projects in the UAE and may only operate within their assigned category and specialization.  

The system replaces the earlier model where contracts were often awarded based on the lowest bid. Going forward, project awards will take into account a company’s technical capacity, workforce, financial health, and compliance track record. 

New contractors entering the market will automatically be placed in the lowest classification tier, with the possibility of promotion only if they meet the criteria for higher categories. They cannot operate outside their classification, either in terms of technical capability, staff strength, or financial capacity. And the employers are prohibited from hiring unregistered contractors or assigning tasks outside the contractor’s license. 

The technical personnels now need to obtain a professional competency certificate issued by the Dubai Municipality. The contractors are responsible for ensuring that their staff meet this requirement, and if they are hiring uncertified workers, it could result in penalties for both the contractor and the worker. 

The contractors are also required to maintain original contracts, records, and project-related documentation for at least 10 years after completion or contract termination. A code of conduct and ethics is expected to be issued soon, and contractors will be required to adhere to it, including complying with instructions issued by the appointed engineering offices. 

Look at: Navigating Trade License Renewal in Dubai 

Subcontracting is now subject to prior approval 

The law introduces formal controls around subcontracting. Contractors may only delegate work if: 

• Their original contract permits it; 

• The subcontractor is licensed and registered with Dubai Municipality; 

• The scope of the subcontracted work matches the subcontractor’s licensed activity; and 

• Prior approval is secured from the designated authority. 

The contractors may invite penalties or enforcement action if they attempt to bypass this process, whether through informal arrangements or exceeding subcontracting limits. 

New oversight body will be established 

A dedicated Contracting Activities Regulation and Development Committee will be established to oversee the implementation of the law. The committee will be chaired by a Dubai Municipality, will include other regulatory officers and will be tasked with approving activities, resolving jurisdictional overlaps, and updating policy. 

Enforcement and penalties for non-compliance 

The contractors can invite fines ranging from AED 1,000 (US$272.2) to AED 100,000 (US$27,225.5) for first-time violations. This can double to AED 200,000 (US$54,451) for repeated violations within the same year. Given the tight margins in Dubai’s construction market, such penalties are expected to carry real commercial consequences. 

For severe or repeated violations, there are further penalties: 

• Construction activities can be suspended; 

• Contractor classification can be downgraded; 

• Contractor can be removed from the official registry; 

• Trade licenses can be suspended or revoked; 

• Technical staff can be deregistered, or competency certificates can be cancelled. 

The law is scheduled to come into effect on January 15, 2026, so the contractors will have until January 14, 2027, to bring their operations into full compliance. All construction activities in Dubai, including those in free zones and the Dubai International Financial Centre (DIFC), will fall under the scope of this law, except those related to airports or exempted by decision of the Executive Council. 

Joint ventures and turnkey projects now under regulatory scope 

The law now regulates joint ventures (JVs) and turnkey contracts. The contractors wishing to form unincorporated JVs need to obtain prior approval from the competent authority. For turnkey contracts, in which the contractor delivers a completed, ready-to-operate facility, the competent authority will determine eligibility and oversee regulatory conditions. 

This step aims to prevent informal partnerships and unregulated “design-and-build” arrangements, and at the same time allow for flexible project delivery models. 

New contractor rating system coming in 2026 

The Dubai Municipality has also announced an upcoming update of the Contractor and Engineering Consultancy Rating System, which will go live in early 2026. This intends to introduce a performance-based evaluation of contractors, based on financial discipline, compliance history, and technical capacity. 

The new system is designed to work alongside Law No. 7 and offers an additional layer of benchmarking for ongoing project eligibility and advancement in classification. 

Preparing for compliance 

Contractors operating in Dubai will need to act within the upcoming transition window. They may consider some of these immediate steps: 

• Reviewing existing projects and contract portfolios against the new classification rules; 

• Ensuring all technical staff obtain professional competency certification; 

• Auditing subcontracting arrangements and formalizing approvals; 

• Preparing documentation systems to retain and archive contracts for a 10-year period; and 

• Establishing internal compliance teams to monitor readiness through 2026. 

In short 

Law No. 7 has changed how construction and engineering work is permitted and penalized in Dubai. The contractors will now need to qualify based on their capacity and competence, not just cost.  

The business engaged in the contracting activities in Dubai have also pointed out that the introduction of classification rules, digital compliance system, and penalties structure could provide greater clarity in dealing with regulatory authorities and raise industry standards.  

See more: UAE Residency Through Business in Dubai: 2025 Guide 

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