Car rental companies across the United Arab Emirates will face new rules from January 1, 2027. All vehicles offered for hire must have approved tracking devices, while rental businesses must register on a unified electronic platform.
The changes are part of Cabinet Decision No. 174 of 2026. It introduces the implementing regulations of Federal Decree-Law No. 14 of 2024, which governs road traffic across the country.
Under the new rules, no person or company can operate a vehicle rental business without first securing a permit from the relevant licensing authority. Businesses must also meet several conditions before they can receive approval.
One key requirement is the installation of tracking devices approved by the licensing authority. These devices must be fitted to every vehicle used for rental services.
Companies must also register and subscribe to a unified electronic platform approved by the Ministry of Interior and the relevant licensing authority. They will need to meet any additional conditions set by licensing bodies or traffic enforcement authorities.
A valid commercial licence is another essential requirement. It must be issued by the competent authority and clearly allow the business to provide vehicle rental services.
The operating permit will remain valid for one calendar year. Companies can apply to renew it for another year, subject to the applicable requirements.
The new system aims to improve oversight of rental vehicles and make it easier for authorities to monitor their use across the UAE.
The Ministry of Interior will be responsible for establishing and designing the electronic system. It will contain records of vehicles owned by rental companies and allow authorities to track the geographical areas where those vehicles operate.
The platform will also store information and data related to rental activities. This will give authorities a central source of information about rental vehicles and their agreements.
The regulations also introduce five main obligations for licensed rental companies. These rules cover customer checks, rental agreements, vehicle registration and the use of rental fleets.
First, companies must check that customers hold valid driving licences before handing over a vehicle. This requirement is intended to ensure that people renting cars are legally allowed to drive them.
Second, every rental transaction must use the standardised rental agreement available through the approved vehicle rental system. Companies will not be free to rely on separate arrangements that do not meet the system’s requirements.
Third, rental agreements must be registered with the relevant licensing authority through its approved electronic systems. This will allow authorities to keep records of rental transactions and access the required information.
Fourth, companies must carry out rental activities only with vehicles registered in their own names. Those vehicles must also have approval from the relevant licensing authority for rental use.
This condition means businesses cannot freely use vehicles that are registered to other parties or have not been approved for rental services.
Fifth, rental companies will not be allowed to lend their vehicles to other rental businesses unless the arrangement is covered by a rental agreement registered with the licensing authority.
There is a limited exception for vehicles used by employees of the same rental company. However, this will be allowed only under the conditions and controls set by the relevant licensing authority.
The new requirements place greater responsibility on rental businesses to keep accurate vehicle records and follow approved procedures. They also make digital registration and vehicle tracking central parts of the sector’s operations.
For customers, the rules introduce clearer requirements for licence checks and rental agreements. For companies, they mean preparing their fleets, systems and commercial documents before the regulations take effect.
Businesses will need to ensure that every rental vehicle has an approved tracking device and that their operations meet the platform’s registration requirements. They must also make sure that their permits and commercial licences remain valid.
The annual permit system will require companies to keep track of renewal dates and continue meeting the conditions set by authorities.
The changes form part of the UAE’s wider effort to strengthen road traffic regulation and improve control over commercial vehicle activities. By bringing rental vehicle information into one electronic system, authorities will have a clearer view of where vehicles operate and how they are being used.
With the January 1, 2027 start date approaching, car rental companies across the country will need to prepare for the new licensing, tracking and registration requirements.
