- Are there any cultural points that someone considering doing business in your jurisdiction should be aware of?
UAE is a member of the Gulf Cooperation Council (GCC) countries in which Islam dominates all aspects of life.
Nowadays UAE is a multinational business centre and the presence of many ethnic groups led Emiratis to be tolerant of other social customs, but they remain however conscious of their own customs as markers of cultural identity. In the same way, foreigners are required to respect the local traditions and beliefs.
Unlike many other jurisdictions, working days in UAE start from and including Sunday till Thursday. Friday and Saturday are the rest days under the Labour Law. In the event that an employee is required to work on a Friday, they are entitled to receive time off in lieu or basic salary on the hours worked plus a supplement equal to 50 per cent of their basic salary.
Islamic holidays include Eid al-Fitr (2 days) and Eid alAdha (three days) as well as Ramadan. Ramadan lasts for 30 days and is considered by Muslims as the month of fasting during which they refrain from consuming food, drinking liquids and smoking. As per the UAE Labour Law, working hours should be reduced by two hours per day during Ramadan and does not differentiate between fasting and non-fasting employees.
- How easy is it to do business in your jurisdiction, and are issues with transparency or corruption easily resolvable?
United Arab Emirates has become an international hub for trading and operations with significant improvements in the ease of doing business including simplification of procedures, introduction of the latest technology systems and reducing or either eliminating minimum capital requirements.
In addition to the ease of doing business, many steps were implemented to enhance transparency. In particular, protection of the interest of the minority shareholders was one of the major initiatives considered, specifically for onshore businesses of which the majority of the capital must be owned by local nationals.
Further to that, all seven Emirates of the UAE have adopted measures to create a more favourable environment for overseas investors. In particular, three of the Emirates, Dubai, Abu Dhabi and Sharjah have very flexible rules regarding the acquisition of real estate property by foreigners.
Moreover, the Government of the UAE has recently passed a new Companies Law, including 18 draft laws covering insolvency and arbitration laws as well as foreign investment law. The new laws are intended to address a range of issues that are regarded as hampering foreign investment in the UAE.
Oil and gas remain the key sectors for foreign investments. Abu Dhabi has however launched a policy for attracting foreign direct investments in order to organise and restructure certain public services such as water and electricity distribution as well as the collection and transport of household wastes.
- What is special about your jurisdiction? Why should an investor or entrepreneur choose your country as a gateway to Asia?
The UAE is a very progressive and stable country with a functional governing system. The effective tax system as a free-tax jurisdiction and the strong financial institutions, led to the acceptance of UAE as a regional hub in pursuit of innovation and excellence.
Since its establishment, the United Arab Emirates has been transformed into one of the most prosperous and highly advanced societies. The advantageous geographical location between Asia and Europe makes the transportation efficient, cheaper and easier.
Although Arabic is the official language of the UAE, English is the most spoken language. However, as a multinational business centre, there are lot of expatriates in the UAE who speak many other languages including Chinese, Malayalamand Hindi, among others.
UAE is a tax-free jurisdiction with no corporation tax (except of financial institutions and oil sector entities), no personal tax, no imports and exports tax, free repatriation of capital and profits and numerous double tax treaties signed, many of them with OECD countries.
There is currently no sales tax or Value Added Tax. VAT will be however imposed by January 1st, 2018 at the standard rate of 5 per cent. Important to note though at this point that various services including financial services, supplies of residential properties, international transportation, education services, healthcare services, local passenger transportation and insurance services will all be exempted from the VAT and many goods and services will be zero-rated. So, the overall impact of the VAT at least at this point is expected to be limited for the UAE market.
Moreover, UAE became a FATCA partner since 2015 and signed an intergovernmental agreement with the United States setting out the guidelines for the application of FATCA by financial institutions regulated by the UAE Central Bank, the Insurance Authority, the Emirates Securities and Commodity Authority (ESCA) and the Dubai International Finance Centre (DIFC).
With investments of trillions of dollars in the construction sector, UAE has now a modern infrastructure with the latest technologically developed systems, that has made it a regional transportation center.
- What help exists for overseas investors in terms of expert partners, trade networks or government incentives? Would you recommend a local business partner?
In an effort to improve the ease of doing business, UAE has encouraged the establishment of one-stop shops as intermediaries that assist foreign investors on the incorporation procedure as well as on everything relating to the business activities (i.e. book-keeping, bank account opening, advisory etc.).
To this, and through our affiliate ICG Middle East Commercial Services DMCC (ICG MECOS), which is located in Dubai we have introduced a new line of business focusing on corporate services in the UAE.
Our long term physical presence in the UAE, gives us the advantage of a deep understanding of the local economy, laws, procedures and very importantly the culture. In turn, this enables us to provide full assistance and business support.
Further to the one stop-shops, overseas investors looking for investment opportunities in the UAE may refer to the several Chambers of Commerce and Industry of the Emirate in which they are interested to operate to obtain assistance and all the information they want to know for the specific Emirate. There are seven Chambers of Commerce and Industry in the UAE, one for each Emirate.
In addition, it is important to note the presence of numerous Embassy Trade Departments in the United Arab Emirates to which foreign investors may refer to for full guidance and assistance.
There are numerous other professional bodies in the UAE that provide essential information and invaluable support. One of them is the Dubai FDI, which is part of the Department of Economic Development in Dubai.
Philippines –VDR The Government is actively courting foreign investment, they have a board where you can go in and they will tell you what areas are open to foreign investment. They have smart people and are very helpful, and as long as you are not on the negative list you don’t need a local partner. Uber are fully foreign-owned because it is a service company.
The Philippines has 100 million people with an average age of 23. They are young, well-educated and like western things. There is a lot of money to be made in the Philippines in the right industry.
There are a range of trade networks with many foreign chambers of commerce trying to push ideas and make life easier for their investors with visa requirements, banking regulations and things like that. We would recommend a local partner because people come in and think they know everything because they have spoken to someone. In the Philippines, personal relationships count for a lot and in the business world gossip goes around.
- What are the major regulatory barriers to entering your marketplace?
The United Arab Emirates (UAE) maintains a free exchange and liberal trading system. However, there are some considerations, issues and questions confronting companies as they stablish, operate and grow a business in the Middle East market.
In particular, some of the major regulatory barriers to entering the UAE marketplace are the enforced local ownership rules as well as the Shari’a law and its influence on the whole local market.
Following the UAE Federal Law, UAE offers three different types of companies as per their legal structure and ownership such as the Limited Liability Company (LLC), Free Zone Company (FZC) and the Offshore or International Business Company (IBC). Based on the foreign ownership restrictions contained in the Commercial Companies Law (CCL), it is required that at least 51 per cent of the share capital of a Limited Liability Company should be owned by UAE National(s), whereas the CCL does not apply to the other types of companies of which 100 per cent foreign national ownership is allowed.
With regards to the establishment of branches or representative offices of foreign companies in the UAE, then an approval from the Ministry of Economy is required as well as a commercial licence from the Department of Economic Development of the Emirate in which the office will be established. The license is renewable on an annual basis.
In addition, the influence of the Shari’a law to the whole UAE market is considered as one of the major barriers of entry. The Shari’a law is technically applicable to both Muslims and non-Muslims, however is generally not applied to the family law of non-Muslims, or to their inheritance. Moreover, there is also the Dubai International Financial Centre (DIFC) Courts, an independent English-language common law system, with jurisdiction governing civil and commercial disputes nationally, regionally and worldwide. In April 2015, the DIFC Courts announced a wills and probate registry which made UAE as the first jurisdiction in the Middle East region where a non-Muslim individual has the ability to register a will under internationally recognised common law principles.