uae - Luxembourg For Business

MARKET ENTRY GUIDE
UNITED ARAB EMIRATES (UAE)
1
1
2
Introduction
3
Modes of Setting up a Business in the UAE
5
3
Procedures for Immigration to the UAE,
8
3.2
Key Points for Work Permits
3.4
Renting Property
2.1
3.1
3.3
3.5
Average Time (in days) Required for Setting up a Business
7
Visa Requirements
10
Real Estate/Freehold Property
15
11
19
Average Rent for Office Space in Dubai and Abu Dhabi
20
Social Security System in the UAE
24
5
Free Trade Zones (FTZs) in the UAE
25
5.2
List of FTZs
3.6
4
4.1
5.1
5.3
6
Average Living Costs for Expatriates
Pensions
Introduction – FTZs
Procedures for Starting a Company in a FTZ
Opening a Bank Account in the UAE
6.1
Overview of Retail Banking
6.3
Major Banks,
6.2
Procedures for Opening an Account
7
Recruitment of Local Staff
7.2
Brief Overview of Labour Laws
7.1
7.3
8
8.1
8.2
27
29
30
30
31
33
35
Average Salary Range
38
Taxation
Tax Rates
37
41
41
Double Tax Treaty between the UAE and Luxembourg
46
Appendix
47
Appendix I: Useful Links and Addresses
10
25
36
Repatriation of Profits
25
Major Recruitment Agencies and Websites
8.3
9
22
Appendix II: Embassies
Disclaimer
47
47
51
52
2
1 Introduction
The United Arab Emirates (UAE) is a federation of seven emirates
that was formed on 2 December 1971. The UAE government has
successfully managed to create a business environment that
is conducive to economic growth. This has helped promote the
UAE as an international centre for trade, finance and services,
attracting reputable global companies.
According to data from the National Bureau of Statistical data
of the UAE, the total GDP (at fixed prices) amounted to EUR
(200.84 billion) AED 977.32 billion in 2010, registering a growth
of 1.4 percent. The country’s GDP for 2009 was EUR 198.01 billion)
AED 963.53 million, where the currency shrunk by 1.6 percent.
The percentage contribution of non-oil sectors has decreased to
about 68 percent in 2010 as compared with 71 percent in 2009.
On the other hand, the percentage contribution of the oil sector in the total GDP increased from about 29 percent in 2009
to 32 percent in 2010, led by the hike of oil revenue as a result of
increase of crude oil prices1. It is to be noted that UAE now uses
2007 as its base year.
The UAE’s currency, the dirham, is secure and freely convertible.
There are no restrictions on profit transfer or capital repatriation
in the country. Import duties are low (around 5 percent for most
of the goods) and, in the case of items imported for use in the
free zones, non-existent in the country. Further, the UAE does not
levy corporate tax or personal taxes and the country has signed
58 double-taxation avoidance agreements and 32 bilateral investment treaties as of 2011. In addition, the financial risk for the
investments is minimal in the UAE (Moody’s credit ratingAa2).
These factors, combined with a strategic and accessible location
for major regional markets, an excellent, reliable infrastructure
and an extremely stable and safe working environment, make
1
Source: Ministry of Economy - UAE
3
the UAE an ideal country for investments. The UAE ranks high in
the list of the Middle Eastern and GCC (Gulf Cooperation Council) countries and is deemed to be the most attractive to direct
foreign investments (FDI), securing FDI inflows worth EUR 2.90
billion (USD 4 billion) during 20102.
Various efforts that are being made to foster an enabling regulatory environment include the following:
| Amendments to the Company Law are currently being made
in order to streamline procedures.
| The Federal Commercial Law that requires a 51 percent3 local
partner for businesses located outside free zones is under
review.
| The Ministry of Economy is in the final stages of drafting a
competition law that should provide further assistance in
combating cartels.
| The government is working on introducing a foreign investment law that will further increase private sector competition and lower inflation.
| The Federal Law No. 24 on consumer protection was passed in
20064.
| Several rent ceiling initiatives were issued at the emirates
level to deal with rent increases.
Source: The National
Source: Government - UAE
Conversion Rate: The figures in the document have been converted with the following exchange rate conversion (Source: www.oanda.com)
USD to EUR
2010 = 0.7548
AED to EUR
2010 = 0.2055
2
3
4
4
The UAE has been a contracting party to the General Agreement on Tariffs and Trade (GATT) since 1994 and a member
of the World Trade Organisation (WTO) since 1996. It is also a
member of the Greater Arab Free-Trade Area (GAFTA) in which
all GCC states participate. The UAE is in the process of negotiating free trade agreements with the US, Japan and India and has
embarked on negotiations, either individually or with the GCC,
on several regional trade agreements.
The following report aims to discuss the most important issues
pertaining to the administrative, legal and financial aspects of
setting up businesses and hiring personnel, as well as the living
conditions, in the UAE.
2 Modes of Setting up a Business in the UAE
The UAE offers an investment environment that is among
the most liberal and attractive in the Gulf region. Economic
activities in the country are regulated by the federal government as well as by individual emirates. All business activities are
primarily covered by three categories of licences:
1 Commercial licence covering all kinds of trading activities
2Professional licence covering professional services, other
services, craftsmen and artisans
3Industrial licence to establish an industrial or manufacturing
activity
This section elaborates on the common investment vehicles
available to foreign investors, the procedures to be followed in
order to establish them and the related regulations for each
investment mode.
Table 1 lists the most common modes of setting up businesses
by foreign investors and the related legal particularities involved
in the process, as laid down in Article 5 of the Companies’ Law
of the UAE.
5
Table 1: Different Modes of Setting up a Business in the UAE
modes of setting particularities
up A business
General Partnership
•The establishment of General Partnership
companies is limited to UAE nationals only.
Partnership in
Commendam and
Share Partnership
Company
•The Dubai government does not at present
encourage the establishment of these companies.
Joint Venture (JV)
•The local equity participation in the joint venture
must be at least 51 percent but the profit and loss
distribution can be prescribed otherwise.
•The JV is not required to be licensed or the
agreement required to be published.
•In practice, JVs are seen as offering a suitable
structure for companies collaborating on specific
projects.
Public and Private Joint-Stock Companies
•Public and private joint-stock company structure
is suitable for large-scale projects or operations.
•The Commercial Companies Law stipulates
that companies engaging in banking, insurance
or financial activities should be run as public
shareholding companies.
•On the other hand, foreign banks, and insurance
and financial companies can establish a presence in
Dubai by opening a branch or representative office.
•The minimum capital required is EUR 2 million (AED
10 million) for a public company, and EUR 0.40
million (AED 2 million) for a private shareholding
company.
•The chairman and majority of directors must be UAE
nationals.
•There is less flexibility of profit distribution than
is permissible in the case of limited liability
companies.
Limited Liability Companies
•A limited liability company is suitable for
organisations interested in developing a long-term
relationship in the local market.
•This type of structure can be formed by a minimum
of 2 and a maximum of 50 people whose liability is limited to their share in the company’s capital.
•The minimum capital required is EUR 2 million
(AED 10 million) for a public company, and EUR 0.40
million (AED 2 million) for a private shareholding
company.
•The foreign equity participation in the company
may not exceed 49 percent but the profit and loss
distribution can be prescribed otherwise.
•Responsibility for the management of a limited
liability company can be vested either with a foreign
or a national partner, or a third party.
6
2.1 Average Time (in days) Required for Setting up a Business
In order to start a business, the legal and bureaucratic hurdles
that companies/entrepreneurs must overcome need to be
identified. Registration is highly important to access a range of
market infrastructure, including finance, physical infrastructure
(electricity, water) and contract enforcement. The greater the
number of procedures, the wider is the scope for enforcing them
in uneven ways.
According to a World Bank report, the average time taken to
start a business in the UAE is high in comparison to that in Jordan, Oman and Iran. Figure 1 illustrates the obstacles inherent
in starting business ventures in various countries.
Figure 1: Obstacles in Starting Businesses in Various Countries
Source: The World Bank Group - Document: Doing Business 2011
7
3 Procedures for Immigration to the UAE
The UAE has simple steps and procedures for immigration.
Citizens of 37 countries (i.e. GCC nationals and nationals of listed
countries) do not require visas prior to arrival at a UAE airport. A
person coming to work in the UAE requires a visa that can only
be obtained on the person’s behalf by the employer or sponsor.
The kind of visa required for entry into the UAE depends on
several factors such as nationality, the purpose of the planned
visit and its expected duration.
The following categories of visitors may receive their visit visa
at the airport, upon arrival
1 AGCC (Arab Gulf Countries Council) residents who are not
GCC nationals but who have a high professional status such
as company managers, business people, auditors, accountants, doctors, engineers, pharmacists, or employees working
in the public sector, their families, drivers and personal staff
sponsored by them, are eligible for a non-renewable 30-day
visa upon arrival at the approved ports of entry.
2National citizens of the following countries:
the UK (with the right of abode in the UK), France, Italy, Germany, the Netherlands, Belgium, Luxembourg, Switzerland, Austria,
Sweden, Norway, Denmark, Portugal, Ireland, Greece, Finland,
Spain, Monaco, Vatican City, Iceland, Andorra, San Marino, Liechtenstein, the United States, Australia, New Zealand, Japan, Brunei, Singapore, Malaysia, South Korea and holders of Hong Kong
SAR passports are granted a free of charge visa for a single visit
upon arrival in the UAE. It should be noted that this list is subject
to change and it is therefore best to check with the local UAE
embassy or the airline that will be used to fly to the UAE.
3A person who does not fall into one of the previous categories requires a visa and a sponsor or an employer for the visit.
The employer or sponsor normally applies for the visa on the
person’s behalf.
8
Valid sponsors may be:
| Hotels and Tourist Companies - can apply for a tourist visa
(valid for 30 days); a service visa (valid for 14 days); or a Visit
Visa (valid for 30 days and extendable to up to 60 days)
| Airlines and Airlines Handlers - can apply for a 96-hour transit
visa on behalf of their crew members.
| Other Organizations based in the UAE - may only apply for
visit visas and service visas.
| Individuals (relatives or friends) already resident in the UAE can apply, subject to guidelines, for a visit visa.
Table 2: Visas Issued by the UAE Government
type of visa
applicants
visa sponsor
Visit Visa
Tourists on family visits and
on long-term business visits
who wish to spend more
than 14 days in the UAE
Must be self-financed
or sponsored by any
company or hotel licensed
to operate in the UAE
Tourist Visa
Tourists from Eastern and
Western Europe, who are
not entitled to a visa issued
on arrival, and visitors from
Thailand, South Africa and
UAE
Must be sponsored by
hotels and tour operators
Entry Service
Permit or 14-day
Stay
Businessmen and tourists
Must be sponsored by a
company or a commercial
establishment or a hotel
licensed to operate within
the UAE
Transit Visa
Individuals flying to or
from Europe/the US from
or to Asia/Africa as well as
individuals passing through
UAE airports
Must be sponsored by an
airline operating in the
UAE and should have a
valid ticket for onward
journey
Multiple Entry
Visa
Business visitors who are
frequent visitors to the UAE
and who have a relationship
with a reputable company in
the UAE
Visitor to enter the UAE on
a visit visa and obtain the
multiple entry visa while
in the country
9
3.1 Visa Requirements
UAE issues several visa types depending on the applicant
type, duration and the purpose of the visit.
Table 2 lists the different types of visas issued by the UAE
government.
duration
fees
Valid for 60 days and renewable
for a total stay of up to 90 days
EUR 20 (AED 100), with an additional
EUR 2.0 (AED 10) for delivery; a fee of
EUR 100 (AED 500) charged for renewal
Valid for a 30-day stay, nonrenewable
EUR 20.0 (AED 100), with an additional
EUR 2.0 (AED 10) for delivery
Valid for 14 days from the date
of issue, exclusive of arrival and
departure days, non-renewable
EUR 24.0 (AED 120) with an additional
EUR 2.0 (AED 10) for delivery
Valid for 96 hours
Travel documents stamped with an
entry seal; no charge for this visa
Valid for six months from the date
of issue; each visit not to exceed
30 days in total.
EUR 199.9 (AED 1000)
10
3.1.1 Documents Required for Visa Applications
Foreign nationals applying for a UAE visa must have the following documents:
| Passport
| Two recent passport-size photographs
| Duplicate application form
| Letter or fax from the sponsor in the UAE to the concerned
embassy
| Letter from the applicant’s company and a copy of it
3.2 Key Points for Work Permits5
| An employer pays a fee of EUR 40 (AED 200) for each employee brought to the country and EUR 199.9 (AED 1000) for each
approved employee.
| An establishment can change the work permit during the
validity period (the first issue) only once, provided that the
permit is changed for someone of the same sex, nationality
and occupation approved by the Ministry. It is allowed to interchange any person with an approved nationality with an
Arab nationality, but not a person with an Arab nationality
with another nationality.
| No fees are collected for the work permit change application.
| The first permit can be renewed for one month after a period
of 60 days following the issue date. If the permit has not been
changed during this period, it is considered cancelled (fees
are not retrieved) and an application for a new permit has to
be filed. All decided fees—EUR 40 (AED 200) for work permit
application and EUR 199.9 (AED 1000) to approve and issue
the work permit and work contract—are collected.
5
Source: Ministry of Labour - Procedure Guide for Labour Sector, Gulf News
11
| Under the new work permit rules effective 1 January, 2011, a worker with an expired contract in the UAE can now obtain a new work
permit and shift to another employer without seeking his sponsor’s consent. The parties must fulfill two conditions:
· The two contracting parties must have ended their work relationship cordially
· The worker should have worked with his employer for at least
two years — the duration of the newly inroduced labour card
| If an employer delivers the work permit cancellation application and does not complete activities of approval, the permit
is cancelled without fees; however, a fine of EUR 199.9 (AED
1000) is deducted from the establishment balance.
| The authority of confirming the change is performed by labour offices directors and labour licences directors without
referring to the permit committee, provided that the rules and
regulations for work permit change are adhered to.
| A licence partner cannot change the system since a licence
partner is a possessor of the establishment and not an employee in the establishment.
| The change is only approved after confirming that the approving fees of EUR 199.9 (AED 1000) were paid for the first permit
that needed to be changed.
3.2.1 Requirements for Eligible Applicants
| The applicant should be over 18 and under 60 years of age.
| Depending on employer needs, the age limit can be extended to 65 years, but only with the approval of the Minister of
Labour.
| The applicant should hold a professional degree or the relevant skill sets required in the UAE labour market.
| The work permit will be cancelled in case of diseases such as
AIDS or TB (Tuberculosis).
| The applicant must hold a valid passport for at least six
months.
12
3.2.2 Documents and Fees
Individual Work Permit Application from outside the UAE
The following documents are required in case of applying for a
work permit from outside the UAE:
| ‘Work permit application’ (outside the state) form.
| A copy of the passport.
| A copy of the scientific qualification attested by the embassy
of the UAE in the country in which the scientific certificate
was issued and also by the UAE Ministry of Foreign Affairs is
to be submitted. (However, no licences are required for simple
jobs in the contracting and general maintenance sectors, or
for fishermen and drivers.).
| A copy of the driving licence is to be enclosed when applying
for a driving job.
| A letter issued by the Ministry of Health and the relevant scientific certificates are to be enclosed when applying for the
post of a doctor, pharmacist, nurse or other technical medical
occupations.
| A letter from the Ministry of Education is to be enclosed
when applying to the position of a teacher in private schools.
| In the case of industry licences, an industrial production certificate issued by the Ministry of Finance and Industry is to be
enclosed.
| A copy of the signatures confirmation card from the Ministry
of Labour and Management of Nationality and Residency.
| A copy of the effective licence.
Fees:
| A fee of EUR 239.9 (AED 1200), which includes issuing the
work permit, work card and work contract, is to be paid by the
employer for the work permit.
13
Notes:
| A fee of EUR 40 (AED 200) is to be paid by the employer
through electronic dirham when applying for an external
work permit.
| A fee of EUR 199.9 (AED 1000) is to be paid by the employer
through electronic dirham when approving the work permit application (including the work card fees and the work
contract for three years)
| Work validity for 60 days from the date of issue by the
Ministry of Labour; can be renewed for a month after a period
of two months.
Group Work Permit Application from outside the UAE
The following documents are required:
| A Primary letter of application to obtain the permission for
the group work (authorised by the ministry’s undersecretary).
| A ‘Group Work Permits Application’ form.
| A copy of an effective licence.
| The signature confirmation card.
| The contracts and projects record with the subcontracts attested by the Ministry of Labour.
Fees:
| A total of EUR 239.9 (AED 1200) is charged as follows: EUR 40
(AED 200) when applying for the permit, EUR 199.9 (AED 1000)
for each employee after the approval from the employer.
Notes:
| The group work permit is not renewable and is valid for six
months from the date of the approval.
14
New Work Card and Work Contract of the Work Permit
Application outside the UAE
The following documents are required:
| A ‘New Work Card’ form.
| Three copies of the work contract.
| A copy of the entrance permission.
| A copy of the passport.
| A copy of a 3-month effective medical examination approved
by the Ministry of Health or Preventive Medicine Department.
| A copy of the signing dependence.
| A copy of the effective commercial permit.
| A self-addressed envelope for the post office.
Fees:
| No fees are collected at this stage; they would have been
collected previously with the work permit issuance fees.
Notes:
| If the date of the work permit issue, printed on the new
work card, differs from the one recorded in the ministry
database, the ministry computer will automatically refuse
the transaction, without involving any authorised employee.
3.3 Real Estate/Freehold Property
Most expatriates living in the UAE normally rent the apartment,
flat or villa they live in.
3.3.1 The Definition of Freehold
The UAE currently does not have a federal law defining freehold.
The freehold property law is applicable in one emirate, Dubai
while it is under development in the other emirates. The law
means that the property purchased by a foreigner is put in his/
15
her name for life, which allows him/her to register the property
with the Lands Department. The owner then has full rights to the
property, including the right to sell, lease or rent the property at
his/her own discretion. However, the property rights to foreigners are available subject to a few restrictions. The foreigners who
own property in Dubai, Ajman or Ras Al Khaimah are eligible to
apply for a UAE residence visa valid for three years.
3.3.2 Freehold Property in Dubai
Dubai has worked towards the promotion of real estate development. The major property boom in Dubai occurred in May 2002,
when Dubai’s crown prince, General Sheikh Mohammed bin
Rashid Al Maktoom, issued a decree to allow foreign nationals to
buy and own freehold property in selected areas of the city, now
referred to as New Dubai. The same month also witnessed the
announcement of Nakheel’s man-made island, The Palm Jumeirah, which was followed a year later by the second man-made
palm-shaped island, The Palm Jebel Ali. All previously developed
leasehold property was automatically transferred to freehold.
After the initial property boom, various new developers joined
the market. Freehold properties in Dubai are currently majorly
limited to areas on Jebel Ali, the Palm Island projects, The World
islands, Dubai Marina, Emirates Hills and Al Barsha.
Dubai Freehold Property Law
On 14 March 2006, the Dubai government issued a law legalising
foreign ownership of properties in designated areas of Dubai.
However, the law does not give property owners permanent
residence visas or an automatic right to work in Dubai.
16
3.3.3 Freehold Property in Rest of the UAE
Once Dubai began offering freehold properties to citizens of
other countries, other emirates followed suit. The following are
the various projects and property developments in the emirates:
Ras Al Khaimah
Ras Al Khaimah was the first emirate to emulate Dubai, with
its 1,300 residential unit development named Al Hamra Village.
The second freehold development for Ras Al Khaimah, spread
across 50 acres of beachfront land of a five-star resort facility, is
The Cove. Another popular RAK property is the 1-million square
metre tourist development, Saraya Islands.
Ras Al Khaimah’s government has set up its own public joint
stock property development company, RAK Properties, which
received freehold rights for all its properties from the city’s ruler
in November 2005. RAK Properties has developed a wide range
of projects in the city, which includes Julfar Towers, Mina Al Arab,
Mangrove Island and Khor Qurum.
Ajman
Ajman was the second emirate to follow, with the announcement of its 15 freehold residential apartment buildings named
Al Naeemiya Towers. The same company that developed the Al
Naeemiya Towers has continued developing its portfolio of Ajman properties with Al Khor Towers, Al Rashidiya Towers and
the Al Corniche Tower. Tameer Real Estate announced completion of an EUR 246.60 (AED-1.2-billion) freehold residential and
commercial project in Ajman, named Al Ameera Village, which
is built on the Emirates Ring Road.
17
Sharjah
Sharjah has also started offering property for foreign ownership, although the majority of property is presently held by lease.
Some of its upcoming towers include ABBCO Tower, Sharjah Gate,
the 32-storey Al Taawun Tower, and the 47-storey Al Sandos
Tower. Tameer also plans to develop various towers throughout
Sharjah, and Al-Hanoo has developed the 60-million square foot
Nujoom Islands.
Umm Al Quwain
Tameer has developed the Emirates Modern Industrial Area that
to primarily serve the manufacturing industry, which is built near
the famous UAQ Aviation Club. Tameer has also developed the
EUR 6 billion (AED 30 billion) Al Salam City, situated along the
Emirates Road in Umm Al Quwain. Umm Al Quwain’s property
ownership law states that non-GCC nationals can own property
but not the land.
Fujairah
Fujairah’s efforts to enter into the freehold market have been
limited to the construction of the 43-storey, 170-metre Al Jabar
Tower, which will contain 270 residential apartments, commercial shops and showrooms and is being developed by Al Jabel
Contracting.
Abu Dhabi
Abu Dhabi’s property law came into effect on 14 August 2005,
when the emirates’ government announced a 99-year land
ownership and a renewable 50-year surface ownership to foreign nationals in specified areas in Abu Dhabi. Properties by
Aldar Properties and the Al Reef Villas project by Manazel and
Hydra Properties have permitted foreign ownership according
to the new property law.
18
3.4 Renting Property
The renting of property is the dominant activity in the property
market of the UAE.
3.4.1 Rental Requirements
In order to rent property in the UAE, the rent for the entire year of
tenancy is normally paid either in cash or by cheque. If the payment is made by cheque, most landlords will limit it to two to
four cheque payments. In addition to the tenancy payment, if the
property has been rented through an agency, a 5 percent6 commission will have to be paid to them. Most premises will require
the payment of a refundable security deposit equal to 5 percent of
the annual rent. As utility bills are paid by a tenant, it is normally
required that a refundable deposit ranging from EUR 199.9 to 399.9
(AED 1000 to 2000) be paid to the landlord for the use of water,
electricity and gas. Some premises also require the payment of a
10 percent municipal tax7 (Sharjah has a 5 percent municipal tax).
3.4.2 Rental Laws
Tenancy contracts in the UAE normally last for two years, with
the exception of Sharjah, where it is normally for three years.
Within that period, landlords are not permitted to increase the
rent until it requires renewal. At the time of renewal, a landlord
is not permitted to increase the rent by more than that stated
in accordance to the rental index set by the Real Estate Regulatory Agency (RERA)8. If a dispute between a tenant and landlord
occurs on the rent increase, the matter should be settled by the
Municipality’s Rent Control Committee. Filing a case with the
Rent Control Committee will cost EUR 80.0 or 100.0 (AED 400
or 500)9 and it will normally take a few weeks or months before
Source: Rootsland
Source: Government UAE - Taxes
Source: Global Property Guide
9
Source: KM Rent
6
7
8
19
the two parties are summoned to appear before the committee.
If the case is won by the plaintiff, the fee paid to file a case will
be paid by the landlord.
3.4.3 Landlord Obligations
Landlords are normally obligated to take charge of the annual
maintenance of their property and they are not permitted to
evict a tenant without just cause within the tenancy contract
time period.
3.5 Average Rent for Off ice Space in Dubai and Abu Dhabi
Office rental rates in the UAE have grown significantly over the
past few years, mainly driven by the demand from the high influx of multinational companies setting up operations and the
growth of existing businesses. The following are the trends in
average office rental expenses in Dubai and Abu Dhabi:
Dubai
Dubai is less expensive than London, Hong Kong, New York and
Tokyo, where average office space prices are more than three
times the prices in the UAE. Rental rates (per annum) in Dubai have tripled and, on average, have risen to a whopping EUR
1,183.6 (AED 5,920) per square metre in fourth quarter of 2008
from EUR 914.7 (AED 4,575) per square metre in fourth quarter of
200710. According to Asteco’s rental research, rents on Sheikh Zayed Road have escalated to EUR 70–75 (AED 350–375) per square
foot as compared to EUR 44– 48 (AED 220–240). The prices at Bur
Dubai and Karama are at EUR 52.2 and EUR 56 and 53 (AED 280
and AED 265) per square foot, which have shown a 24 percent
and 51 percent increase over Q3 of 2006, respectively. Office rents
are expected to stabilise in the long term with the completion
of projected commercial units.
10
Source: Emirates-re
20
Abu Dhabi
According to CB Richards Ellis, commercial space in Abu Dhabi is
in high demand, with occupancy rates at a saturation level of 100
percent, creating additional pressure on supply and rental levels.
The supply shortage has narrowed the rental bands among the
prime-, mid- and low-quality office market divisions. Rents on
older buildings are on a relative decline, while overall office rents
in the CBD area range EUR 449.8 to EUR 499.8 (from AED 2250
to AED 2500) per square meter. The lease for office rentals is
generally three years with a three-month deposit. Annual rent is
generally paid in advance with service charges of 10-15 percent of
the annual rent. However, certain areas of Abu Dhabi, particularly
prime areas, have already surpassed the upper threshold with
increases observed to be more than 50 percent, and in some
cases, doubling year over year, as shown in Table 3.
Table 3: Comparative Prime Off ice Rental Levels (Per Annum)
in Selected Areas of Abu Dhabi
location
q2 2006 eur (aed)
q2 2007 eur (aed)
Al Bateen
223.7–279.6
(1200–1500)
298.2–465.9
(1600–2500)
Al Markaziyah
242.3–307.5
(1300–1650 )
316.8–465.9
(1700–2500)
Al Mushrif
223.7–260.9
(1200–1400)
37.3–55.9(200-300)
Corniche West
223.7–279.6
(1200–1500)
639.78 (3200) for Q2 2009
Source: Trade Arabia-Abu Dhabi
A further rise in the demand for office space is expected with
the implementation of diversification strategies, which will
broaden the opportunities in different sectors.
21
3.6 Average Living Costs for Expatriates
For a person living in the same manner as an average western
expatriate, the overall cost of living in the UAE will be similar to
that in most European countries. The no-taxation policy of the
government has a significant impact on the cost of certain items,
e.g. cars and electronic products. On the other hand, the cost
of accommodation is generally high, as is that of certain food
items, particularly imported foods. Internationally recognised
branded foods and household goods might be costlier than in
the home country; however, there are plenty of cheaper locally
and regionally produced alternatives that are of excellent quality.
Table 4 shows the average monthly major expenses for a single
person, couple and family with two children. (Numbers in brackets relate to the notes following Table 4).
Table 4: Average Monthly Major Expenses for a Single Person,
Couple and Family with Two Children
Monthly Costs (EUR/AED)
Item
Housing
Schooling
Utilities
Car Rental
• Couple with Two Children
• 19,993 – 23,991/100,000 – 120,000
• 7,997.2/40,000 – High School
• 3,998.6 – 5,598/20,000 – 28,000 – Primary School
• 199.9 – 399.9/1,000 – 2,000 – Electricity and water
• 2,399.2/12,000 – Full Time Maid
• 299.9/1,500 – per month
Telephone
• 50/250
Insurance
• 38/190 for a coverage of 9,996.5/50,000
Maximum Total
• 35,175.2/175,940
22
Notes
1 These are the rental costs for a one-bedroom apartment in a
modern block, probably unfurnished, a two-bedroom apartment in a similar block and a two or three-bedroom apartment or a modest villa. Apartments might have air-conditioning included in the rent. Satellite television is probably
provided but is unlikely to include all channels. A swimming
pool and/or gym are usually provided.
2This does not include luxury food items or alcohol.
3These rates include electricity (and air-conditioning), water
(and usually sewage if charged in conjunction with the water) and an allowance for telephone charges.
4This includes entertainment, dining out, sports, newspapers
and magazines but not holidays (air fares are often included
in work contract terms).
5These rates include running costs for an average family car
and third-party insurance, petrol, servicing and repairs, but
exclude depreciation and credit purchase costs.
6This includes private healthcare, travel, car and contents insurance. Note that property is rented, therefore, building insurance is usually unnecessary.
7Excessive clothing is unnecessary as a result of the region’s
hot climate. Office wear for men comprises a shirt and tie,
except on formal occasions.
23
4 Social Security System in the UAE
Small populations and high GDP rates allow the UAE government to fund the welfare of its people without needing to impose many financial obligations on them. For example, Dubai
does not have obligatory state or employer-contribution insurance schemes. UAE nationals working for private companies are
entitled to the same social security and pension benefits as UAE
nationals working for the government. The government hopes
to attract more nationals to non-governmental jobs by providing
benefits in the private sector to speed up the emiratisation of
the workforce. Under the national pension and social security
scheme, which came into effect in the public sector in May 1999,
nationals who have contributed to the scheme will be eligible for
retirement and disability benefits; compensation on the death
of these nationals will be granted to their dependents. Current
end-of-service entitlements for government employees have
been transferred to the new programme.
The General Authority for Pensions and Social Security (GAPSS),
which is an independent entity that invests employer and employee contributions to fund the social security programme, was
set up to operate the scheme. The government allocated the required capital of EUR 100 million (AED 500 million) in the 1998
budget for the establishment of the authority, which commenced
functioning as an investment body from 15 December 1998. Nationals are automatically provided with extensive help from
the state, including medical care, sickness and maternity coverage, child care, pensions, unemployment benefits and, in some
instances, housing and disability benefits.
Foreign workers have access to medical facilities. In fact, Dubai
is pressurising companies to provide medical insurance for their
employees to ease expatriate pressure on state healthcare programmes; private medical insurance is recommended for most
foreign nationals.
24
4.1 Pensions
There are no state pension schemes in Dubai for foreign expatriates, although certain state institutions and some international
companies have corporate pension schemes. Expatriates can
take advantage of their high disposable income in Dubai to avail
themselves of a personal pension plan. There are many companies offering a variety of schemes, either based on lump sums
or supported by regular savings.
5 Free Trade Zones (FTZs) in the UAE
5.1 Introduction – FTZs
The UAE has enjoyed substantial economic benefits and significant industrial growth as a result of its flourishing FTZs. Financial
incentives to establish manufacturing industries in the UAE are
primarily focussed on exemption from all taxes and duties levied
on profits or production, with the exception of licensing fees.
Further, there are no restrictions on profit transfer or capital
repatriation. Customs duty may also be exempted for qualifying projects established in special industrial zones. In addition,
nationally produced products are accorded a 10 percent price
advantage in government purchases over imported goods.
Different types of companies that can be established include
the following:
| Free Zone Company (FZCO/FZC)
| Free Zone Establishment (FZE)
| Free Zone Branch
25
Different types of licences that can be issued include the
following:
| Trading Licence
| Industrial Licence
| Service Licence
| National Industrial Licence
Exemption
It is possible for companies or their branches engaging in a trade
or business in the UAE to enter into an agreement with the ruler
of a particular emirate whereby it will be exempt from any liability to taxation on its income.
26
5.2 List of FTZs
Table 5 provides the names, purpose, financial incentives and
official websites of major FTZs in the UAE.
Zone
WEBSITE
The Abu Dhabi Free Zone
www.hcsez.ae
The Sharjah Free Zone
www.saif-zone.com/
Hamriyah Free- Zone
www.hamriyahfz.com
The Dubai Free Zone
Jebel Ali Free Zone (JAFZ)
www.jafza.co.ae
Dubai Airport Free Zone (DAFZ)
www.dafza.gov.ae
Dubai Technology E- Commerce and Media Free Zone
www.dubaimediacity.com
Dubai Cars and Automotive Zone
www.ducamz.co.ae
Dubai Gold and Diamond Park
www.goldanddiamondpark.com
Source: UAE Interact - Business Centre - Free Zones
27
OBJECTIVE
Financial Incentives
Facilities for warehousing, precious metals and food
•100 percent import and export tax exemptions
• 100 percent repatriation of capital and profits
• No corporate taxes for 15 years; renewable for
an additional 15 years
• No personal income taxes
Not Available
• 100 percent exemption from corporate and
personal income taxes for companies, investors
and their employees
Considered as one of the most
advanced free zones in the
Middle East providing attractive
concessions and investment
incentives to foreign investors,
including excellent manufacturing
and commercial facilities
• 100 percent import and export tax exemption
• 100 percent repatriation of capital and profits
allowed
• No corporate profits tax
• No personal income tax
100 percent foreign ownership;
company formation period is 5-20
days subject to availability of
facility requested and submission
of necessary legal documents
• No corporate taxes for at least 15 years;
renewable for an additional 15 years
• No restrictions on the repatriation of capital
and profits
• No personal income taxes
• No currency restrictions
Offers similar incentives as JAFZ,
• No corporate tax up to 15 years; renewable for
particularly in view of proximity to a similar period
the Dubai airport.
• Freedom to move capital including dividends
and profits
• Exemption from import duties
• No personal income tax
• Full repatriation of both capital and profits
• No currency restrictions
Manufacturing and commercial facilities with attractive
concessions and investment incentives to foreign investors
• No corporate taxes for at least
15 years; renewable for an additional 15 years
• No restrictions on the repatriation of capital
and profits
• No personal income taxes
• No currency restrictions
Facilities for the re-export of
• Governed by JAFZ rules and
automotive vehicles to the African, regulations
Asian and Middle Eastern markets
Not Available
• Not Available
28
5.3 Procedures for Starting a Company in a FTZ
The Free Zone Authority assesses a company’s requirements
and their feasibility for starting a company in a FTZ through a
questionnaire. Licence application, a list of invoice required for
planning, consumer request for electricity and Form B for environmental concerns, if applicable, are provided after submitting
the questionnaire. Finally, a duly filled in licence application is
to be submitted.
Provisional approval is given along with a specimen lease agreement; personnel documents for the licence requirement are submitted. After the meeting of the company representative and the
concerned authority to finalise the details of the project, actual
documents are processed.
29
6 Opening a Bank Account in the UAE
6.1 Overview of Retail Banking11
| The aggregated balance sheet of banks operating in the UAE
grew by 5.7 percent to reach EUR 329.95 billion (AED 1605.6
billion) at the end of 2010, against EUR 312.15 billion (AED 1519
billion) at the end of 2009.
| By the end of 2010, total deposits with banks operating in the
UAE amounted to EUR 215.7 billion(AED 1,049.6 billion), from
EUR 201.9 billion (AED 982.6 billion) in 2009.
| Foreign assets of banks reached EUR 47.98 billion (AED 233.5
billion) at the end of 2010, increasing by 12.2 percent from EUR
42.79 billion (AED 208.2 billion) in 2009.
| Capital & Reserves of banks operating in the UAE increased by
EUR 5.06 billion (AED 24.6 billion), from EUR 47.55 billion (AED
231.4 billion) at the end of 2009 to EUR 52.61 billion (AED 256
billion) at the end of 2010.
11
Source: Central Bank
30
6.2 Procedures for Opening an Account
Opening a bank account in the UAE is a straightforward process,
although requirements vary from bank to bank. Only residents
can open a current/checking account. However, some banks allow non-UAE residents to open savings accounts.
Foreign nationals need to provide the following documents to
open a bank account in the UAE:
| A valid passport (original and copy)
| A valid residence visa
| An official identification, such as a labour card or driver’s licence
| A salary certificate from the employer
| A letter of no-objection from the employer/sponsor
Note:
Some banks set a minimum account/balance limit.
6.2.1 Salary Transfer Account
| The requirement to open a salary transfer account is a noobjection letter from the employer addressed to the respective branch.
| Dependents on a husband’s or father’s visa who want to open
accounts need their original passports to verify the sponsorship.
| Banks also offer accounts to new entrants whose residence
permits are under processing, provided they submit either
a letter from the employer certifying their employment or a
letter of introduction or verification from a bank which the
applicant has an account with in his/her home country.
31
6.2.2 Phone and Internet Banking
| Due to security reasons, some banks require a branch visit for
even minor changes to account details. Other banks, however,
offer phone and Internet banking.
| The degree of functions of a phone or Internet banking plan
differs from bank to bank. Some banks only allow for bill payment and fund transfer to its different branches or other local
banks online or over the phone.
6.2.3 Foreign Currency in the UAE 12
| Most major banks offer customers the option to open accounts in major currencies such as USD, GBP and EUR.
| Most UAE banks accept cheques in major currencies, charging
rates starting at EUR 20 (AED100) and can take 30–45 days for
clearance.
12
Source: Gulf News
32
6.3 Major Banks13
The UAE has 28 foreign banks from several countries and 23 local banks. Foreign and local banks have established 111 and 754
branches respectively in the UAE, by the end of March 2009.
Table 6 lists the major banks in the UAE and their total number
in terms of each bank type.
Table 6: Major Banks in the UAE as of 31 March 2009
13
Bank Type
Number of
banks
Names of major banks
Local Banks
23
National Bank of Abu Dhabi
Abu Dhabi Commercial Bank
ARBIFT
Union National Bank
Commercial Bank of Dubai
Dubai Islamic Bank PJSC
Emirates Bank International
Emirates Islamic Bank
Mashreq Bank PSC
Sharjah Islamic Bank
Bank of Sharjah PSC
United Arab Bank PJSC
Invest Bank PLC
National Bank of R.A.K.
Commercial Bank International
National Bank of Fujairah PSC
National Bank of U.A.Q.
First Gulf Bank
Abu Dhabi Islamic Bank
Dubai Bank
Noor Islamic Bank
Al Hilal Bank
Ajman Bank
Source: Central Bank of the UAE
33
Bank Type
Number of
banks
Names of major banks
Foreign
Banks
(Locally
Incorporated)
28
National Bank of Bahrain
Rafidain Bank
Arab Bank PLC
Banque Du Caire
El Nilein Bank
National Bank of Oman
Calyon Bank
Bank of Baroda
BNP Paribas
Janata Bank
HSBC Bank Middle East
Arab African International Bank
BLC Bank (France) S.A.
Al Ahli Bank of Kuwait
Barclays Bank PLC
Habib Bank Limited
Habib Bank AG Zurich
Standard Chartered Bank
CitiBank N.A.
Bank Saderat Iran
Bank Meli Iran
Blom Bank France
Lloyd Bank TSB
ABN-Amro Bank
United Bank Limited
Doha Bank
Samba Financial Bank
National Bank of Kuwait
Restricted
Licence
Bank
1
Banca Commercial Italiana
Investment
Banks
3
•United Arab Emirates Investment
Bank P.J.S.C.
•HSBC Financial Services (Middle
East) Limited.
•Noor Capita P.S.C.
Source: Central Bank of the UAE
34
7 Recruitment of Local Staff
There are a large number of employment agencies, recruitment
agencies, consultants and job agencies in the UAE, which have
been growing rapidly. According to the UAE Ministry of Labour,
recruitment agencies are not allowed to charge fees for sign up
and/or visas and/or to be placed in jobs. There are employment
agencies (usually online) in Dubai that operate from another
country and so could claim to be able to legitimately charge a fee.
Employment agencies normally charge fees from the employer
and not the employee.
Some recruitment consultants in the UAE provide assistance
with writing curriculum vitaes and application letters, and/or
they may offer consulting services and psychometric evaluations
to assist in choosing suitable careers and jobs. A few of the larger and more well-known job search firms operating in Dubai include BAC Middle East, Clarendon Parker, IQ
Selection, Kershaw Leonard and SOS Recruitment.
There are various recruitment channels available in the UAE.
These include campus recruitment, headhunting agencies, media advertisements (newspapers, magazines, TV and broadcasting), Internet recruiting, on-site recruiting, internal references
and ‘walk ins’. Different approaches are needed for various recruiting requirements.
35
7.1 Major Recruitment Agencies and Websites
Table 7 lists the major recruitment agencies in the UAE and their
websites.
Table 7: Major Recruitment Agencies and Websites
top internet recruitment agencies
websites
Bayt.com
Bayt.com
Dubaidonkey.com
dubaidonkey.com
Gulftalent.com
gulftalent.com
Jobsindubai.com
jobsindubai.com
Jobtrackme.com
jobtrackme.com
Mawaride.com
mawaride.com
Monster.com
monster.com
Strategiy.com
strategiy.com
Jobs.theemiratesnetwork.com
jobs.theemiratesnetwork.com
Dubizzle.com
dubizzle.com
classified advertisements
websites
Gulf News
www.gulfnews.com/
Khaleej Times
www.khaleejtimes.com/
36
7.2 Brief Overview of Labour Laws
| Administered by the Federal Ministry of Labour and Social
Affairs, the Labour Law in the UAE is loosely based on the
International Labour Organisation’s model. UAE Law No. 8 of
1980, as amended by Law No.12 of 1986 (the Labour Law) governs most aspects of employer/employee relationships, such
as work hours, leave, termination rights, medical benefits
and repatriation. The Labour Law is protective of employees
in general and overrides conflicting contractual provisions
agreed under another jurisdiction, unless they are beneficial
to the employee.
| The ministry issues a model form of labour contract in Arabic,
which is widely used. Other forms of contract are enforceable,
provided they comply with the Labour Law. End-of-contract gratuities are set at 21 days’ pay for every year of the first five years
of service and 30 days for every year thereafter. Total gratuity
should not exceed two years’ wages. Employees are entitled to
pro-rated amounts for service periods less than a full year, provided they have completed one year in continuous service.
| Trade unions do not exist. In the case of a dispute between
an employer and an employee, or in the interpretation of the
Labour Law, the Ministry of Labour and Social Affairs will initially act as an adjudicator in an effort to resolve matters. If a
party wishes to appeal any decision taken, it can take its case
to court. Strikes and lockouts are forbidden.
| The normal maximum working hours are 8 per day or 48 per
week. However, these hours may be increased to 9 hours daily
for people working in the retail trade, hotels, restaurants and
other such establishments. Similarly, daily working hours may
be reduced for difficult or dangerous jobs. Many businesses
work on a two-shift system (for example, 8am–1pm and 4pm–
7pm). As in all Muslim countries, Friday is the weekly day of
37
rest. In practice, commercial and professional firms work 40–45
hours a week and government ministries for about 35 hours.
The weekend for office workers has traditionally been Thursday afternoons and Fridays but a number of organisations have
changed over to a five-day week with the weekend comprising
Fridays and Saturdays. During the Muslim holy month of Ramadan, normal working hours are reduced by two hours daily.
| There are 10 days of public holidays (paid) in a year. An employee’s annual leave is two days for every month if his service is more than six months and less than a year. With every
completed year of service after the first year, an employee is
entitled to 30 days annual paid leave. This is in addition to
public holidays, maternity leave for women and sick leave.
| Expatriates who have not worked in UAE can avail a visa for
60 days to work temporarily. A fee of AED 500 needs to be
paid for the job. Further, the employees who have served two
years under an employer are eligible for transfer without the
need for a no-objection certificate (NoC).
7.3 Average Salary Range
The median salary ranges by job, employer type, industry, city
and degree in the UAE in 2011, as per Payscale, are listed in the
tables 8–12, respectively:
Table 8: Median Salary by Jobs in the UAE in 2011
jobs
Regional Sales Manager
Project Manager – Information Technology (IT)
median salary (in eur/aed)
EUR 50,580.13 (AED 246,132)
EUR 48,968 (AED 238,291)
Mechanical Engineer
EUR 21,845.68 (AED 106,305)
Business Development Manager
EUR 38,013.39 (AED 184,980)
Human Resources – Manager
EUR 47,356.86 (AED 230,447)
38
Table 9: Median Salary by Employer Type in the UAE in 2011
EMPLOYER TYPE
Company
Private Practice/Firm
Non-Profit Organisation
Government – State and Local
School/School District
Other Organisations
median salary (in eur/aed)
EUR 31,495.36 (AED 153,265)
EUR 28,313.17 (AED 137,777)
EUR 37,009.32 (AED 180,094)
EUR 37,896.46 (AED 184,411)
EUR 19,172.53 (AED 93.297)
EUR 24,858.92 (AED 120,968)
College/University
EUR 36,242.19 (AED 176,361)
Self-employed
EUR 28,951.05 (AED 140,881)
Government – Federal
EUR 38,435.90 (AED 187,036)
Foundation/Trust
EUR 42,559.67 (AED 207,103)
Franchise
EUR 18,994.57 (AED 92,431)
Hospital
EUR 23,967.88 (AED 116,632)
Contract
EUR 20,869.35 (AED 101,554)
Team
EUR 20,084.54 (AED 97,735)
Table 10: Median Salary by Practice Area in the UAE in 2011
INDUSTRY
median salary (in eur/aed)
Corporate, Business, Mergers & Acquisitions
EUR 57542.06 (AED 280,010)
Litigation & Appeals
EUR 51,254.78 (AED 249,415)
General
EUR 43,537.64 (AED 211,862)
Real Estate/Construction/Land Use
EUR 49,320 (AED 240,000)
Trusts & Estates
EUR 51,254.78 (AED 249,415)
Insurance Law
EUR 27,659.07 (AED 134,594)
39
Table 11: Median Salary by City in the UAE in 2011
CITY
median salary (in eur/aed)
Dubai
EUR 30,730.88 (AED 149,542)
Abu Dhabi
EUR 35,694,73 (AED 173,697)
Sharjah
EUR 19,775.68 (AED 96,232)
Al Ain
EUR 23,758.88 (AED 115,615)
Ajman
EUR 13,809.60 (AED 67,200)
Fujairah
EUR 12,929.85 (AED 62,919)
Table 12: Median Salary by Certification in the UAE in 2011
CERTIFICATION
MEDIAN SALARY
(IN EUR/AED)
Certified Professional Engineer (PE)
EUR 36,898.35 (AED 179,554)
Project Management Professional
(PMP)
EUR 58,232.74 (AED 283,371)
Cisco Certified Network Associate
(CCNA)
EUR 23,156.77 (AED 112,685)
Microsoft Certified Professional (MCP)
EUR 28,718.83 (AED 139,751)
Business Certificate
EUR 29,152.02 (AED 141,859)
Chartered Accountant (CA)
Microsoft Certified Systems Engineer (MCSE)
EUR 42,098.52 (AED
204,859)
EUR 30,113.15 (AED 146,536)
Certified Public Accountant (CPA)
EUR 45,858.97 (AED 223,158)
Project Management Certificate
EUR 49,528.58 (AED 241,015)
40
8 Taxation
The UAE is an attractive location to invest or set up business
operations, particularly in light of the relative scarcity of personal
and corporate taxes. Only a few industries in the UAE are in fact
subject to taxes. It is expected that this approach will not change
in the medium or long term. The UAE has entered into numerous
double-taxation avoidance treaties with other countries to avoid
instances of tax being levied on a person in connection with the
same matter in two different countries.
8.1 Tax Rates14
There is no federal tax legislation in the UAE; instead each emirate follows its own tax law. The following taxes are not applicable in the UAE:
| Personal income tax
| Capital gain tax
| Value-added tax
| Withholding tax
| Corporate tax
Currently, there are legislations in force in the emirates of Abu
Dhabi, Dubai and Sharjah, establishing a general corporate taxation regime—the Abu Dhabi Income Tax Decree of 1965 (and its
amendments), Sharjah Income Tax Decree of 1968 (and amendments) and Dubai Income Tax Decree of 1969 (and amendments).
In practice, however, only oil, gas and petrochemical companies
and branch offices of foreign banks are required to pay taxes.
14
Source: Income Tax in UAE, Move one
41
8.1.1 Personal Taxation
There is no personal income tax levied in the UAE.
| Municipality service charges are levied on individuals living
and working in the UAE.
| Service charge percentages vary among the emirates.
| A service charge of 5–10 percent is imposed on food purchased in restaurants. Hotels require a 10–15 percent service
charge per night on room rates. These charges are usually included in the customer’s bill, which the municipality will collect from restaurants and hotels.
| A tax of 50 percent is charged on import of alcohol. An individual, who has a liquor licence, is required to pay an additional 30 percent tax on liquor upon buying.
| Hotels also require an additional 15 percent service charge on
the services they provide.
8.1.2 Corporate Tax
There is no federal tax legislation on corporate tax in the UAE;
instead, each emirate follows its own tax rules.
Abu Dhabi
There are no corporate, income, withholding, sales or valueadded taxes currently imposed in Abu Dhabi, apart from the
following exceptions:
1 Taxes on oil and gas companies at rates specified in the relevant concession agreement
2Flat rate on annual profits of branches of foreign banks
3Flat rate service tax on hotel services and entertainment
42
However, according to the Abu Dhabi Income Tax Decree of 1965
(as amended by Abu Dhabi Income Tax Decree Number (4) of
1972), every chargeable person who conducts trade or business,
including the rendering of any services in Abu Dhabi, shall be
subject to a scale on income basis, with a maximum of 55 percent
tax as listed in Table 13.
Table 13: Tax in the UAE as Percent of Income
INCOME
PERCENT TAX
Less than EUR 199,930 (AED 1,000,000)
0
Equal to or more than EUR 199,930 (AED 1,000,000)
but less than EUR 399,860 (AED 2,000,000)
10
Equal to or more than EUR 399,860 (AED 2,000,000)
but less than EUR 599,790 (AED 3,000,000)
20
Equal to or more than EUR 599,790 (AED 3,000,000)
but less than EUR 799,720 (AED 4,000,000)
30
Equal to or more than EUR 799,720 (AED 4,000,000)
but less than EUR 999,650 (AED 5,000,000)
40
More than EUR 999,650 (AED 5,000,000)
55
Source: Al-Tamimi - Document - Taxation Law in the UAE
Dubai
In Dubai, all companies are required by law to pay tax on their earnings. The rates of tax are on a sliding scale up to a maximum of 50
percent. In practice, however, only oil, gas and petrochemical companies and branch offices of foreign banks are required to pay tax.
The Dubai Income Ordinance of 1969 and Dubai Income Tax Decree of 1970 (and its amendments) specifies that an organization that conducts trade or business in Dubai will be subject to
taxation as listed in Table 13.
43
Oil companies pay up to 50 percent tax on the UAE-sourced taxable income while banks pay 20 percent tax on taxable income
(income tax on branch offices of foreign banks ordinance (No. 2)
of 1997). The taxable income of banks is calculated with reference
to their audited financial statements whereas that of oil companies is calculated with reference to their concession agreements.
Oil companies also pay royalties on production.
Customs duties are extremely low and there are many exemptions.
Goods imported and intended for re-export often benefit from customs duty as do manufacturers on the import of their machinery,
raw materials and spare parts used for industrial purposes.
Sharjah
The Sharjah Income Tax Decree of 1968 (and its amendments)
specifies that tax, on the scale listed in Table 13, shall be imposed
on the taxable income of every chargeable person for each income tax year ending after the date of this decree. In practice,
however, only oil, gas and petrochemical companies and branch
offices of foreign banks are required to pay tax on their net profit.
8.1.3 Property Tax15
In the UAE, tax is payable by residential and commercial tenants according to the annual rent of a residential property at
the rate of 5 percent and for a commercial property at the rate
of 10 percent.
Abu Dhabi
| A property tax is charged in Abu Dhabi to obtain and renew
business licences. In general, taxes are assessed at around
5–10 percent of the applicant’s annual office rental and 5
percent of the annual rental of the residence of the manager
whose name appears on the licence.
15 Source: Al-Tamimi - Document - Taxation Law in the UAE
44
Dubai
| In Dubai, all residential properties are subject to an annual
property tax payable to the Dubai Municipality.
| The amount of tax payable depends upon the employment
status of the tenant. All professional, managerial and other
senior employees in commercial, professional and industrial
sectors are charged at the rate of 5 percent of the annual rent
of their property, whereas in the banking sector, the percentage is 15 percent of the annual rent of their property.
| It is the tenant’s obligation to pay the property tax. The Dubai
Municipality often collect the tax from the tenant’s employer
through the Department of Economic Development at the
time of issuing or at the annual renewal of the employer’s
trade licence.
| The Dubai Department of Economic Development collect the
tax with reference to a list to be submitted by companies applying for the issue or renewal of their trade licences. The list
contains the names and job titles of all of the company’s employees and the amount of their rent.
| Junior employees are charged at a flat rate of EUR 60 (AED
300). A flat rate of EUR 199.9 (AED 1000) is payable in the absence of a lease agreement.
| The Dubai government has introduced new tax rules wherein
a 5-percent tax will be charged on residential units (including vacant freehold properties) based on the real estate index
RERA and 10 percent tax will be charged on commercial units
in addition to 1 percent transfer fee based on selling price.
45
Sharjah
| In Sharjah, all leased residential properties are subject to
an annual property tax payable to the Sharjah Municipality,
charged at 2 percent of the annual rent shown in the tenancy
agreement, subject to a minimum of) EUR 60 (AED 300) and
payable when the tenant notarises the agreement.
8.2 Double Tax Treaty between the UAE and the Luxembourg
The UAE has 58 double-taxation avoidance agreements and 32
bilateral investment treaties in place. Applicable since November
2005, the main tax law regarding double-taxation is specified in
the agreement between the UAE and the Grand Duchy of Luxembourg to avoid double-taxation and to boost bilateral trade
and investment between the two states.
This agreement provides equal taxation treatment to investors
in the UAE and Luxembourg. Moreover, it provides an environment that stimulates foreign direct investment, encourages
business ventures, and enhances cooperation and the economic
growth levels of both countries. Further, it paves the way for
new com mon projects that benefit the economies of the two
countries. The agreement also encourages tourism and bilateral
trade between the two countries, especially after the implementation of income and profit tax exemption regulations granted
to national air cargo companies.
8.3 Repatriation of Prof its
There are no exchange controls or restrictions on repatriation
of profits in the UAE; 100 percent repatriation of capital and
profits is allowed
46
9 Appendix
Appendix I: Useful Links and Addresses
type of organisation
address
UAE Ministries, Agencies and Services
Board of Economic
Development in Dubai
Dubai Cargo village
room 3035, 3rd floor
P.O. Box 211024
Dubai
United Arab Emirates
Mr. Albert PANSIN
Executive Director
Fax: +971 4 283 3031
E-mail: [email protected]
E-mail: [email protected]
Embassy of the United
Arab Emirates
73 avenue F.D. Roosevelt
B-1050 Bruxelles
Tel: +32 2 640 60 00
Fax: +32 2 646 24 73
E-mail: [email protected]
www.uaeembassybrussels.be
UAE Government
Not Applicable
E-mail: [email protected]
www.uae.gov.ae/home.htm
Ministry of Finance
and Industry
P.O. Box 433
Abu Dhabi Office Tel: +971 2 6726000
Fax: +971 2 6663088
P.O. Box 1565
Dubai Office Tel: +971 4 3939000
Fax: +971 4 3939738
E-mail: [email protected]
www.uae.gov.ae/mofi/default.htm
47
type of organisation
address
Ministry of Foreign Affairs
P.O. Box 1
Abu Dhabi Office Tel: +971 2 4444488
Fax: +971 2 4449100
P.O. Box 3785
Dubai Office
Tel: +971 4 2221144
Fax: +971 4 2280979
E-mail: [email protected]
http://mofa.gov.ae/
Ministry of Labour
Abu Dhabi Off ice
Tel: +971 2 6671222
Fax: +971 2 6665889
Dubai Off ice
Tel: +971 4 2691333
Fax: +971 4 2695011
E-mail: [email protected]
http://www.mol.gov.ae/
Ministry of the Economy
Planning Sector
P.O. Box 904
Abu Dhabi Office
Tel: +971 2 6271100
Fax: +971 2 6261344
Economy Sector
P.O. Box 901
Abu Dhabi Office Tel: +971 2 6265000
Fax: +971 2 6260000
E-mail: [email protected]
www.moep.gov.ae
48
type of organisation
address
Immigration Department
Abu Dhabi Off ice
Saeed bin Tahnoon St.
Abu Dhabi
Tel: +971 2 4462244
Al Ain
Aditaba Road, near Dubai Islamic Bank, opposite Carrefour supermarket.
Tel: +971 3 7625555
Dubai Off ice
Department of Naturalization and Residency, Trade Centre Road, near Bur Dubai Police Station
Tel: +971 4 3980000
Emirates Organization
for Properties
P.O. Box 407
Abu Dhabi Office
Tel: +971 2 6322200
Fax: +971 2 6322260
E-mail: [email protected]
http://www.akaryah.org.ae
State Audit Institution
P.O. Box 3320
Abu Dhabi Office
Tel: +971 2 6448800
Fax: +971 2 6448688
P.O. Box 5513
Dubai Office
Tel: +971 4 2286000
Fax: +971 4 2286111
E-mail:
[email protected]
[email protected]
www.saiuae.gov.ae/
49
type of organisation
address
Belgian and Luxembourg Associations in the UAE
The Belgian and
Luxembourg Association
in the Emirates
E-mail: [email protected]
http://www.uae.clubnieuws.be/
UAE MINISTERS, AGENCIES AND SERVICES
Trade and Investment
Office - Abu Dhabi
Luxembourg Embassy
Silver Wave Tower - Office 1001 Meena Road
P.O. Box No 44909
Abu Dhabi - United Arab Emirates
Mr Marc Scheer
Executive Director
E-mail: [email protected]
Tel: +971 2 4912 446
Fax: +971 2 4912 289
www.investinluxembourg.ae
Trade and Investment
Office - Dubai
P.O. Box 211024
Dubai
United Arab Emirates
Mr. Albert Pansin
Executive Director
Email: [email protected]
[email protected]
Mobile: 0097150 624 9030
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Appendix II: Embassies
Embassy
UAE Embassy in Belgium
address
UAE Embassy
73 Av. F. Roosevelt 1050
Bruxelles, Belgium
Tel: +32 2 640 6000
Fax: +32 2 646 2473
E-mail: [email protected]
Belgium Embassy
in the UAE
Al Masaood Tower (6th floor)
Hamdan Street Abu Dhabi
Tel: +971 2 6319 449
Fax: +971 2 6319 353
E-mail: [email protected]
http://www.diplomatie.be/abudhabi/
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10 Disclaimer
The Government of the Grand Duchy of Luxembourg declines all
responsibility regarding the use of information featured in this
document. The contents are provided for information purposes
only. They contain information which is not necessarily complete,
exhaustive, precise or up to date. In the event of discrepancies between the texts of this publication and the original documents,
the original documents as officially published shall apply. This
publication may refer to external sites over which the Government of the Grand Duchy of Luxembourg has no control and for
which it declines all responsibility.
52
DECEMBER 2011
Luxembourg for Business
19-21 Boulevard Royal
L-2914 Luxembourg
Grand Duchy of Luxembourg
[email protected]
www.luxembourgforbusiness.lu
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