United Arab Emirates (UAE)

Fujairah

The United Arab Emirates (UAE) is a constitutional federation formed on 2 December 1971 between the seven emirates of Abu Dhabi, Dubai, Ajman, Fujairah, Sharjah, Ras al-Khaimah, and Umm-Al-Quwain. Formerly a part of the British protectorate known as the “Trucial States” or “Trucial Oman,” the emirates gained autonomy when the British withdrew from the Gulf region in 1971.

The UAE is strategically located in the Arabian Peninsula and covers an area of approximately 82,880 square kilometers. It shares borders with Saudi Arabia, lying at the southwest of the country, and Oman, situated at the north and southeast of the UAE. The country also lies between the Arabian Gulf and the Gulf of Oman. Arabic culture is part of everyday life in the UAE and it influences the country’s business norms. The country is largely open to foreigners and strives to create an environment that is favorable to foreign investment and economic growth, and which promotes tolerance, diversity and multiculturalism.

Climate

The climate is characterised by hot and humid summers with temperatures reaching 48°C (118°F) and mild winters with minimum rainfall. The average annual temperature is approximately 24°C (75°F).

Population

The population of the UAE is estimated to be 9.4 million. Approximately 80% of the population is composed of expatriates, with a large percentage residing in Dubai. Arabic is the country’s official language—however, English is generally used in business and everyday life. Hindu, Urdu and Persian are also widely spoken. The majority of the population is Muslim.

Government

There are no elections or legal political parties in the UAE. Power rests with the seven hereditary Sheikhs - also known as Emirs, and hence the area ruled by an Emir is known as an Emirate - who controls the seven traditional sheikhdoms ( Abu Dhabi, Dubai, Ajman, Fujairah, Sharjah, Ras al-Khaimah, and Umm-Al-Quwain - each Emirate is named after its principal town) and choose a president from among themselves.

Since 1971, the ruler of Abu Dhabi, Sheikh Zayed Bin Sultan Al Nahyan, had been the President. He was re-elected to his fourth consecutive term in late 1991 by his colleagues on the Supreme Council of Rulers “the highest body in the country”, which usually meets informally.

Sheikh Khalifa Bin Zayed Al Nahyan was elected as the President after the death of his father in November 2004. The Deputy Prime Minister is Sheikh Sultan Bin Zayed Al Nahyan. The Vice President and Prime Minister is the ruler of Dubai, HH Sheikh Mohammad Bin Rashid Al Maktoum. In 2008, HH Sheikh Mohammad appointed Hamdan Bin Mohammad Bin Rashid Al Maktoum as Dubai Crown Prince and Sheikh Maktoum Bin Mohammad Bin Rashid Al Maktoum as Deputy Ruler of Dubai.

There is also a Cabinet, and its posts are distributed among the seven Emirates. (The members of the Cabinet are the government ministers, such as Minister of the Interior, etc.). The Supreme Commander of the Armed Forces is the President. The Minister of Defence is Sheikh Mohammed Bin Rashid Al Maktoum.

The parliament is known as the Federal National Council (FNC). It was established on 13th February 1972 and is considered a landmark in the country’s constitutional and legislative process. The FNC advises the Cabinet and the Supreme Council but cannot overrule them. According to the constitution, the FNC consists of 40 members who are drawn proportionately from each of the seven Emirates. Each ruler appoints the members for his Emirate.

The UAE was a founding member of the Gulf Cooperation Council (GCC) created at a summit conference in Abu Dhabi in 1981. The members of the GCC comprise Saudi Arabia, Kuwait, Bahrain, Qatar, the Sultanate of Oman as well as the UAE. The country is also a member of the League of Arab States, the Islamic Conference Organisation and the United Nations.

The UAE is essentially a civil law jurisdiction heavily influenced by French, Roman and Islamic laws. The increasing presence of international law firms from Common Law jurisdictions has demonstrated the application of Common Law principles in commercial contracts. This, albeit indirectly, has further influenced the UAE legal system.

A number of codified federal laws have been passed to regulate matters such as labour relations, maritime affairs, commercial transactions, commercial agencies, civil transactions, intellectual property and commercial companies. A number of local laws have also been passed in various areas by individual Emirates.

There are two main types of laws in the UAE, federal and local. The federal laws are applicable to the UAE as a whole and are issued either by the legislative body or by the Ministers of each Ministry by virtue of powers conferred upon them. When a Minister passes a law it is known as a Ministerial Order and should theoretically be referred to as a regulation rather than a law.

Local decrees and orders only apply to a particular Emirate. A local decree is passed by the Ruler or Crown Prince of a particular Emirate and a local order is issued by a member of the Royal Family of that Emirate.

Economy

The UAE is a dynamic hub for global commerce and has won the right to host the World Expo in Dubai in 2020. This will be the first time that the World Expo is staged in the Middle East, North Africa or South Asia.

The UAE has a petroleum-reliant economy with roughly a third of the country’s gross domestic product (GDP) being derived from its output of oil and gas.2 The oil wealth accumulated by the country over the past 25 years has helped fund and stimulate much of its current social and economic development.

However, in recent years the UAE has embarked on a largely successful effort to diversify into other economic sectors, with tourism being one of its primary focuses. The UAE attracts millions of tourists every year with a variety of attractions, such as the Dubai Shopping Festival and the annual Omega Dubai Desert Classic golf tournament.

The UAE is also quickly becoming a worldwide commercial hub, as indicated by numerous multinational companies relocating their regional headquarters to the country. The main driving force behind this economic and commercial expansion is the UAE’s shift towards increasingly liberal economic policies, particularly the creation of economic and financial free zones.

The UAE has no foreign exchange controls and the currency of the UAE, the dirham, is pegged to the US dollar at a rate of AED 3.67 to USD 1. There are no restrictions or levies on the repatriation of capital and profits by foreign investors outside the UAE. At the present time, the UAE does not impose corporate or personal income tax, except on oil concessions and branches of foreign banks.

At a regional level, the GCC countries have been embarking on fiscal reforms in response to recent low oil price developments. Hence, the UAE is in the process of introducing, initially, a value added tax, and potentially a corporate income tax.

It was announced in February 2016 that the rate of the value added tax will be 5% and that the UAE will implement it by 1 January 2018. However, there are no clear guidelines on how and when corporate income tax would be implemented.

Tourism

The sun, sea, beaches, shopping facilities, dramatic scenery, superb hotel accommodation and cuisine, excellent sports and leisure facilities and the warmth and hospitality of its people all combine to make the United Arab Emirates a popular tourist destination.

The country has made substantia l investments in this sector and has a fun-filled annual calendar of events. The Dubai Shopping Festival, the Dubai Summer Surprises, the Abu Dhabi Shopping Festival, the Sharjah Ramadan Festival and several other fairs, exhibitions, museums, parks and sporting events all combine to ensure that tourists have a great time. Tourism is no doubt, succeeding in making a significant contribution to the overall diversification programs, having become one of the most important economic sectors in terms of growth.

The UAE is one of the easiest Middle East countries to visit and visas are easily obtained. A very diverse, friendly and helpful population, keeps alive the traditional values of generosity and hospitality. Traditional sports such as camel racing, horse racing and boat racing coupled with pearl diving, falconry, camp-outs in the desert, gold souqs, spice souqs and wind towers all offer tourists an Arabian Experience.

Traditional Arab hospitality and a delightful winter climate complemented by a highly sophisticated infrastructure and crime-free environment, have also contributed in recent years to creating an ideal atmosphere for the development of tourism. The UAE is also endowed with an extensive coastline, sandy beaches and varied landscape, where a wide variety of activities can be indulged, ranging from powerboat races to sand-skiing.

The UAE has also become a much sought after venue for conferences, regional and international exhibitions and major sports events such as the Dubai World Cup, the Dubai Desert Classic Golf Tournament, and polo and cricket competitions.

Entry Visas and Work Permits

The laws governing immigration requirements are mainly contained in Federal Law No. 6 of 1973 regarding the Entry and Residence of Expatriates as amended by Federal Law No. 13 of 1996, the immigration Law.

The general rule regarding foreign visitors to the UAE is that all visitors, except transit passengers who do not leave the airport, citizens of the GCC countries (Qatar, Kuwait, Saudi Arabia, Bahrain and Oman) and British citizens, need to obtain a visa in order to enter the UAE. In order to apply for any visa or permit, it is necessary to obtain the sponsorship of either a UAE resident (who maybe a foreigner) or other legal entities in Dubai such as companies or hotels.

If the visa or permit is being arranged by a hotel or local sponsor, it is usually deposited at the airport for collection by the visitor on arrival.

There are several types of visas and permits one may apply for. The type that a person will need will primarily depend on the individual’s purpose of entry into the UAE. Each permit or visa has its own requirements and procedures. However, there are general conditions which all applicants must satisfy in order to obtain a visa or permit, as listed below:

  • The applicant must hold a valid passport or document allowing him to enter the country and return to his country of residence.
  • The official authorities have approved his entry for the purpose sought.
  • The applicant has a foreign or local sponsor who is resident in the UAE.
  • The applicant is not banned from entering the UAE.
  • The applicant has not previously been deported from the UAE, unless special permission has been obtained for his entry.

Business Hours

The official weekend is on Thursdays and Fridays. Some multinationals close on Fridays and Saturdays, to overlap with companies doing business outside of the Arab world. However, most of the smaller private companies only close on Friday, although Thursday may be a half-day.

Government offices open at 7.30 a.m. and close at 2.30 p.m. Private offices tend to keep longer hours, many coming back to work in the evening after an extended mid-day break whilst others are open from 8 a.m. to 6 p.m. Shop hours are similar in their opening times, but remain open until 9-10 pm. Department stores, boutiques, the souks and many food shops remain open on a Friday, apart from Prayer Times (11.30-1.30), while larger shops re-open on a Friday afternoon around 4pm.

During Ramadan most work is accomplished in the early hours of the morning or much later in the evening after the day’s fast is broken (at sunset).

Transportation and Communications

Taxis are the main source of public transportation, although local bus services exist in some Emirates. Rental cars are available, including rental from internal car rental companies. A temporary driving license, which may be obtained through the car rental company, is required.

The UAE currently has seven international airports; the principal ones are located in Abu Dhabi, Dubai and Sharjah. Excellent connections are available to other Middle Eastern countries and most international centers.

Currency

The monetary unit of the Emirates is the Dirham (Dh or AED), which is divided into 100 fils. Dirham notes are generally issued in denominations of 1000, 500, 200, 100, 50, 20, 10 and 5 while coins are issued in denominations of 1 Dirham and 50, 25, 10 and 5 fils. The Dirham is closely linked to the US Dollar via IMF Special Drawing Rights. For the past several years the government has fixed the UAE Dirham to the US Dollar at a rate of approximately 3.67 UAE Dirhams to 1 US Dollar.

Source:

bk_uae_dbi_2017.pdf

doing business in the uae.pdf