The United Arab Emirates (UAE) is a federation of seven emirates (Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain) located along the eastern side of the Arabian Peninsula.
With a number of social, economic and environmental initiatives, the UAE strives to make continuous progress on various fronts, including trade, investment, communications, information technology, tourism and infrastructure, as well as social development.
The country is a member of several international organisations, such as the United Nations (UN), the League of Arab States, the International Monetary Fund (IMF), World Trade Organisation (WTO), the World Customs Organisation (WCO) and the Organisation of Exporting Countries (OPEC).
According to 2020 data, the total population of the UAE is approximately 9.89 million. The official language of the UAE is Arabic. English is a widely accepted business language and is spoken in commercial and government organisations, although correspondence with the government is mainly in Arabic.
The UAE is an Islamic nation and the legal system is largely based on Islamic teachings.
TIP1: The UAE is an Islamic nation – be aware of this and respect Islamic teachings and customs.
Before you start working in Dubai, you should think carefully about what exactly you want to do there. Take Islamic values into account and inform yourself about the product or service you want to provide.
TIP 2: Don’t make jokes and make sure you treat your business partner with respect at all times.
Before you sit down with your Dubai business partner: The Dutch like to do business in a friendly way, a joke is part of the deal. Watch out! In the UAE, people do not like this, hierarchy and respect are of great importance. The Dutch joker is not wanted here. So – put on your serious face at the negotiating table (and also in any other contact with your business partner) and inform yourself well in advance about dress code and other customs.
Do you want to sell products from the Netherlands or do you really want to set up a business in Dubai/the UAE?
Both are possible, but both require a different approach – also legally.
If you want to supply products or services from the Netherlands, you should look carefully at your contracts. Different legal systems apply and different rules apply in both countries.
There are almost 45 Free Trade Zones (FTZs) spread out over the UAE, most of which are located in Dubai. Each FTZ is independent, with its own rules and regulations. However, they are subject to certain federal laws of the UAE.
Many FTZs in the UAE are set up with a focus on specific sectors (such as financial services, ports and logistics, telecom and IT).
Dubai has announced a “One Free Zone Passport”
The “One Free Zone Passport” initiative should allow companies to operate in different FTZs in one emirate without applying for multiple permits.
TIP 3: Be aware, the rules in Dubai/VAE change quickly and regularly – therefore, be well and regularly informed about the exact state of affairs.
Moreover, before you start a business relationship from the Netherlands, have your contracts checked so that you can start working with full energy and security.
Do you want to establish an office in Dubai?
Emiratisation requirements – Know what it means
To overcome structural divisions in the labour market, the UAE government has launched an Emiratisation campaign that encourages the integration of Emiratis into the workforce, especially in the private sector. Emiratisation aims to increase the number of Emiratis participating in the labour market. The UAE encourages Emiratisation at all levels through the establishment of a special department, quotas and incentives.
A UAE employer entity must ensure that its employees are authorised to work in the UAE by providing a work visa for one to three years, residence permit and an Emirates ID. Workers can then sponsor their families to stay in the UAE. If necessary, a three-month mission visa can be obtained for overseas staff or visitors.
The UAE has introduced a long-term stay visa which is issued for five or ten years and automatically renewed. The eligibility criteria for both five- and 10-year visas is broad and covers a number of eligible cases, including property investors, entrepreneurs, outstanding talent and researchers, students with promising scientific abilities and their respective family members.
Virtual work programme
Dubai has introduced a unique virtual remote working programme.
Eligible foreign professionals, entrepreneurs and business owners can work remotely in Dubai for up to one year with the option of bringing their family members as well as accessing all services in Dubai. This programme was recently introduced and more details are yet to be confirmed.
Personal Income Tax/Corporate Income Tax and Value Added Tax (VAT)
There is no personal income tax in the UAE, on a federal level there is also no corporate income tax. VAT was introduced in 2018 – it is 5%.
The most common problems when doing business in Dubai/UAE:
- Lack of information or outdated information– There are only a handful of government departments that provide accurate and updated information to consumers. Much of the information related to setting up a business, compliance and maintenance is not shared with the public. Currently, there is limited (accurate) information available to entrepreneurs when setting up their business in the UAE.
- Rapidly changing requirements– Developments are so rapid that even government officials working with customers are often unaware of the viability of decisions made at the top. The Smart Dubai government initiative has been introducing new systems and requirements every month for over 5 years.
- Too many options to choose from – There is Mainland, Free Zone and Offshore. There are more than 50 Free Zones (FTZs) in the UAE. Each FTZ offers a similar range of services. Often entrepreneurs do not understand what the conditions are until later, as a result of which many entrepreneurs change jurisdiction. Only a few jurisdictions offer business migration, which increases costs as the business in one jurisdiction has to be liquidated and a new application filed to start operations in another jurisdiction.
- Bank accounts – Opening and maintaining a bank account in the UAE is becoming increasingly difficult. If a customer does not have a residence permit from the company, it is almost impossible to open a bank account.
- Lack of regulation in business services – Anyone can get a business services licence in the UAE and advisers often do not even have the right qualifications to advise clients. The service providers are not regulated, which makes it difficult for an entrepreneur to get good advice.
- The limited scope of business activities – Businesses can only engage in activities for which they are licensed. The scope of activities under a licence is often quite limited and does not allow the entrepreneur to offer a complete solution to a customer. Sometimes the activities simply do not exist and you have to mix and match activities that offer a close relationship.
- Set-up costs and regulation – Set-up costs are still quite high compared to other countries and sometimes it is more difficult to acquire regulated activities. Therefore, many small businesses partner with larger regulated entities (with deep pockets) to offer the client a solution that may not offer the kind of approach the small business is aiming for.
Doing business in Dubai or the UAE – a country of tremendous opportunity but also one that works very differently to the Netherlands
When considering doing business in Dubai or the UAE, it is important that you are well informed in advance about the rules and laws that currently apply. You therefore need an adviser/lawyer who is familiar with the rules in the Netherlands and the UAE. Moreover, you need someone who can put you in touch with reliable parties in the UAE itself.
ACG International meets all these criteria
Edith Nordmann, Managing Partner of ACG International, has been working as a lawyer in the field of cross border business transactions for 20 years, so she understands and can help you prepare your business steps in Dubai and the UAE.
Moreover, she has an excellent network in the UAE and can therefore put you in contact with relevant partners in the UAE.
Please feel free to contact ACG International (e: firstname.lastname@example.org / t: 020 800 64 00) for a no-obligation consultation with Edith Nordmann, so that you can be sure that you have everything legally arranged!