Doing Business in the UAE



This guide has been prepared by  ARCA AlRubaie & Partners Chartered Accountants  presenting professional services all over UAE since 1979. It is designed to provide information on a number of subjects important to those considering investing or doing business in the United Arab Emirates (UAE).

This guide is one of a series of guides & articles presented by ARCA for use by clients & prospective clients of ARCA

Doing Business in the UAE has been designed for the information of readers. Whilst every effort has been made to ensure accuracy, information contained in this guide may not be comprehensive and recipients should not act upon it without seeking professional advice. Facts and figures as presented are correct at the time of writing.

Up-to-date advice and general assistance on UAE matters can be obtained from  ARCA . Contact details can be found at the end of this guide.

August 2010



(1) Fact Sheet




South-eastern tip of the Arabian Peninsula



Land boundaries

Saudi Arabia, Oman and Qatar


The Gulf of Oman and the Arabian Gulf; approximately 1318km but land reclamation projects are extending this figure


Desert. From October to April daytime temperatures are in the 20 oC range. Spring and summer are hot and humid with up to 90% humidity and the mercury rising to 45oC+


Flat, barren coastal plain merging into rolling sand dunes of vast desert wasteland; mountains in the east

Time zone

GMT +4



8.19 million

Ethnic groups

The UAE has one of the most diverse populations in the Middle East. Approximately 83.5% of the total population is non-citizens. A large number are expatriates on visas, mainly from India, but also from other Middle Eastern countries, as well as Pakistan and the Far East and  recently from all over the world


Islam is the official religion


Arabic is the official language. Whilst English is widely spoken in business and government circles, all correspondence with government authorities is conducted in Arabic except with free zone authorities, which is mainly in English. Most signage and packaging is bilingual


Country name

The United Arab Emirates

Government type

Federation with specified powers delegated to the UAE federal government and other powers reserved to member emirates


Abu Dhabi

Administrative divisions

Seven emirates. Each emirate is ruled by its own Sheikh, commonly known as the ruler. The Supreme Council, the highest federal authority, is composed of the hereditary rulers of the seven emirates. Each hereditary Sheikh regulates commercial activity and retains control over natural resources, including oil, within their emirate


GDP – per capita

US$42,000 (2009 est.)

GDP – real growth rate

-3.5% (2009 est.)

Labour force

3 million (2009 est.)


Arab Emirates Dirham (AED), divided into 100 subunits called Fils



 (2) Business Entities and Accounting

All businesses, whether industrial, professional, trading, or services, must be licensed to operate in the UAE. Licensing procedures vary from emirate to emirate and within different free trade zones (FTZ); relevant details are available from the individual chambers of commerce in each emirate. For an introduction to company registration in Dubai, see section 2.4.

The Commercial Companies Law and the Trade Agencies Law constitute the primary federal legislative framework controlling commercial activities in the UAE.



2.1       Free Zones

Establishing a business entity in one of the UAE’s many FTZs can be an attractive option for foreign investors. To date FTZs have been successful in attracting a large number of companies and foreign direct investment, as well as expanding net non-oil exports. The major advantages in setting up in a FTZ include:


  • 100% foreign ownership of the enterprise
  • 100% import and export tax exemptions
  • 100% repatriation of capital and profits
  • No corporate taxes for 15 years, renewable for an additional 15 years
  • No personal income taxes
  • Assistance with labour recruitment and additional support services, such as sponsorship and housing.


Investors can either register a new company in the form of a free zone establishment (FZE) or free zone company (FZCo), or simply establish a branch or representative office of their existing or parent company based within the UAE or abroad.


A FZE is a limited liability entity governed by the rules and regulations of the free trade zone in which it is established.


2.2       Business Ownership

Except in FTZs, foreigners are only permitted to own up to 49% of a limited liability commercial company. The remaining 51% must be owned by one or more UAE nationals.

Foreign companies can market their products in the UAE either through a limited liability company or through 100% UAE national owned distributorships.

There are exceptions to this rule, the most relevant for foreign firms being those for firms operating within FTZs, professional or artisan companies and branches or representative offices. Each of these exemptions allows 100% foreign ownership but with restrictions on the permissible scope of business activities. Foreign contractors or service businesses require UAE national sponsors, with limited exceptions, one for each emirate in which they do business.

The UAE Federal Government has updated intellectual property rights laws to be consistent with the World Trade Organisation’s (WTO) agreements.

Dirham or foreign currencies can be imported or exported by foreigners or UAE nationals, with the exception of Israeli currency and currencies of those countries subject to United Nations sanctions. Otherwise, all currencies can be freely exchanged in the UAE at market rates.


2.3 Auditing, Accounting and Filing Requirements

All commercial companies are required to keep financial records and to appoint auditors. Federal Law No. 18 of 1993 specifies the books and records that are required to be maintained by traders.

A company may select any date as its accounting year-end. Companies registered in accordance with the Companies Law generally have their accounting year-end  specified in the memorandum or articles of association.

Generally, accounting records can be maintained in English or Arabic, or both.

All correspondence pertaining to the entries recorded in the books of accounts must be kept and maintained in a systematic manner to facilitate audit verification process.


2.4Company Registration in Dubai, UAE

The categories of license available for doing business in Dubai are commercial, industrial and professional. There are ten activities that can be undertaken per licence. Generally, for normal trading the licence category is commercial. Licences are authorised and approved by Dubai Economic Department (DED).



  1. Sole Proprietorships
  2. Civil Works Company
  3. Joint Venture Company
  4. Limited Liability Company
  5. Public & Private Shareholder Company
  6. Businessmen’s Community Center
  7. Branch of Foreign Company
  8. Branch of Local Company
  9. Representative Office
  10. Government Representative Office



  1. General Partnership
  2. Simple Limited Partnership
  3. Public Joint Stock
  4. Limited Liability Company
  5. Private Joint Stock
  6. Partnership Limited with shares
  7. Joint participation (venture)



(3) Finance and Investment

3.1       Banking and Finance

The regulatory authority is the UAE Central Bank. Some 47 commercial banks operate with a total of around 370 branches, of which about 27 are foreign banks with a combined total of more than 200 branches. Federal law restricts foreign banks to no more than eight branches each across the UAE.

Federal law requires every commercial bank to have a paid-up capital of at least AED40m. There are few investment or merchant banks at present. For medium- or long-term industrial finance, local companies can approach the Emirates Industrial Bank, set up by the government to help develop the private sector.

Bill discounting can be arranged with commercial banks, either foreign or locally owned. Leasing and hire purchase are available from local specialist finance companies. Factoring is not practiced in the UAE.

Import and export financing can be arranged through commercial banks; margins are often required. Such margins and the facilities offered by the banks will mainly depend on their relationships with their customers.

Cheques are widely used for settlement. Post dated cheques are also widely used instead of bills of exchange.


3.2       Stock Exchange

The Dubai International Financial Exchange (DIFX) is an international stock exchange accessible to both Western Europe and East Asia. It is unique in its region because its standards are comparable to those of leading international exchanges in New York, London and Hong Kong.

The DIFX enables regional and international investors to share in the rapidly growing wealth of its region, which includes the Middle East and the Indian sub-continent.
Through the exchange, regional and international issuers can access the regional and international investment they need.


3.3Foreign Investment Incentives/Restrictions

  • Member of the WTO and the Gulf Co-operation Council (GCC).
  • 5% customs duties imposed on goods (although numerous consumer goods, commodities and raw materials are exempt).
  • Implementation of the GCC custom union (one point entry).
  • The strategic location of the UAE, which serves more than 1 billion consumers


(4) Employment Regulation and Social Security

The Labour Law governs most aspects of employer/employee relations, such as hours of work, leave, termination rights, medical benefits and repatriation. It is protective of employees in general and overrides conflicting contractual provisions agreed under another jurisdiction, unless they are beneficial to the employee.

A new method for the  settlement of wages was introduced in 2009 and is mandatory for all UAE companies under the Wages Protection System of the Ministry of Labour.

Wages Protection System (WPS) is an electronic salary transfer system that allows institutions to pay workers’ wages via banks, bureaux de change, and financial institutions approved and authorized to provide the service.

The system, developed by the Central Bank of the UAE, allows the Ministry of Labour to create a database that records wage payments in the private sector to guarantee the timely and full payment of agreed-upon wages.


4.1       Visas

There are several types of visas for visitors to Dubai. A work permit and entry visa are required before a foreign worker can enter the UAE. Upon arrival, the worker must apply for a residence permit. Sponsorship is required for the work permit, and certain restrictions apply to the number of foreigners granted such permits.

There are no special requirements for departure from the country. Registered immigration violations and police complaints are subject to clearance prior to departure from any UAE airport.


4.1.1    Entry service permit

An entry service permit (sometimes referred to as a 14-day stay permit) is available to business persons and tourists. The permit must be sponsored by a company, commercial establishment or a hotel licensed to operate within the UAE. The visa, which is non-renewable, is valid for 14 days from the date of issue and the duration of stay is 14 days from the date of entry, exclusive of arrival and departure days.


4.1.2      Transit visa

A transit visa is a four-day (96 hour) visa, which is sponsored by an airline operating in the UAE. It can only be issued if the visitor has a valid ticket for an onward flight. Issuing a transit visa is normally free.


4.1.3    Visiting Visa

A visiting visa must be sponsored by a UAE resident or any company or hotel licensed to operate within the UAE. It is valid for entry within two months from its date of issue, allows the holder to stay in the country for up to

60 days, and is renewable for a total stay of up to 90 days.


4.1.4    Employment Visa

An employment visa or permit is issued by the Immigration Department to allow a foreign national to work in a company in the UAE. Approval must be obtained from Ministry of Labour and Social Affairs.

The employment visa allows the holder to enter the UAE once for a period of 30 days and is valid for a period of two months. When an employee enters the country on an employment visa the sponsoring company must arrange to complete the formalities of their residence stamp/permit, which is normally issued for three years. The employee must work only with the employer/sponsor and is not permitted to work elsewhere unless formal procedures are followed.


4.2       Trade Unions

Trade unions do not exist in the UAE. In the case of a dispute between employer and employee, or a dispute in the interpretation of the Labour Law, the Ministry of Labour and Social Affairs will initially act as an adjudicator. If a party wishes to appeal any such decision, it may take its case to court. Strikes and lockouts are forbidden.


4.3       Social Security System

There is no minimum wage in the private sector, although the Ministry of Labour has announced that one will be introduced in the near future.

The UAE does not impose social security taxes on foreign workers. Employer pension contributions for national employees are mandatory at 12.5% of “contribution calculation salary”. In addition, national employee contributions are levied at 5% of the contribution calculation salary.

Employers are required to provide employees with end of service benefits in accordance with federal labour laws. Recent changes in legislation also require employer guarantee deposits of AED3,000 for each sponsored employee. End of service benefit (gratuity) is 21 days basic salary for every year of service after the first five years.


4.4Working Hours

The week commences on Sunday and extends through Thursday. Friday and Saturday are the official weekend. Government offices are closed on Friday and Saturday.

Private sector and government office hours vary between business, cities and government departments but are broadly be summarised as:

  • Government: 8.00am to 2.00pm
  • Private sector: The normal maximum working hours are eight hours per day or 48 hours per week. These hours may be increased to nine hours daily for those in the retail trade, hotels, restaurants and other such establishments.


4.5       Holidays

During the Muslim holy month of Ramadan, normal working hours are reduced by two hours per day.

There are ten days of public holidays (paid) annually. The Hejra calendar is the official calendar of the UAE and is based on lunar change. However, in most communications the Gregorian calendar year is used. This results in religious holidays occurring at different times each year according to the Gregorian calendar.

Employees are entitled to two days of annual leave for every month if their service is more than six months but less than a year. In every completed year of service after the first, employees are entitled to 30 days annual paid leave.


(5) Taxation

The UAE provides an advantageous environment in which to do business, including the following:

  • Currently there is no VAT or general sales tax. Although the introduction of  VAT has been expected, it has been delayed until mid-2013.
  • No individual tax.
  • No withholding taxes.
  • No tax on capital gains.
  • No tax on dividends or any other income.
  • No provision for group tax.


5.1       Corporate and Income tax

There is no corporate tax for most companies in the UAE, but income tax is levied on the profits of oil and gas exploration companies and certain petrochemical companies under specific government concession agreements, currently at 50%/55% (Dubai/Abu Dhabi).

Branches of foreign banks are taxed at rates agreed with the ruler of the emirate in which they operate, currently 20%.


5.2       Tax Treaties

The UAE has concluded 44 tax treaties.


5.3      Other Taxes

  • Municipal taxes are imposed on hotel services and property rentals.
  • Annual rental income of residential and commercial tenants is taxed at 5% and 10% respectively in Dubai and some other emirates.
  • Customs duties are imposed by individual emirates, generally at a rate of 5%, with some exemptions.
  • Inheritance, in the absence of a will, is dealt with in accordance with Islamic Sharia principles.

Doing Business in UAE