United Arab Emirates is country situated in the Middle East. Total area of the UAE is 83.600 sq. km sq. km. Population of the UAE is 9.771.000 (2019). Ethnic groups include Emirati 19%, other Arab and Iranian 23%, South Asian 50%, other expatriates (includes Westerners and East Asians) 8%. The capital of the UAE is Abu Dhabi. The official language of the UAE is Arabic. The official currency is Emirati dirham (AED). 1 USD is equal to 3.67 AED. The climate of the UAE is desert; cooler in eastern mountains; avg. maximum temperature (August) +43°; avg. minimum temperature (January) +18°. Time difference with Moscow is + 1 hour. Literacy rate is 90%. Calling code of the UAE is +971.
The UAE is a federation of hereditary absolute monarchies. It is governed by a Federal Supreme Council made up of the seven emirs of Abu Dhabi, Ajman, Fujairah, Sharjah, Dubai, Ras al-Khaimah and Umm al-Quwain. All responsibilities not granted to the national government are reserved to the emirates.
The head of state is the president whose post is held by the emir of Abu Dhabi. As the emirate is an absolute monarchy, the power is essentially hereditary.
Executive power is exercised by the Council of Ministers headed by the chairman appointed by the president and approved by the Supreme Council.
Legislative power is vested in Federal National Council which consists of representatives from each emirate (40 members).
Judiciary power is vested in the Union Supreme Court, which is the highest court in the UAE. Supreme Court regulates relations between emirates, federal and local authorities.
Legal system of the UAE is a mixed legal system which combines:
Codified laws regulating labor relations, maritime law relations, commercial transactions, civil acts, intellectual property, etc. apply in the UAE.
There are two main types of law in the UAE:
Federal laws have effect on the whole territory of the UAE and are adopted by the legislative body or ministers.
Local decrees and acts have effect only on the territory of a separate emirate. Local decrees is adopted by the Emir or Hereditary Prince of the emirate; local acts is issued by the member of the royal family of the emirate.
The main characteristics of the United Arab Emirates economy currently are: type of economy: an open economy, which involves active inclusion in international economic relations; high per capita income; about 40% of GDP is based on oil and gas production; The UAE has more than 40 Free Zones (FZs), which helps attract foreign investment. The discovery of oil contributed to a significant increase in living standards in the United Arab Emirates. The UAE is now the third largest Gulf country in terms of oil production, which generates 2.2 million barrels per day on average. Reserves of raw materials in the UAE are: 200 billion barrels of oil; 5,600 billion cum. of natural gas.
The formation of the Caliphate in the 7th century favored the spread of Islam among local population. Such cities as Dubai, Sharjah, El Fujairah were founded. The Eastern part of the Arabian Peninsula was part of the state of the Qarmatians and after its collapse it was under the governing of Oman. The English supremacy under the territory dates back to 1820. Oman was divided into three parts and later it was called Trucial Oman. Even under the protectorate of the British Empire the native people preserved their traditions and religion. At the beginning of the 20th century the richest oilfields were discovered. It favored the international capital flows and the improvement of living standards. In 1971 the federation of the United Arab Emirates was formed including six Emirates of the Trucial Oman. The seventh Emirate joined them next year.
There are more than 40 free trade zones in the UAE.
Some Free Zones are designed around one or more business industry categories, e.g. Internet City, Media City, Healthcare City, Dubai International Financial Center, etc.), others have genera l specialization.
Free Zones of the UAE:
Dubai Internet City - For the companies engaged in technologies. Here you can find the offices of such transnational corporations as Fortune 500, Facebook and LinkedIn, as well as many other small and medium businesses.
Dubai Media City - For the companies engaged in media business. Here you can find the offices of such transnational corporations as CNN, Forbes, MBC, Reuters, Showtime, Sony and many others.
Dubai International Financial Center - The largest companies in financial and insurance markets use this jurisdictions enter the market of the UAE and other markets of the Middle East and Northern Africa.
Dubai Multi Commodities Centre - Specialized on the companies engaged in trade on commodity markets (gold, diamonds, pearls, tea), and companies providing related services. The free zone plays a role of an international center of raw material in the region.
Dubai World Central - Allows to establish companies specializing in production, trade and service in various fields of economy. The Free zone is located on the territory of the largest international airport Al Maktoum International Airport, what gives great opportunities for logistic companies and companies connected with international air carriage.
RAK Investment Authority Free Zone - Allows to establish companies specializing in production, trade and service in various fields of economy.
Fujairah Free Zone (FFZ) - Allows to establish companies focused on trade, industry and service.
Jebel Ali Free Zone - One of the largest free zones in the UAE, developed on the territory of the biggest port of the Middle East. It is a perfect choice for companies specializing in export and import operations.
Ajman Free Zone - Allows to establish companies specializing in production, trade and service in various fields of economy.
Companies registered in the UAE can be divided into 3 categories:
Besides, commercial activities can be established through Sole Establishment (sole trader). Foreign companies can also establish a branch or a representative office in the UAE or free trade zone.
At present all UAE companies (except companies of some sectors) are exempt from corporate tax, repatriation, royalties and other taxes and duties. 5% VAT was introduced in 2018.
According to the UAE Commercial Companies Act, the following business forma can be established in the UAE:
According to the Civil Code civil companies can be established in the UAE. Types of activities of such companies are restricted – they can carry on professional activities in technologies, law, medicine, etc. The local shareholder is not required.
There are more than 40 free trade zones in the UAE. The federal laws, local laws and special laws adopted by the zone, regulate activities of the companies registered in a free zone. According to the general rule, local founder is not required.
To carry on international transactions a company is obliged to obtain a related licence which is issued in the process of incorporation. The company may not carry on business outside the free zone. However, international activity is not restricted by the law if it complies with the issued licence.
The law requires to lease a minimum office space in a free zone or a seat in the business center.
Free trade zone companies can be established in the following forms:
Each free zone has its own requirements of share capital, number of directors, audit of accounts, etc.
The activities of offshore companies, along with federal law and the legislation of the relevant Emirate, are governed by special laws adopted in relation to such offshore jurisdictions.
The establishment of an offshore company does not require the involvement of a local partner as the founder.
Such companies generally do not have the right to conduct activities in the UAE, but are not restricted from conducting foreign trade operations outside the UAE. An offshore company cannot own real estate in the UAE and, unlike a resident company, cannot be used to obtain visas for its employees or directors.
Offshore companies are fully exempt from taxation in the UAE.
Such companies are not required to maintain an office or staff, or audit their annual financial statements.
Offshore companies cannot benefit from double taxation agreements.
The UAE does not have such concept as a residence permit. UAE migration rules require the issuance of residence visas, which in practice are similar to a residence permit.
A residence visa can be obtained on the following grounds:
The number of residence visas depends on the business package chosen during registration of the company.
An investor visa is normally issued for 3 years, a work visa - for 2 years.
Upon expiration, a visa can be renewed.
The procedure of applying for residence visas is as follows (application for a visa can only be made after registration of the company):