Latest Business Amendment Laws in UAE for Entrepreneurs to Follow
UAE is a business-friendly destination with a host of business benefits and incentives for foreign investors to start and expand their business in the region. There are a host of Business Amendment Laws in UAE that are introduced for the betterment of work culture and business in UAE.
UAE tops the list of ‘Ease of Doing Business in the Middle East region and offers a variety of low-cost company license packages for investors to choose from. The Business Amendment Laws in UAE aims at providing entrepreneurs a friendly ecosystem to easily do business in the country.
The article covers a list of the latest business amendment laws in UAE that an entrepreneur must know for conducting smooth business operations. To avoid fines and do business legally, there are certain business laws the investor have to adhere.
Following are few of the Business Law Amendments in UAE that every entrepreneur must know for operating a business in the country.
Business Laws Amendments for Entrepreneurs in UAE
To streamline and create transparency in the business world over the years UAE has introduced a series of transformational business law amendments.
Safeguarding the interest of investors is the topmost priority in UAE and the changes are reflecting positive sentiments in the market of UAE being the safest and most robust business center in the world.
List of Recent Business Amendments for Entrepreneurs
Here is a list of a few business amendments that every entrepreneur in the UAE must be aware of and comply with.
These amendments are aimed at promoting economic activities more effectively and helping global investors to easily set up companies and scale up their establishments quicker in the region.
1. Stimulus Packages and Incentives
The Stimulus Package and Incentives were provided to businesses in UAE during the pandemic period. When globally there was a slowdown in trade, employment, and business growth, the Stimulus Package from the UAE Central Bank and the Government saved ailing companies in the region.
Stimulus Package and Investor Confidence
The issuance of the stimulus package in the UAE has raised investor confidence and the new company registrations in UAE are at an all-time high.
The Dubai Government launched an AED 1.5 billion economic stimulus package for supporting the business affected by the pandemic.
From rent relief to interest-free loans and payment deferrals, the UAE government is in-game with boosting the business scenario in the region.
2. Foreign Direct Investment on Key Sectors
With 100% foreign ownership in onshore companies in the mainland of UAE to reducing the minimum share capital to set up a mainland company in UAE for foreign investors. The 100% expatriate ownership in mainland came in as a major business law amendment in UAE.
UAE is offering several options for opening a business in the region for foreign investors. It is focusing on building a transparent and robust business ecosystem for the investor to do business in the region.
The Free Zones in UAE are a major driving force to foreign direct investment in the form of opening new companies in the UAE and strengthening the economic activities.
3. Economic Substance Regulation
The Economic Substance Regulation is a policy launched in UAE to ensure the companies operating in UAE comply with the international tax laws. The ESR is also another major Business Law Amendment that all companies under the ‘Relevant Activities’ must adhere to the ESR Filing and Regulations.
ESR states that any business entity in the UAE onshore and Free Zone companies and other business forms that carry out any of the ‘Relevant Activities; listed in the regulatory framework must maintain an adequate ‘economic presence’ in the UAE.
ESR Regulations are aimed at creating transparency in the market and a strategic move towards Anti-Money Laundering and Combating the Financing of Terrorism and illegal organizations.
4. Ultimate Beneficiary Owners
Ultimate Beneficiary Owner (UBO) is a natural person who owns more than 25% of a company shares registered in UAE. UBO Registration is another latest business law amendment that all companies operating in UAE must adhere with to avoid any compliance issues.
All details of the shareholders are now to be included along with the ESR Documentation. It is aimed at creating transparency and reduce illegal transactions.
Hence the declaration of Ultimate Beneficial Owner helps in establishing an effective regulatory mechanism and procedure for stating the ownership details of the company operating in UAE with the Ministry of Finance.
5. Know Your Customer (KYC) Norms for Opening Corporate Bank Account
UAE has a well-secured network of international and local banks UAE. Recently with the impact of Pandemic, business lending and day-to-day transactions have had a significant impact across every bank globally.
Banks in UAE are highly supportive of the business sector with business incentives such as loan deferrals, banking charge waive-offs, attractive financial solutions, easy bank accounting openings, and more.
There is a strict KYC Compliance in all UAE Banks for opening a corporate bank account. They require a bank statement ( from the previous bank ), a robust business model , and investor profile to review.
6. VAT Registration and Filing
The Value Added Tax in UAE applies to all consumer and commercial transactions in the region at a rate of 5 %. There are certain criteria for registering the VAT. Companies must be aware of the VAT rules in UAE for smooth operations of their business.
The Federal Tax Authority is the governing body for overseeing the VAT compliance, regulations, and the VAT regime in UAE. For small businesses, entrepreneurs, and freelancers it is not mandatory to file until they have not reached the VAT Threshold.
VAT Registration Compliance to Follow
VAT registration is mandatory for companies that have an annual turnover of AED 375,000. Companies that get VAT registered benefits can opt for voluntary registration for VAT even though the annual turnover is less than AED 375,000.
Those companies registered for VAT must submit the VAT Returns periodically. Also, file for any VAT refund for business supplies, maintain the VAT record, and pay the due to FTA accordingly.
To know more, read: VAT Registration in UAE
Legal Documents every Entrepreneur must be having in UAE
A new business in UAE must have a strong legal structure and disciplined operations to successfully scale up and achieve sustainability. The company while registering in UAE will receive the Trade License where the mention of the list of business activities chosen will be present.
Also, the Trade License will have the shareholder information, date of company incorporation and expiry date. Another important document is the Memorandum and Article of Association. It states the terms and conditions and rules relevant to the company operations.
Having all the company documents in place enable the business to protect their investment and intellectual property of the business.
An investor or a company must always have their establishment card valid for applying the employee visas as required.
Employee and Company Documents that Must be Available Handy
The next key document is the Non-Disclosure Agreement, employee contracts, and offer letters to keep the employees, supplier relationship strong.
Then comes the requirement of documentation like the company trade secrets such as trademark registration certificates for the marketing assets, Intellectual Property rights for new products/applications, etc.
Hence, in a nutshell, there are numerous business law amendments in UAE that the investor must closely follow.
All the latest amendments in the Ultimate Beneficiary Ownership, Economic Substance Regulation, VAT Registration, and is having a significant effect on the current businesses that are operating in the country.
To know more about the process and documents required for company formation in UAE, talk to our expert Business Consultants right away!