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NEWSLETTER,U.A.E

Entrepreneurial Brain Drain: Indian Businesses Shifting Base to Dubai

July 13, 2022

Overview

International finance and industry experts are upbeat about the economic future of Dubai as the latest Dubai FDI Monitor data ranks this emirate first in the GCC and third worldwide in FDI attraction.

“Dubai is now among the world’s most attractive FDI locations. Global investors have placed their confidence in our business ecosystem,” highlights H.H.Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of the Executive Council of Dubai.

It is high time to forget the picture of the old desert city of Dubai as the new Dubai wears the hats of AI, Blockchain, Crypto, Startups, Fintech and other emerging technologies. Even the developed worlds, the US and Europe are shifting their blockchain platforms to Dubai.

As Dubai rapidly transforms into a sustainable and resilient economy offering myriad growth opportunities, waves of new investments are pouring in and paving the way for new businesses who like to put their footprint in the city through a business setup in Dubai. The emirate today grows into a hotbed for international start-ups looking for unlimited business prospects and opportunities.

“Dubai is well-positioned from a geographical perspective. It’s a hub and has a lot of connections with the rest of the globe. Dubai is multinational in nature, which makes it a vibrant environment, where there is a mix of cultures, and this is also used to check if the idea of a start-up can work from different perspectives,” comments a top management executive from Accenture, Middle East.

The government of Dubai has long been acclaimed for its proactive and fast decision-making process as well as effective policy implementation. Innovation and creativity are always on the top of the agenda of the government authorities who are inclined on enhancing new-age futuristic technologies.

Why are Indian Entrepreneurs Moving to Dubai?

A friendly business landscape, low tax environment, high global connectivity and an opportunity to engage skilled global talents are driving Indian entrepreneurs to turn their heads to Dubai for relocating their businesses.

The new Visa rule offering the golden Visa scheme has been another major catalyst for Indian businesses to consider Dubai as the most ideal destination for setting up their business. Being a long-term residence visa allowing foreign entrepreneurs, startups and talents to live, carry out businesses, work, or study in the UAE for up to 10 years is luring many Indians to explore Dubai for a bright and glorious business journey.

Fast and easy business setup, robust infrastructure, lower taxes on starting and running a business, and a friendlier policy environment are some of the key features under the Golden Visa scheme that are attracting increasingly more Indians to Dubai.

There are also many reputable firms of Indian origin and cross-border presence offering PRO services in Dubai and facilitating hassle-free, easy and fast company set-ups in the emirate that acts as an additional stimulus for Indian businesses to shift base.

With increasing regional economic competitiveness, Dubai is getting ready to become the crypto capital of the world with a regulatory environment conducive to the growth of this sector. Sheikh Mohammed Bin Rashid, the ruler of Dubai, recently rolled out the first legislation governing virtual assets and assigned an independent regulator to promote Dubai as a regional and global cryptocurrency trading hub.

Indian exchanges are expressing their willingness to capitalize on this opportunity.

The negative stance on cryptocurrencies in India is discouraging the crypto businesses and more recently an imposition of a flat 30% tax on all crypto gains has become a huge negative for this sector.

Two founders of the Indian cryptocurrency exchange, WazirX, recently shifted base to Dubai and raised speculations about other crypto and Web3 startups including their management shifting to Dubai.

A few crypto exchanges from India have plans to capitalize on the favourable crypto ecosystem of Dubai and may shift their base.

Recent Web 3.0 events held in Dubai in March 2022 also witnessed a highest-ever surge in Indian attendees to almost 75%.

Intelak is a technology and innovation hub based in Dubai that supports start-ups, both in early and late stages with mentorship, business tools and resources to set up businesses and give shape to their perceptions and thoughts.

Intelak hub facilitates collaboration with big companies, brands, and industry leaders. Just having a great idea doesn’t take anyone far unless appropriate funding, backing and support are made available to turn a dream business idea into reality through the support from Intelak.

Important to note that the Indian startup population is almost 30% of the total startup population in Dubai which hosts a large network of incubators offering help to the start-ups to make any good business idea to fruition.

Incubators create conducive environments for small and medium emerging businesses by offering early funding, providing co-working spaces, imparting training and workshops, networking events, and providing access to investors. The city presently boasts several enabling platforms for entrepreneurs and start-ups including TechStars Dubai, Turn8, In5, FinTech Hive, Astrolabs, and many more.

The Fineprint

Besides the benefits of the recently revised Visa administration offering Golden Visa, the other most important reason that is driving Indian startup founders to shift their base to Dubai is significantly less taxation for business set up and operation. Outsourcing PRO services in Dubai is often recommended for Dubai business aspirants as it can help companies to avoid many pitfalls and unpleasant future surprises.

Indian investors have placed their unfailing trust in the business ecosystem of Dubai, making it among the most tempting overseas locations in the gulf. The emirate, with business-friendly initiatives, continues demonstrating its commitment to the needs of investing communities.

NEWSLETTER,U.A.E

Dubai: Transforming into a Breeding Ground for Startup Funding

July 13, 2022

Current Scenario

Access to easy financing has long been the most serious challenge encountered by entrepreneurs while working towards the growth and expansion of their businesses. The GCC nations, however, have introduced several business-friendly policies in recent times and attracted large businesses and in turn, venture capitalists (VCs) and angel investors to the respective countries.

The VCs and angel investors prefer innovative markets providing outstanding regulatory environments and favourable economic policies and having a strategic geographical location for easy access to global markets. As Dubai fulfils all these preference criteria, it has become a breeding ground for startup funding by VCs and angel investors.

Dubai focuses on and also strives on becoming a one-stop destination for startups, and in recent years, Dubai’s startup ecosystem has witnessed a significant spike in the numbers of investors and entrepreneurs.

In 2022, Dubai has topped the list in Global Entrepreneurship Index, leaving behind developed world economies including the United States, Canada, Japan, the United Kingdom and a few notable EU countries, and bearing the testimony of an advanced and agile trade and investment framework.

Dubai’s progressive policy reforms, proactive and business-friendly regulations, and sector-specific business districts have been instrumental in creating this global entrepreneurial leadership. A regularly flowing and constantly filling-in investment pool, however, would be the key to retaining this title and sustaining the growth of startups in the emirate.

The latest Dubai Chamber statistics reveal that MENA Region is home to 587 companies having an average annualized return of a minimum of 20% in the past three years and these scaleups have mopped up almost USD 9.1 billion through VC funding, an increase of 47% since 2020.

60% of VC funding of MENA scaleups has been contributed by the UAE’s scaleups and

Dubai retained the hot spot by claiming the majority of funding and being home to most of the technology companies in the region. MAGNiTT, a venture data analytics platform also reported the highest ever VC funding in the GCC region and Dubai is in the driver’s seat.

The in5, an enabling platform for startups also witnessed billion-dollar investment in 2021 mainly accrued from VCs and angel investors.

Dubai with sector-specific business ecosystems having Dubai Media City, Dubai Design District and Dubai Internet City offers huge business appeal to large multinationals and thus attracts VCs and angel investors. The local startup community in Dubai is thriving and in turn, creating more funding opportunities.

Startup Funding Opportunities

Every stage of business growth for a startup requires fund infusion to keep their activities running. Usually, during the early stages funding comes from family and friends, but as the company grows to the pre-seed and seed stages, access to bigger investments becomes a must for long-lasting growth.

The incubators e.g. in5, FinTech Hive, TechStars Dubai, Turn8, Astrolabs etc. then come into the picture and establish linkage between the entrepreneur and potential investors and business experts for continuing business activities.

Trusted mentors from similar fields also play vital roles by providing access to networks that hold membership of important people e.g. HNIs. As startups mature from their infancy to a growth phase, angel investors can also become a viable and popular route for funding in exchange for equity ownership and infusing large sums of capital into the startup.

Future of Funding

Hassan Al Hashemi, Vice President of International Relations at Dubai Chamber, noted, ” We have become a hub for VC investors.” He also pointed out various government initiatives such as free zone incubator programs that offer a business-setup framework, co-working space, knowledge and partnerships. Hashemi also emphasized, “We will continue supporting a growing number of startups and contribute to the country’s digital economy.”

The rise in startup funding has been globally trending with a rise in the global unicorn number that registered 1,070 startups within the unicorn community.

Under the entrepreneurial drive, Dubai is also promoting an increased number of companies with USD 1 billion valuation enhancing investment opportunities and unlocking huge potential for business entities.

VC firms are also planning for integrated-hub to enable startups display their innovative ideas to potential investors. The startups will also be aided with legal and technical advice besides being mentored from time to time.

Creating Industry-focused networking community is also on the agenda of VCs and industry experts believe that with a flourishing startup ecosystem, Dubai has become successful in making the city attractive for venture capitalists and angel investors to channel their funds.

NEWSLETTER,U.A.E

UK GCC Free Trade Agreement Kicks off in Riyadh

July 12, 2022

On 22nd June 2022, The Rt Hon Anne-Marie Trevelyan, Secretary of State for International Trade of the United Kingdom and H.E. Dr Nayef Falah M. Al-Hajraf, Secretary-General of the Gulf Cooperation Council (GCC) officially announced the launch of the UK-GCC FTA negotiations. The UAE, Bahrain, Kuwait, Oman, Qatar and Saudi Arabia are the six middle eastern nations representing the GCC bloc.

The GCC bloc qualifies as the seventh-largest export market for the UK and the demand for global products and services in these six countries is likely to grow by almost 35% to £800 billion by 2035, a 35% resulting in creating massive business opportunities for the UK companies.

Once the FTA deal is through, the GCC nations would invest more in the UK supporting its economy and generating employment in the country.

UK Trade Secretary Anne-Marie Trevelyan said, “Today marks the next significant milestone in our 5-star year of trade as we step up the UK’s close relationship with the Gulf.”

She also highlighted, “Our current trading relationship was worth £33.1 billion in the last year alone. From our fantastic British food and drink to our outstanding financial services, I’m excited to open up new markets for UK businesses large and small, and supporting the more than ten thousand SMEs already exporting to the region.”

The UK Trade Secretary emphasized, “With almost £30 billion already invested in each other’s economies, this deal would also help unlock even more opportunities for investment between the UK and GCC countries.”

The Director of an exporting house based in Liverpool, UK commented, “A strong trading relationship would allow the UK to play to our strengths as a manufacturing powerhouse and a world leader in technology, cyber, life sciences, creative industries, education, AI, financial services, and renewable energy.”

He further emphasized, “UK businesses in these industries will also play a role in supporting GCC countries as they diversify their economies to move away from a reliance on oil and towards other sectors. The UAE, for example, has set a target of generating 50% of its electricity from renewable sources by 2050. Exports of UK wind turbine parts currently face tariffs of up to 15%.”

Dan McGrail, the CEO of Renewable UK said, “The global transition to clean energy includes countries throughout the Middle East which are seeking to make the most of their excellent renewable resources such as solar and wind.”

He added, “As a global leader in wind, marine energy and green hydrogen, we’re perfectly placed to help other countries to accelerate their efforts to decarbonise their energy systems – and to boost our own economy by exporting around the world.”

UK firms have at least £13.4 billion invested in GCC economies and GCC firms have £15.7 billion invested in the UK as of 2020.

The UAE amongst the GCC bloc has always been a frontrunner in building trade and investment relationships with the UK whose government is also seeking to strike a Comprehensive Economic Partnership Agreement (CEPA) with the UAE besides negotiating an FTA deal with the GCC. As the CEPA deal has a much wider scope compared to FTA, once struck can attract more UK companies for doing business in UAE.

Bradley Jones described the UAE-UK Sovereign Investment Partnership (UAE-UK SIP) as “quite a unique initiative” that can inspire many UK technology companies for business setup in Dubai.

He further remarked, “They are investing in cutting edge innovative projects which have high growth potentials. They can also do the knowledge transfer back to the UAE.”

In an interview with Emirates News Agency WAM, Bradley Jones, the ED of the Joint Secretariat of the UAE-UK Business Council said, “There is nothing to stop the UK and the UAE talking bilaterally about doing additional agreements.”

The UAE-UK business council is focusing on cooperation in renewable energy and other high technology sectors e.g. AI, Agritech, FinTech, advanced manufacturing, education technology, life sciences etc. that can open up new avenues of opportunities for company formation in Dubai UAE by the renewable energy and technology businesses in the UK.

NEWSLETTER,U.A.E

Corporate Tax on Corporate Income: UAE Announces New Tax Regime for the First Time

July 12, 2022

The UAE Ministry of Finance (MoF) announced on 31 January 2022 to introduce federal corporate tax or Corporate income tax (CIT) regime that will apply to all UAE businesses except for the entities involved in the extraction of natural resources. Under certain conditions, the UAE CIT regime may also apply to individuals who own a commercial registration to perform such activity.

The federal CIT will come into effect from 1 July 2023 across all seven individual Emirates for the first time. The UAE, in its support of the OECD efforts to create a global minimum CIT rate, has announced the introduction of a corporate tax regime complying with the new international tax standard.

The MOF recently shared more details about the regulation and launched a three-week online public consultation with the stakeholders, business advisors and tax professionals revealing several important pieces of information about when what and how of the new corporate tax regime.

The Timeline

On 1 July 2023, the new CIT regime will come into force for full financial years.

Any company that follows a fiscal year starting on 1 July 2023 and ending on 30 June 2024, would be subject to corporate income tax starting 1 July 2023. The due date for the first tax return filing would be likely at the end of 2024.

Any company that follows a calendar year starting 1 January 2023 and ending 31 December 2023, would be liable for paying CIT for corporate income starting 1 January 2024 and filing would be likely due towards the middle of 2025.

Registration with the Federal Tax Authority (FTA) and obtaining a tax registration number will be mandatory for all companies liable for the CIT. The companies must submit the tax returns within nine months of the ending of the tax period accompanied by supporting schedules and payments.

What is Corporate Tax? Why does the UAE introduce CT? When will the UAE CT regime become effective?

The Tax Structure

In line with the minimum tax rate proposals of OECD under the base erosion and profit shifting (BEPS) initiative, different tax rates have been designed that will protect small businesses while levying higher tax rates on large multinational corporations. No tax will be imposed for an annual taxable income not exceeding AED 375,000. The tax rates will be:

For the businesses in mainland UAE, a 9% CIT rate will apply on annual income exceeding AED 375,000.

UAE CIT will apply for Free zone businesses and will be required to register and file a CIT return. These businesses, however, will continue to benefit from CIT holidays or Nil taxation subject to meeting all regulatory requirements with no business conducted with mainland UAE

A higher tax rate will apply to large multinationals that meet the criteria under ‘Pillar Two’ of the OECD having consolidated global revenues exceeding AED 3.15 billion

Scope Applicability and Exemption

All entities engaged in doing business in UAE will be subject to the new federal CIT at 9% unless exempted. Businesses and commercial activities across all the seven emirates will come under CIT.

Individuals holding an official licence or permit for doing business or professional practising will also come under the new CIT tax regime.

Businesses engaged in the extraction of natural resources will continue to be subject to the USE tax issued by the respective emirate and will not be subject to CIT.

Individuals earning income in their personal capacity e.g. salary, or investment income as long as the income-generating activity does not require a commercial license will not come under the CIT regime.

Transfer Pricing

Compliance with the transfer pricing rules and documentation requirements set as per the OECD Transfer Pricing Guidelines is mandatory for all UAE businesses now.

Withholding Tax

No withholding tax will be applicable on domestic and cross-border payments of any nature.

Foreign Tax Credits

Any foreign CIT levied on UAE taxable income shall be allowed as a tax credit against the CIT liability.

CIT Administration

UAE Federal Tax Authority (FTA) shall be responsible for the administration, collection and enforcement of CIT. Businesses will be required to register for CIT purposes and will be required to electronically file one CIT return per financial year.

There will be no requirement for provisional or advance CT filings or any advance tax payments. A UAE group of companies may form a tax group that can be treated as a single taxable person subject to fulfilling certain conditions. A single tax return for the entire group will need to be filed.

The UAE MOF plans to issue detailed information on the CT regime sometime during 2022.

Potential impact assessment of the CIT regime will be crucial for all businesses in terms of their operations and preparation for CIT compliance requirements.

All businesses and commercial activities need to evaluate if the existing tax function including people, processes, systems and technology are adequate to effectively address the requirements of the CIT regime.

Businesses must also critically review if accounting policies and data management systems are appropriate for compliance management with both CIT and VAT.

All UAE businesses must also Identify potential exposures and opportunities to drive tax efficiencies from both a tax cost and administrative point of view before CIT implementation such as restructuring, transfer pricing etc.

Business setup consultants in Dubai UAE with proven knowledge in accounting, corporate taxation and Free Zone operations can help businesses with early planning and preparation of any corporate tax issues.

The UAE Ministry of Finance (MoF) announced on 31 January 2022 to introduce federal corporate tax or Corporate income tax (CIT) regime that will apply to all UAE businesses except for the entities involved in the extraction of natural resources. Under certain conditions, the UAE CIT regime may also apply to individuals who own a commercial registration to perform such activity. The federal CIT will come into effect from 1 July 2023 across all seven individual Emirates for the first time. The UAE, in its support of the OECD efforts to create a global minimum CIT rate, has announced the introduction of a corporate tax regime complying with the new international tax standard. The MOF recently shared more details about the regulation and launched a three-week online public consultation with the stakeholders, business advisors and tax professionals revealing several important pieces of information about when what and how of the new corporate tax regime. The Timeline On 1 July 2023, the new CIT regime will come into force for full financial years. Any company that follows a fiscal year starting on 1 July 2023 and ending on 30 June 2024, would be subject to corporate income tax starting 1 July 2023. The due date for the first tax return filing would be likely at the end of 2024. Any company that follows a calendar year starting 1 January 2023 and ending 31 December 2023, would be liable for paying CIT for corporate income starting 1 January 2024 and filing would be likely due towards the middle of 2025. Registration with the Federal Tax Authority (FTA) and obtaining a tax registration number will be mandatory for all companies liable for the CIT. The companies must submit the tax returns within nine months of the ending of the tax period accompanied by supporting schedules and payments. The Tax Structure In line with the minimum tax rate proposals of OECD under the base erosion and profit shifting (BEPS) initiative, different tax rates have been designed that will protect small businesses while levying higher tax rates on large multinational corporations. No tax will be imposed for an annual taxable income not exceeding AED 375,000. The tax rates will be: For the businesses in mainland UAE, a 9% CIT rate will apply on annual income exceeding AED 375,000. UAE CIT will apply for Free zone businesses and will be required to register and file a CIT return. These businesses, however, will continue to benefit from CIT holidays or Nil taxation subject to meeting all regulatory requirements with no business conducted with mainland UAE A higher tax rate will apply to large multinationals that meet the criteria under ‘Pillar Two’ of the OECD having consolidated global revenues exceeding AED 3.15 billion Scope Applicability and Exemption All entities engaged in doing business in UAE will be subject to the new federal CIT at 9% unless exempted. Businesses and commercial activities across all the seven emirates will come under CIT. Individuals holding an official licence or permit for doing business or professional practising will also come under the new CIT tax regime. Businesses engaged in the extraction of natural resources will continue to be subject to the USE tax issued by the respective emirate and will not be subject to CIT. Individuals earning income in their personal capacity e.g. salary, or investment income as long as the income-generating activity does not require a commercial license will not come under the CIT regime. Transfer Pricing Compliance with the transfer pricing rules and documentation requirements set as per the OECD Transfer Pricing Guidelines is mandatory for all UAE businesses now. Withholding Tax No withholding tax will be applicable on domestic and cross-border payments of any nature. Foreign Tax Credits Any foreign CIT levied on UAE taxable income shall be allowed as a tax credit against the CIT liability. CIT Administration UAE Federal Tax Authority (FTA) shall be responsible for the administration, collection and enforcement of CIT. Businesses will be required to register for CIT purposes and will be required to electronically file one CIT return per financial year. There will be no requirement for provisional or advance CT filings or any advance tax payments. A UAE group of companies may form a tax group that can be treated as a single taxable person subject to fulfilling certain conditions. A single tax return for the entire group will need to be filed. The UAE MOF plans to issue detailed information on the CT regime sometime during 2022. Potential impact assessment of the CIT regime will be crucial for all businesses in terms of their operations and preparation for CIT compliance requirements. All businesses and commercial activities need to evaluate if the existing tax function including people, processes, systems and technology are adequate to effectively address the requirements of the CIT regime. Businesses must also critically review if accounting policies and data management systems are appropriate for compliance management with both CIT and VAT. All UAE businesses must also Identify potential exposures and opportunities to drive tax efficiencies from both a tax cost and administrative point of view before CIT implementation such as restructuring, transfer pricing etc. Business setup consultants in Dubai UAE with proven knowledge in accounting, corporate taxation and Free Zone operations can help businesses with early planning and preparation of any corporate tax issues.

NEWSLETTER,U.A.E

UAE Economic Substance Regulations

June 27, 2022

The Economic Substance Regulation has been introduced in the UAE in April 2019 with the aim to curb harmful tax practices while at the same time complying with the global standards. It is a major step toward preventing businesses from unethically shifting their profits to jurisdictions that impose minimum or no income tax with the intention of taking advantage of their liberal tax regime.

In order to restrict this practice of profit sharing and to promote transparency, ESR laws impose an obligation on the businesses operating in UAE to have an adequate presence in the country. The regulation aims to demonstrate that these businesses have substance and legitimate operations in the UAE.

It applies to all UAE onshore as well as free zone legal entities that carry out one or more of the 9 ESR “Relevant Activities” referred to as “licensees”. These relevant activities include Banking, Distribution and service centre, Fund management, Headquarters, Holding company, Insurance, Intellectual property, Finance and leasing and Shipping.

ESR Filing Requirements

Entities that fall within the scope of the regulations have to file ESR Notification and submit ESR Reporting. The annual filing obligations for such entities are as follows:

Relevant Activities	Income Earned	Notification	Reporting
No	No	Not required	Not required
Yes	No	Must be filed within 6 months from the end of the financial year declaring that the entity undertakes Relevant Activity.	Not required
Yes	Yes	Must be filed within 6 months from the end of the financial year declaring that the entity undertakes Relevant Activity.	Must be filed within 12 months from the end of the financial year declaring certain business information demonstrating economic substance. The information includes income figures, expenses, assets, number of employees, etc.

Reporting Deadlines

Below are the reporting deadlines for a selection of financial year ends:

Fiscal Year End	Notification Filing Deadline	Report Filing Deadline
30 Jun 2021	31 Dec 2021	30 Jun 2022
30 Sept 2021	31 Mar 2022	30 Sept 2022
31 Dec 2021	30 Jun 2022	31 Dec 2022
31 Mar 2022	30 Sept 2022	31 Mar 2023

Penalty for Non-Compliance

In case of non-compliance with ESR regulations by the entities, Federal Tax Authority (FTA) can impose wide-ranging and significant penalties which are as follows:

Offense	Penalty in 1^st year	Penalty in the subsequent year
Failure to submit a Notification	AED 20,000	AED 20,000
Failure to submit an Economic Substance report	AED 20,000	AED 20,000
Failure to provide accurate or complete information	AED 50,000	AED 50,000
Failure to demonstrate sufficient economic substance in the UAE	AED 50,000	AED 400,000

The penalty can be imposed anytime within six years from the date of such violation. In case of persistent non-compliance, the entity’s license can be suspended, revoked or not renewed.

Why Accurate Assessment of Activities is Important?

Accurate assessment of the relevant activities is very important because failure to do so can result in huge penalties. Therefore, it is crucial for entities to undertake assessments on a yearly basis.

How Can IMC Group Help?

IMC Group can help you in regards to complying with ESR requirements and assist in the filing of the ESR notifications and ESR reports in an efficient and professional manner. We can help you in the following ways:

ESR Applicability Assessment

We conduct a detailed study of your business activities to assess the applicability of Economic substance regulations.

ESR Notification Filing

We provide support and guidance in preparing your ESR Notification and filing it with the Ministry of Finance as a part of ESR compliance.

ESR Report Filing

We provide support and guidance in preparing your ESR Report and submitting it as per the requirement of the Ministry of Finance.

Economic Substance Regulations Test and Compliance

We can assist in undertaking Economic Substance Regulations impact assessment and gap analysis audit to identify the non-compliant aspects. We guide you and recommend corrective or preventive actions to fulfill the requirements of ESR.

Submitting Appeal

We can assist you in submitting an appeal against the penalties that are already levied concerning ESR compliance.

Accounting and Bookkeeping

Our team can help you maintain proper and up-to-date accounting records as per IFRS accounting principles ensuring relevant activities and associated income are easily identifiable and presentable to authorities as and when required.

Contact IMC Group and easily navigate through the Economic Substance Regulation and guidelines based on your jurisdiction. Book a consultation with our experts now!

NEWSLETTER,U.A.E

Dubai: Announces New Rules for Digital Services Provision

June 10, 2022

The Vice President and Ruler of Dubai, Sheikh Mohammed bin Rashid announced on 14th March 2022, the enforcement of Law No. (9) of 2022 ‘Regulating the Provision of Digital Services’ in the Emirate of Dubai from 24th March 2022 to improve and enhance the quality of digital services in Dubai as well as to drive the emirate’s digital transformation journey. The law complements the federal digital and data laws in the UAE and mandates all Government departments to offer online services in multiple languages with no additional cost burden to the customer.

Dubai Government Media Office said, “Government entities and judicial authorities, including Dubai Courts and Dubai Public Prosecution, as well as non-government entities in Dubai, are required to provide digital services to their customers.”

It also added, “The chairman of the Executive Council of Dubai will issue a decision on the various stages of implementing the Law, in line with the recommendations of the Digital Dubai Authority.”

The law applies to both digital services provided by the Dubai government and non-government establishments and outlines key requirements for efficient and effective delivery of digital services.

The General Secretariat of the Executive Council, the Dubai Digital Authority (DDA) and the Dubai Electronic Security Centre (DESC) are held responsible as competent authorities to oversee the enforcement and implementation of the law that encompasses the delivery of digital services across the entire gamut of digital channels including websites and other internet applications.

A one-year grace period has been provided for meeting the requirements of the law and can be extended by the Executive Council of the Emirate of Dubai. The law speaks of phased roll-out and implementation of the provisions of the law.

The key features outlined in this law are:

1- The law is applicable throughout the Emirate of Dubai, including all the free zones in Dubai and the Dubai International Financial Centre (DIFC).

2- Digital services standards shall be documented and rolled out by the appropriate competent authority for effective implementation by the digital services providers once the technical and organizational requirements for the provision of digital services are identified and established.

3- Disruptions in digital services shall be an essential part of digital services standards needing adequate addressal by the digital services providers through business continuity and data security.

4- Data security and privacy requirements will be the vital features of these legal standards and shall address all requirements including data retention, data classification, data security and data accuracy. Privacy compliance programs must also be periodically reviewed to ensure the fulfilment of all requirements of the law.

5- The Dubai Development Authority (DDA) is responsible for approving the appropriate digital identification tools in line with the electronic transactions and trust services law of the UAE.

6- Digital services need to be provided in Arabic and English as a minimum to ensure accessibility to all Dubai residents.

6- All digital transactions shall be equal in status to physical transactions carried out in person.

7- Digital services provided in Dubai must be easily accessible and all customers are legally binding to update the information to digital service providers as and when necessary.

8- The digital services providers can outsource their services from a public or private sector company, with approval from the Department of Finance.

In Dubai, most of the government departments that previously needed residents to physically visit their offices for bill payments, and tenancy contract approvals have largely transitioned to online services mostly through app-based portals. An in-person visit is now sufficient to get a driving license or residency visa. Even setting up a business in Dubai has become much easier, faster and more affordable in the absence of bureaucracy and red tapes.

Additional technical guides and resolutions for effective implementation of the law shall be issued over the coming months by the DDA and other relevant authorities.

NEWSLETTER,U.A.E

Dubai: Witnessing a High Growth in Office Space Demand Spurred by Foreign Businesses

May 31, 2022

Recently a huge growth in demand for office spaces has been witnessed in Dubai intensifying at the highest rate in the last five years, the latest Real Estate Property Data revealed. Such an impressive hike in demand hasn’t been seen in years and this has happened at a time when a large number of foreign businesses are exploring office options for either relocating part of their business operations or expanding their businesses further in the UAE market.

Warehouse, retail and office spaces have been seen in high demand and the office space occupancy level touched 81% in the city, the highest since 2016. Rental prices soared significantly and went up by as much as 35% in all popular districts. CORE, the commercial real estate services firm reported.

A study conducted by Savills, one of the leading property agents in the world also recently reported that Dubai is, at present, the only city within the Europe, Middle East and Africa territory to record the highest office occupancy levels.

The office space demand boost has mainly been generated by businesses engaged in technology and services sectors including companies in the digital currency and Fintech fields. Dubai, in the last few months also issued a record number of new business licenses and Ejari, the mandatory registration of tenancy contracts by Rera.

Robert Thomas, Head of Real Estate Research and Advisory at CORE, noted, “A surge in enquiries is coming from EU/UK and other international markets wanting to expand in Dubai due to its favourable and open business environment.”

“Dubai is also seeing an influx of many international firms relocating their staff and operations from Russia and Ukraine,” he informed.

As per Robert Thomas, even though many existing businesses have adopted a hybrid working model in Dubai, the majority of employers are now getting their workers back to their offices and retaining existing office spaces.

As Dubai has put in place, progressive cryptocurrency regulations and frameworks, the city is also attracting many cryptocurrencies-related businesses, Thomas highlighted.

The UAE has recently announced several reforms including new visa rules for attracting tourists, global talents and foreign investments. As per CORE, these reforms can be “game-changing” and “an unprecedented catalyst” for the real estate market growth in Dubai.

Rental Prices

Dubai rental prices have been on the lower side from a global perspective however started marching northwards at the start of 2022. Rental prices for offices have begun to witness huge spikes at prime office locations as demand has grown significantly among tenants looking for larger floor spaces.

The rental prices are mainly soaring in those business districts which are popular with foreign businesses including Sheikh Zayed with leasing rates soaring by 35% during the first quarter of 2022 followed by One Central with a 29% jump, Business Bay and Jumeirah Lakes Towers with 29% hike and Downtown Dubai with16% increase.

Bur Dubai, Deira and Garhoud, the old Districts in Dubai which struggled earlier to maintain higher rental prices are also seeing price increases exceeding 10%.

In the first quarter of 2022, a total office space of 480,000 square feet was delivered in Dubai clocking a new high and bringing the office supply to 107 million square feet in the city.

NEWSLETTER,U.A.E

UAE: Compliance with VAT Regulations Rises During Q1 2022

May 11, 2022

The UAE Federal Tax Authority (FTA), in an official report dated 21 April 2022, revealed that the number of VAT registrants had increased to 367,157 in the first quarter of 2022, compared to 358,468 in Q1 of 2021, an increase of 2.42%.

In its second yearly meeting chaired by Sheikh Mohammed bin Rashid Al Maktoum, the Deputy Prime Minister and Ruler of Dubai; the FTA Board of Directors adopted the tax authority’s financial statements for 2021.

The meeting held at the FTA headquarters in Dubai reviewed a report on the FTA’s plans to develop and improve the procedures of UAE’s existing tax system in line with the best international standards and practices. Implementing systems and procedures for improved customer services through fast, accurate, and user-friendly digital platforms were also discussed in the meeting. The status of progress on developing the draft corporate tax law was also reviewed by the FTA board.

Upgradation of FTA Services

Directives were issued by the FTA Board Chairman, Sheikh Maktoum on maintaining the pace of upgrades made to the services of the tax authority, complying with international best practices and adhering to the digital transformation plans, specifically developed to boost the country’s competitive edge in terms of services provided to the taxpayers and help realize the country’s vision to become one of the world’s highest-ranking governments based on trust and performance.

The government of Dubai Media Office in a statement noted, “The directives aim at focusing on the customer and enhancing competencies to become a world leader in government services, drawing on the UAE’s ‘Principles of the 50’ and the terms of the new methodology for government action”.

Enhanced Customers Satisfaction

The reports which were presented in the meeting highlighted the efforts of FTA to maintain high scores in the service performance across all areas and activities. Sheikh Maktoum reviewed the plans of the tax authority to enhance services for ensuring satisfaction for all clients and representing all segments of society.

The FTA Chairman added, “The Federal Tax Authority is committed to strengthening its relations with all entities involved in implementing the tax system in the government and private sectors, and to fulfilling its role in driving nationwide economic diversification policies through the administration and collection of federal taxes, in line with best practices.”

“The authority is constantly reviewing the executive regulations it issues for each tax legislation to ensure top-level performance and streamlined procedures. The stages ahead will witness sweeping developments and upgrades to tax systems and procedures to enhance the quality of the FTA’s services,” Sheikh Maktoum highlighted.

Report

The report detailed the accomplishments of the tax authority over the last year and the first quarter of 2022, documented the status of progress made on existing projects and provided all statistics regarding Value Added Tax (VAT), Excise Tax, Tax Returns, tax payments, and all refund requests already processed.

The report revealed that compliance with tax regulations continued to grow in all the emirates across the UAE. The number of Excise Tax registrants has also grown, registering 1,398 numbers compared to 1,357 last year with an increase of 3.02%. Besides, the number of Tax Agents has also increased to 446 nos compared to 433 with a net increase of 3%.

New applications from UAE citizens for VAT refunds on expenses incurred on building new residences were promptly approved by the tax authority and the value of refunds totalled AED185,038,134 during the first quarter of 2022 compared to AED118,503,245 in the first quarter of 2021, registering a huge growth of 56.15%.

This staggering increase in refunds reflects the FTA’s commitment to streamlining online procedures of VAT refunds for UAE citizens building their new houses. This also highlights the country’s vision to develop a modern society with an affordable housing system for citizens and ensure their wellbeing. Enhanced customer satisfaction, as a policy and objective form the core of functionalities of all the government institutions including the FTA.

The report also highlighted the results of the implementation of two phases of the ‘Marking Tobacco and Tobacco Products Scheme’, aimed at preventing the sale or possession of all types of cigarettes including waterpipe tobacco (Mu’assel), and electrically heated cigarettes, not carrying the Digital Tax Stamps in local markets for tax evasion.

NEWSLETTER,U.A.E

New Visa Rules 2022: A Stimulus for UAE Startups and the Job Market

May 11, 2022

In April 2022, the UAE Cabinet, headed by Sheikh Mohammed bin Rashid Al Maktoum, the Vice President, Prime Minister and Ruler of Dubai, has rolled out flexible requirements for investors and entrepreneurs including the startup owners to apply for the UAE Golden Visa and Green Residency Visa under a new set of executive regulations. This is considered to be the most extensive set of reforms which will come into effect in September.

The startups in the UAE can now obtain the UAE Golden Residence visa, a long-term 10-year UAE residency visa more easily under the revised visa regulations.

The new Green Residence permits will allow the investors, partners, freelancers and self-employed individuals engaged in establishing or participating in commercial activities five years of residency in the country. It replaces the earlier residence permits that were valid for 2 years only.

The new system of entry and residence in the UAE will attract and retain global talents and a skilled workforce across the world and will make the local job market more flexible and competitive.

The new visa rules will enable the startups and SMEs to more conveniently hire foreign professionals and provide incentives for the investing communities to relocate to Dubai UAE due to the availability of talent pools. Professional Dubai Pro services can help startups and SMEs identify the most suitable and affordable ex-pats and recruit them for their organizations.

The new simplified visa rules will automatically boost the country’s investment segment increasing the likelihood of easy financing for the country’s startup ecosystem. Startups and SMEs can benefit significantly if they opt for outsourcing PRO Services in Dubai for facilitating fundraising activities.

Many small technology startups who can’t afford full-time professionals and are heavily dependent on freelancers, can now take a deep sigh of relief as the new visa rules will attract many such freelancers into the country. UAE is all set to witness an influx of technology professionals who can help realize the nation’s ambitious vision for the digital economy and new age of innovative and smart technologies such as AI, ML, IoT, AR, Big Data and many more.

Many startups and tech industry experts believe that the reforms will make Dubai and the other emirates more attractive to the short as well as long-term residents and professionals.

Many industry leaders confirmed that the new immigration system will act as an incentive to launch businesses in the UAE making significant and valuable contributions not only in the Emirates but the wider Middle East as well. The new rules will underscore Dubai’s growing role as the key catalyst in attracting businesses both in the region and globally.

The newly introduced job exploration entry visa doesn’t need a sponsor and addresses the long-existing issues of people coming to the UAE on tourist visas searching for jobs. This visa makes it legitimate for jobseekers to attend interviews and search for employment in the country without needing 30 or 90-day tourist visas to look for a job and subsequently shift to an employment visa after getting a job. The people, however, must meet certain skill sets outlined by the Ministry of Human Resources and Emiratisation. This will provide a huge stimulus to both startups and the job market in the UAE.

People from around the globe who are planning to visit the UAE either for business, jobs, or pleasure can now avail themselves of a variety of visa options without needing a host or sponsor for the first time. All entry visas, under this new system, are available for single or multiple-entry and can be renewed for similar periods with a validity of 60 days from their issuance date.

NEWSLETTER,U.A.E

UAE and South Korea Sign MoU to Promote Entrepreneurship and Support for SMEs

May 11, 2022

The UAE Ministry of Economy (MoE) and the Korea Federation of SMEs (KBIZ) have recently agreed to develop entrepreneurship and strengthen partnerships between SMEs through cooperation.

Abdullah Al Saleh, Under-Secretary of the Ministry of Economy; and Kim Ki-mun, Chairman of KBIZ, signed this MoU in the presence of UAE Minister of State for Entrepreneurship and SMEs, Dr Al Falasi.

Dr Al Falasi added, “The UAE attaches great importance to the development of the SMEs sector as one of the main pillars of the country’s new economic model and its strategic plans for the future in line with the ‘Principles and Goals of the 50’. The development of international partnerships is a major focus area of the UAE’s efforts in this regard, and South Korea is a major partner for the UAE in our efforts to develop entrepreneurship.”

“The signing of the MoU will help us strengthen the role of entrepreneurs and SMEs in the two countries in fields of economic cooperation and facilitate the development of partnerships, especially in the sectors of health technology and smart agriculture. It will also drive the growth of trade exchanges and stimulate the flow of quality investments in the fields of innovation, research and development,” the Minister highlighted.

The two countries agreed to jointly design partnership programmes to enable Emirati and Korean SMEs to make an easy entry into the markets of the two countries and prosper.

Knowledge sharing between the MoE and KBIZ on developing appropriate policies, programmes and legislations regarding entrepreneurship has also been part of this MoU to put the SMEs of both countries on stronger footings in terms of trade and investments.

Agreement reached on the development of a joint platform to support SMEs will help identify potential and promising investment opportunities in each other’s markets and will particularly help many aspiring Korean SMEs in company formation in Dubai.

MoU also highlighted the need for the exchange of market research and information, mutual participation in international entrepreneurship programs and extending expert support to the SMEs. While the entrepreneurship and SMEs sector account for 99% of the total companies in South Korea, the sector accounts for 98.5% of the private sector in the UAE.

In early April 2022, Korean Export-Import Bank (KEXIM) visited Abu Dhabi to explore ways of strengthening collaboration on export financing and discussed ways and solutions to co-finance Korean organisations looking toward doing business in Dubai UAE for import of goods and services from the UAE including projects undertaken by Korean EPC contractors, provided these projects use materials or expertise from the UAE.

The MoU is seen as a commitment between the two institutions to realize mutual

aspirations and objectives and in all expectations will have a significant positive impact on the export dynamics and relations between the UAE and South Korea and enhance their respective economies.

South Korea’s central bank in a statement, confirmed an agreement with the Central Bank of the United Arab Emirates (CBUAE) to extend a currency swap agreement for five years. The Bank of Korea and the CBUAE originally entered into a USD 5.5 billion currency swap deal which can be renewed and extended by mutual consent of the two countries.

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