A Member Firm of Andersen Global

Contact Us
IMC Logo

Blog

UAE Plans to Ready Itself for the Next 50 Years in 2020
  • Newsletter, U.A.E

UAE Plans to Ready Itself for the Next 50 Years in 2020

UAE Plans to Ready Itself for the Next 50 Years in 2020. UAE has announced 2020 as the year of preparing for the next 50 years. The Kingdom’s 50th anniversary also falls in the year 2021, marking 50 years from the historic union of the emirates.

In his tweets, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai announced and said: “Brothers and sisters. The UAE is approaching its fiftieth anniversary in 2021 and we want it to be the year of fresh-starts and new-beginnings. We will celebrate our country’s 50th anniversary and launch into another fifty. We will get ready for that in 2020. Next year will be the year of preparation for great strides”.

In yet another tweet, Sheikh Mohammed said, “Today, we announce 2020 to be the Year of Getting Ready for UAE’s 50th Anniversary. We will develop our plans, projects and thinking. 50 years ago, our founding fathers designed our lives today. So, we want next year to design the future of generations to come in the next fifty years”.

He mentioned that 2020 will be the year of getting ready and gaining momentum in the economic sector, infrastructure, education, health, and in the media sector. “In 2020, we will work together, Emiratis and residents, in all sectors… We are united and we can change the equations. We can raise expectations… We want 2020’s atmosphere to be similar to that of in 1970 when our founding fathers and their teams were preparing to embark on a new stage and new life” the Vice President said.

He further said, “I was there in 1970, the year of creating the union and will also be there in 2020, overseeing the team shaping the next fifty. There will be two committees. The first one will be chaired by Sheikh Mansour Bin Zayed and will be tasked with mapping out the development plan of the next 50 years. The other committee will include Sheikh Abdullah Bin Zayed and Sheikha Mariam Bint Mohamed Bin Zayed to oversee the celebratory activities of the country’s Golden Jubilee”.

“We are one team working in one spirit. We are fully optimistic that we have a promising future ahead,” he concluded.

In the meantime, His Highness Sheikh Mohamed Bin Zayed Al Nahyan, the Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces, also announced that 2020 will be the year of preparing and making great strides towards the country’s 50th anniversary and also prepare for the next 50 years.

Sheikh Mohamed tweeted: “Today, I launched with my brother Sheikh Mohammed Bin Rashid the biggest national strategy for next year 2020. It will be the year of getting ready for the UAE’s 50th anniversary. It will be a red-letter year, during which we will make great strides economically, socially and developmentally aiming to be the best in the world in fifty years”.

He further added: “In the next fifty years, we will prepare all sectors for the post-oil phase, build a real knowledge economy based on innovation, creativity and modern science, and leave our imprint on the human civilization march. We will lay solid foundations to sustain development for future generations”.

The 50-year development plan committee

Sheikh Mohammed also announced the formation of a committee for creating a development plan for the coming 50 years. The committee, which would be chaired by Sheikh Mansour Bin Zayed Al Nahyan and Mohammed Abdullah Al Gergawi as his deputy, would have main agenda of preparing a complete development plan across the UAE and advancing the government administrative system with an objective to make the UAE the quickest and most adaptable and flexible government to future amendments.

The committee is also responsible for involving various segments of the society in shaping their life in the UAE for the coming 50 years. It would create a new economic map for the UAE and designing exceptional projects, guidelines and policies to make massive leaps in the country’s economy. It would also work to cement the soft power of the Kingdom and establish latest media systems for sharing the country’s new story with the world, thus bringing economic and social yields that safeguard its profits and increase opportunities in the new economy.

The committee is also responsible for developing key sectors such as health, housing, education, transport, and food security in the country to enhance future readiness. The committee would also create a broad vision of the UAE society in the coming 50 years that adapts family life, cultural identity and demographics to a rapidly-changing world.

It is also responsible to foster the ethics of productivity and passion for growth to prepare the new generation for any challenges and goals of the country in the coming 50 years.

Golden Jubilee celebrations committee

Sheikh Mohammed bin Rashid also announced directives to form a committee which would oversee the Golden Jubilee preparations.

The committee, which would be chaired by Sheikh Abdullah bin Zayed Al Nahyan and deputy Sheikha Mariam bint Mohamed bin Zayed Al Nahyan, would organize and manage remarkable celebrations to mark the momentous milestone in UAE’s history.

The committee would have a goal to govern the Emirates’ Golden Jubilee celebrations, develop a broad preparation plan and also form teams to organize various events and activities to celebrate the country’s 50th anniversary next year in 2021. It is also supposed to involve all the segments of the society for preparing for the Golden Jubilee celebrations.

The committee would also involve the private sector in preparing and executing the exceptional celebrations towards the Golden Jubilee and develop new plans to reinforce the global outreach and effect of the Golden Jubilee celebrations.

The committee would also compile a report of the Kingdom’s achievements since the federation and preserve the same for future generations. It is also going to involve embassies across UAE in the preparations and implementation of the Golden Jubilee celebrations for promoting the UAE’s global image.

The committee’s key duties also involve setting broad mechanisms for coordinating events and activities during the Golden Jubilee celebrations on both the federal and local level, creating local and international-level media plans for sharing the country’s journey of 50 years and also invite regional and international media to participate in the Golden Jubilee celebrations.

With all these dynamic changes, if you plan Dubai company incorporation or new business setup in UAE, this is the right time. We, at IMC, can assist you in your entrepreneurial journey and help you register your business.

Read More

Key Points of FAQ Regarding Economic Substance Regulations in the U.A.E.
  • Newsletter, U.A.E

Key Points of FAQ Regarding Economic Substance Regulations in the U.A.E.

In April 2019, the U.A.E. Ministry of Finance announced Cabinet Resolution No 31 of 2019 (Resolution) on Economic Substance Regulations (ESR). The regulation is an element of Kingdom’s commitment to the OECD inclusive framework.

As per the regulations, the U.A.E. onshore and free zone companies along with other U.A.E. businesses (collectively known as Licensee) that conduct any of the listed ‘Relevant Activities’ to maintain an acceptable economic presence in the country related to the activities.

In continuance to the above, the Finance Ministry of U.A.E. recently published a list of 41 Frequently Asked Questions (FAQs) for addressing the apprehensions of impacted companies in relation to ESR. Along with listing down the FAQs, the Ministry has also offered valuable guidance on what steps a Licensee should take before the end of a specific financial year to be able to meet the compliance requirements related to the regulations. As per the stated guidance, a Licensee should –

  • Evaluate what Relevant Activities were being or are likely to be conducted during the financial period while applying a ’substance over form’ approach;
  • Evaluate the amount and type of income that is earned from the Relevant Activity in that financial period;
  • Organise board meetings with a particular required number of directors’ present in the U.A.E. document the important minutes of these meetings;
  • Investigate all the expenses incurred;
  • Study and document main U.A.E.-based assets like premises, which is related to the Relevant Activity;
  • Maintain relevant documents like agreements or financial records which support the assets and expenses;
  • Examine roles and responsibilities of the staff towards the Relevant Activity;
  • Analyse applicable outsourcing agreements;
  • Any other facets that may help Licensee to prove adequate Economic Substance in the U.A.E. for a relevant financial period.

 

Questions

Answers
Which is the first reportable financial year?Regulations apply to financial year that starts on or after 1 January 2019. For a U.A.E. company that follows January to December as their financial year, the first assessable period would become 1 January 2019 to 31 December 2019. But for a U.A.E. company that follows April-March financial year, the first assessable period would become 1 April 2019 to 31 March 2020.
Will these regulations only apply to entities in U.A.E. that are part of a global multinational group?No. The regulations enforce Economic Substance obligations on any U.A.E. business which conducts a Relevant Activity, irrespective of whether the U.A.E. business belongs to a global multinational group. But in case of a U.A.E.-based Distribution Business, Headquarter Business, Service Centre Business, or High-Risk IP Business would remain within the scope of the regulations only if the U.A.E. company or firm is doing transactions with any foreign group companies.
Will a company that is registered under an ‘offshore’ free zone company regime be subjected to these regulations?Yes. Regulation would apply to ‘offshore’ company in case it conducts a Relevant Activity.
Do the listed activities on the commercial license regulate whether a Licensee undertakes a Relevant Activity or not?No. Though the commercial license might define the Relevant Activity, a ‘substance over form’ method should be used to decide whether a Licensee conducts a Relevant Activity and is within the scope of these regulations.
What happens if a Licensee does not conduct any Relevant Activity during a specific financial period?The Licensee would not need to inform its Regulatory Authority nor is it required to submit an Economic Substance return for the applicable financial period.
What if a Licensee conducts a Relevant Activity, but is not able to earn any income from the same during a financial period?Then the Licensee would only be required to submit a notification with the Regulatory Authority. Nevertheless, they would not be needed to file an Economic Substance return for the applicable financial period.
If the entire income from the Relevant Activity has been earned from outside U.A.E., then does the Licensee get an exemption from the Regulations?No, this Licensee will not be exempted from the regulations. Any income from a Relevant Activity for which the Licensee needs to show Economic Substance return in the U.A.E. includes all income, inclusive of income generated by the Licensee outside of the U.A.E.
How is ‘adequate’ or ’appropriate’ economic substance defined?The regulations and directive do not give a minimum standard for what is defined as adequate or appropriate. The Regulatory Authorities are supposed to take a realistic approach while assessing if a Licensee complies with the Economic Substance test, understanding that the type and level of activity of any Licensee might vary during the financial period and also from year to year.
Is the Economic Substance evaluated on a Licensee by Licensee basis, or can Licensees who are part of the same group chose to be evaluated on a ‘consolidated’ basis?No. The regulations do not permit the Licensees who are a part of the same group to be combined for Economic Substance purposes. All the Licensees would have to comply with the regulations, and validate Economic Substance on an individual basis.
Are conditions for directed and managed applicable to Holding company business?A Holding Company Business is not needed to be directed and managed in the U.A.E.; only exception is when this is a condition for the relevant licensing authority.
Is it necessary for the employees who conduct Core Income Generating Activities (CIGAs) to be the residents in the U.A.E.?Yes, the employees who conduct the CIGAs of a Licensee would, be needed to be residents in the U.A.E. Any non-resident employees or other individuals would be counted towards the Economic Substance of a Licensee in the U.A.E. only if:

 

  • the Relevant Activities are conducted while the individual is present in the U.A.E. physically, and under the supervision of the Licensee; and
  • the Licensee is bearing the related costs of the non-resident individual.
Is it necessary the directors of the Licensee need to be resident in the U.A.E.?No. Directors only need to be physically present in the U.A.E. to attend pertinent board meetings of the Licensee.
Can CIGAs or any other related activities be outsourced by the Licensee?A Licensee is allowed to outsource any or all of its CIGAs as long as the outsourced activities are conducted in the U.A.E. However, a Licensee is not permitted to outsource activity of being supervised and managed, as the Licensee itself is needed to show oversight and control of the Relevant Activity in the U.A.E..

 

Activities that are not defined as CIGAs (like back office functions) could be outsourced to people located outside U.A.E. without negatively affecting the Economic Substance of the Licensee in the U.A.E..

Are investment funds dependant on the Regulations as a Holding Company Business?No. An investment fund is not deemed as a Holding Company Business.
Is lending to any other group entity deemed a Lease-Finance Business?Yes, a U.A.E. company that offers a loan or provides some other form of credit to a U.A.E. or any other international group company for deliberation, for example, interest would be deemed as engaged in a Lease-Finance Business.
Is doing investment and trading in debt securities deemed as undertaking a Lease-Finance Business?No, all the U.A.E. company that invest and hold bonds or other debt securities which are traded on a regulated exchange are not deemed as engaged in a Lease-Finance Business.
What happens if there is no consideration payable for the credit given?The Regulations are not applicable to credit and other financing and leasing provisions where there is no anticipation of consideration in the form of fees, interest, rental payments, capital gains or any other such form of payment. The grant of security which is in favour of the lender does not constitute consideration.

Read More

Advantages of Freelance Permits in U.A.E.
  • Article, U.A.E

Advantages of Freelance Permits in U.A.E.

A freelance permit offers you an opportunity to work on your own as a sole practitioner or an independent contractor. Working like this is entirely legal in the U.A.E. if you have the required permit. However, it’s important to note that in the U.A.E., you can get the permit as an Independent Contractor only if you are pursuing some selected professional activities (most of which are media-related) that are approved by the government.

Information you would need

Freelancer contractors can apply for this work permit and residence from some selected free zones located in the U.A.E., which also let you to set up and run your business in your birth name that is equivalent to the brand name. Essentially, your profession should be related to the listed free zones activities which are principally media-related like artists, directors, editors, writers, photographers, producers, make-up artists, and other technicians in the field of TV, Radio and films.

There’s also a recent trend where many professionals and businessmen want to gauge the market before they plan to invest and establish a company in U.A.E. Taking a freelance permit provides entrepreneurs with an option to test the market without investing or risking a big amount.

A freelance permit slightly varies from setting up a start-up company. Many professionals or entrepreneurs start out with freelancing in the beginning and the gradually upgrade to a suitable and full-fledged setup as they get successful.

For many people, being your own boss or starting a side-business is like a dream come true. Therefore, freelancing seems to be the best option to begin with. Having said that, it does need a strong and structured business plan and a great insight and determination to get new clients on-board. It is obvious that you would require the right set of skills and passion to succeed.

As a freelance permit is offered by some specific free zones and as per the package, the freelancers can base themselves in one of these free zones either by using a flexi-desk option which is surrounded by other businesses who may need a freelancer’s services or by renting their own office space.

Please note that freelance permit registration and the relevant visa applications have an attached cost, therefore, you will require funds that separates saving account supported with at least 6 months expenses or may be even more.

Differences between Freelance Permits of Free Zones in Dubai and Umm Al Quwain (UAQ) Free Zone

Here are the differences between the Dubai Free Zones and the Umm Al Quwain Free Zone that you should be aware of to be able to apply according to your preference and requirements:

Particulars

 UAQ Freelance Permit Dubai Freelance Permit
NOC from the Sponsor Not needed Needed
Shared Desk Not needed Needed
Visa Validity 2 years 3 years
Sponsorship of Dependents Yes Yes
Auditing/Book keeping Not Needed Not Needed
Bank Account Personal Personal
Duration 4 – 5 working days 25 – 30 working days
Cost AED 22,000* AED 35,000*

Read More

The Path for Family Office Investments and Private Equity in the U.A.E
  • Newsletter, U.A.E

The Path for Family Office Investments and Private Equity in the U.A.E

The topic of a discussion at the recently held Super Return conference in Dubai was – What is the future ahead for the asset management and safeguard of family offices and high-net-worth individuals located in the Gulf Cooperation Council? In the event, the discussion hovered around how the world of family offices was changing. Titled ‘In it together: family offices, private equity and venture capital’, the main point from the event was that the market seemed promising especially for the high-net-worth clients who are thinking of asset diversification, particularly in private equity. They also emphasised how the sector is gaining from the professional attitude of the service providers in the area as the demands on them are increasing.

One of the experts at the event also said that the family offices such as the fund managers in the area, are anticipating more from their providers because the market is growing and there is ever-increasing demand for state-of-the-art technological infrastructure. People managing investments have a preference for service providers who are ready to work as an extension of their back office team and also provide a professional operational oversight function.

Although the investors are giving positive response towards private markets in general, they have been also conveying their caution. This shows in higher expectations of service providers to assist in providing peace of mind. Their requirements on administrators are rising in terms of access to data and information being available on clear and transparent fees. Various managers and investors want them to exhibit the value they are adding to structures. Another expert mentioned that “For private equity investment, Limited Partner (LP) sentiment is reflective of the growing demand within the industry of a greater need for transparency and enhanced reporting. Fundamentally, increased disclosure regarding fees and greater visibility and understanding of the value remains a focus for LPs.”

The need for more transparency comes as no surprise in the area and “The regulator is keen to reinforce the notion that there is no place for weak corporate governance. Investors want the assurance of a robust risk management framework to mitigate operational risks, a feature of which is inherent in the DFSA’s regulation. We have seen it become increasingly likely that fund managers and family offices will seek to secure the services of sophisticated, independent fund administrators. Their ability to provide the additional comfort investors seek from having an independent, comprehensive and robust corporate governance and control framework is a fundamental requirement when managing funds and investor commitments.”  We, at IMC, can guide and support you by playing the role of an outsourced family office or may be a multi-family office. You can also get in touch with us if you need professional assistance on Dubai company incorporation or family office investment in the UAE.

Read More

Emirati Visitors Would Now Get Visa on Arrival in India
  • Newsletter, U.A.E

Emirati Visitors Would Now Get Visa on Arrival in India

There’s good news for UAE nationals travelling to India. Now, Emiratis to get a visa on arrival in six airports in India. As per the Indian Embassy in Abu Dhabi, this visa would be valid for a time limit of a maximum of 60 days and would be double entry for tourism, business, conference and medical purposes.

It is going to be applicable for six international airports in India which are Delhi, Bangalore, Chennai, Hyderabad, Mumbai and Kolkata.

But the scheme applies only for people who have previously obtained an e-visa or usual Indian paper visa. Emiratis who are travelling to India for the first time are recommended to apply for either the paper visa or the e-visa.

The statement ‘Introduction of Visa-on-Arrival facility to nationals of the United Arab Emirates’ announced by the Embassy of India in Abu Dhabi on November 17, 2019, mentioned that this service has a goal of further fortifying tourism and also trade relations and strategic relations between these two nations.

UAE nationals who are coming to India can now obtain on-arrival visa starting from November 16, 2019, announced the Government of India. This move has an objective to further solidify people to people and the business links in these two countries.

The criteria for UAE nationals:

  • This visa-on-arrival service is applicable only for those Emiratis who have obtained an e-Visa or usual paper visa previously for travelling to India.
  • UAE nationals who are travelling to India for the first time will have to apply for regular paper visa or e-Visa for India.
  • Pakistan-origin nationals of UAE would not be eligible for this visa-on-Arrival scheme.
  • All other pre-requisites and conditions, which are applicable for Japanese and South Korean nationals, would also be valid for Emiratis.

Read More

Mediation in the Middle East: Prior and Post the Singapore Convention
  • Newsletter, U.A.E

Mediation in the Middle East: Prior and Post the Singapore Convention

The United Nations (UN) Convention on International Settlement Agreements Consequent of Mediation, known as the Singapore Convention on Mediation (the ‘Singapore Convention’), was inaugurated for signatures on 7 August 2019.

This boasts of 46 signatories or countries, out of which five are a part of the Middle East. When paralleled to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the ‘New York Convention’) in total numbers of Middle Eastern signatories, it seems that the Singapore Convention was not received as heartily as the New York Convention (which has about 13 Middle Eastern signatories). But while looking closely and when comparing as per the number of Middle Eastern signatories when being inaugurated (just Jordan from the Middle East had signed the New York Convention on 10 June, 1958), then the projections of the Singapore Convention immediately seem brighter in the region

Some Key Highlights of the Singapore Convention

The Singapore Convention has been greeted as the “missing piece” in the framework of global dispute resolution enforcement. It creates a framework for the cross-border recognition and also enforcement of various settlement agreements (Article 3 of the Singapore Convention) and targets to get certainty and stability to the global framework on mediation. Some notable provisions of this include:

1. Lucidly-defined Application Scope

Article 1(3) of the Singapore Convention impedes settlement agreements which are enforceable like court judgments or arbitral awards from its application. This has established a well-defined arena for exercising this Convention and eradicates probable overlaps with any other conventions which regulate global trade like the Hague Convention on Choice of Court Agreements (2005) and the New York Convention.

Though the New York Convention would continue to administer and oversee settlements attained through mediation which are part of Med-Arb and Arb-Med-Arb processes, the Singapore Convention would now allow an equal level of authority to settlements exclusively ensuing from mediation. Thus in a way, this will assist in establishing mediation as a more effective and an independent way of Alternative Dispute Resolution (‘ADR’), as compared to a secondary step in the arbitration process.

2. Procedural Safeguards

Articles 5(1)(e) and (f) of the Singapore Convention stipulate that the competent authority might decline relief on the grounds of “serious breach of standards applicable to the mediator or the mediation” and failure to disclose “circumstances that raise justifiable doubts as to the mediator’s impartiality or independence”.

Intriguingly, the Singapore Convention doesn’t specify the criteria that is to be used to evaluate the conduct of the mediation, the mediator or his impartiality. Since the Singapore Convention doesn’t offer any examples or instances for either provision, and as there is no soft law or regulation on which States could rely (contrary to arbitration, mediation gets insignificant attention from global associations), the responsibility for elucidating these regulations now resides with the capable authorities in all the ratifying States.

Therefore, wherever needed, the signatory States would have to include regulations or standards in their own national laws before they would be able to endorse the Singapore Convention. In turn, this might encourage the manufacture of soft law instruments to restructure and streamline these standards. Consequently, there would surely be the formation of standards which have been elusive in mediation so far, except from the generating more awareness and debating mediation in the near future. It is important to note that the recently-inaugurated Saudi Centre for Commercial Arbitration (‘SCCA’) offers a code of ethics for various mediators in Saudi Arabia.

Prospects of Mediation in the Middle East

The initial response of the Singapore Convention in the Middle East is should surely not be considered as reflective of its eventual success. As State parties may assent at any stage to the Singapore Convention, it is very likely, that the countries in the Middle East who have still not signed the Singapore Convention would soon do so to keep up with the growing demand for mediation in this region. For instance, in just UAE, the Dubai International Arbitration Centre (‘DIAC’), which resides under the ambit of the Dubai Chamber of Commerce and Industry, registered 127 mediation cases which were valued at Dh18 million (almost US$ 4.9 million) in the first quarter of the year 2018.

With the necessity to align their national laws with their obligations under the Singapore Convention, all the signatories in this region would have to alter or come up with dedicated and standalone national laws regarding mediation. Though there is much that remains to see with regards to how well, and through which strategies, all of these nations would implement the Singapore Convention in their areas, one thing that remains certain is that mediation in the Middle East is surely in for a facelift and carries a view of a very assuring future.

Read More

Recent Changes to the UAE Penal Code: Three Key Amendments to be aware of
  • Newsletter, U.A.E

Recent Changes to the UAE Penal Code: Three Key Amendments to be aware of

H.E. Sheikh Mohammed Bin Rashid Al Maktoum, the Vice President and Prime Minister of the UAE and Ruler of the Emirate of Dubai, has the vision that justice should be governed quickly and efficiently. Therefore, the UAE Attorney General delivered a new decree on the Penal Order. The Order includes five articles stating the criminal offences and penalties that could be issued by public prosecutors as per their jurisdiction and grades. This Order brings about a number of considerable changes to the administration of criminal justice in the UAE, out of which, the three most important ones are explained as follows:

1. More offences to be managed instantly by public prosecutors

A number of crimes mentioned in the Order might be disposed of by public prosecutors instead of transferring them to the criminal courts. This step is meant to avoid long and complex processes before the criminal courts for reducing the overload of criminal cases in the UAE criminal courts which eventually might enable speeding up the process of criminal justice.

The Order tackles almost 30 offences, counting defamation, bounced cheques offences, traffic, and allows members of the Public Prosecution Department whose grade is not any lower than a senior prosecutor for issuing penal orders.

A limited form of appeal has been included: members of the Public Prosecution Department whose grade is not any lower than a chief prosecutor may change or withdraw any penal order within seven days of the date it was issued. The Case Examination and Follow-up Department in the Attorney General’s office is authorised to deliberate mitigating the penal order and, if suitable, withdraw or substitute a penalty with community service.

 2. More sentences will be mitigated

The Order considerably reduces or mitigates a number of sentences instructed under the UAE Penal Code (Law No. 3 of 1987). The Order comprises 20 offences overseen by the Penal Code 18 which includes imprisonment and/or fine. But under the Order, these offences would be now punishable by just a fine which will not go over a recommended limit. The phrasing of Articles 1 and 2 of this Order leave the interpretation to the public prosecutor’s discretion to judge the offences as per the Order’s provisions. Ideally, the public prosecutor may have an option to those provisions or can follow the regular process of transferring offences to the suitable criminal court. It is important to note that the Order is tongue-tied on the criteria that should be practiced by public prosecutors while exercising their prudence.

3. Lower penalties in case of dishonoured cheques

Bounced cheques of an amount lesser than AED 200,000 (circa US$54,500) are considered within the ambit of the Order. Article 3(16) says that fines of AED 10,000 (circa US$27,22) would be applicable to individuals issuing cheques in bad faith, who don’t have sufficient funds and given the cheque amount is over AED 100,000 (circa US$27,229) but not higher than AED 200,000 (circa US$54,500).

The fine amount would be decreased as a pro-rata amount from the bounced cheque. In case the cheque amount is not over AED 50,000 (circa US$13,610), then the fine would be AED 2,000 (circa US$545). But if it’s more than AED50,000 (US$13,610) and doesn’t surpass AED 100,000 (US$27,229), then the fine would be AED 5,000 (circa US$1,360). This offence is punishable under Article 401 of the Penal Code and the criminal would get imprisonment of up to three years or has to pay a fine (between AED 1,000 (circa US$272) and AED 100,00 (circa US$27,229).

If there are multiple cheques relating to the same parties and their collective value is over AED 200,000 (circa US$54,500), then the Public Prosecution Department would combine such offences and would refer them to the Criminal Court.

For a Victim, a Fine is not a Solution

A fine in case of a dishonoured cheque is a criminal punishment; however it is not essentially a solution to the victim creditor. The public prosecution would directly implement any fine imposed using the accessible enforcement measures. This would leave the creditor with no solution rather than filing a civil suit for gaining a judgment compelling the debtor for paying the cheque amount.

Ideally, creditors should opt for the normal civil proceedings. Per the Civil Procedure Law (Law No. 11 of 2015) and the Executive Regulations of the Civil Procedure Law No. 57 of 2018, any creditor has the privilege to ask for adjudication of its application on a summary basis (that is before the fast-track court) by presenting a claim categorising the dishonoured cheque as a debt instrument. But, many UAE courts that are discarding this approach and rather preferring to study the merits of the claims instead of concluding them on a summary basis, results in a lengthier procedure. The Dubai Civil Courts usually ends up dealing with such claims on a summary basis.

Deterrent Penalties

It has become apparent that cheques do play an important role in the national economy, as majority of transactions involve a cheque. Thus, it is imperative that law enforcement must uphold integrity and reliability of cheques as an authentic method of payment. So it is vital to apply stern penalties to offenders or else, its reliability would be prejudiced.

Read More

Dubai Government is Opening up More Opportunities for the Private Sector
  • Newsletter, U.A.E

Dubai Government is Opening up More Opportunities for the Private Sector

Dubai is now taking measures to control or limit the number of state enterprises to lend more support towards the expansion of the private sector entities and enable their economic growth. To help with the already underway efforts by the governments to re-assess the function of both the public and private sectors, all the state-run businesses or enterprises would now only be set up to enable fulfilling national security or any governmental need. The government would only mediate and interfere in scenarios where the private sector is not capable of offering the services or goods required or wherever the government might attain a better result.

The higher committee is currently managing the demand and supply projections and giving guidance on sectors where private companies can possibly handle additional responsibilities. Besides this, new government entities are also expected to function without governmental prejudice, to help reduce any additional gain over private-sector partners.

The positive approach of the government in providing a level playing field for the UAE’s private sector, assisting to enable fair competition for all the big players in the market. There is still hope that with this new attitude and viewpoint, the private sector will be able to create newer jobs and company registration in Dubai, while also helping to enhance economic development in this region. So, if you aim for best company formation in UAE and need professional advice or guidance for the same, please get in touch with us and we would be glad to help.

Read More

7 Tips for Women Who Wish to Start A Business
  • Article, Bahrain, India, Oman, Saudi Arabia, Singapore, U.A.E

7 Tips for Women Who Wish to Start A Business

These days, women have loads of opportunities and the required abilities to start a business – be it full-time or part-time. Social media has also helped in changing the perception and women these days are taking the risks and becoming entrepreneurs.  There are many women who are also quitting their full-time jobs and starting their own ventures. So if you’re also thinking of starting your own enterprise but confused about how to go about starting it, then read on. We have collated seven tips for you, which would help you to kick-start your business.

1. Prepare an impressive pitch:

The first step before you start talking to your network or looking for investors, you must prepare a good pitch. You should know which product you are selling and why a customer should spend their money on it? So do you know what an elevator pitch is? Your pitch should be such that it is impressive yet not long. It should be crisp and something that grabs your attention quickly. It should also be something that enables people to understand your product or service and how the customers would be benefitted using it. Think of how your product is filling the gap in the market and giving what has been lacking.


2.  Study your market in detail:

After the sales pitch, do a detailed study on the customer base, that is, who will buy your product or service. What’s the size of your customer base? Are you targeting a niche customer base or generic one? Find answers to these questions first and then decide to present your idea to your potential investors.


3. Upskill yourself on financial aspects and knowledge:

Before making a sales pitch to investors, you must be confident with numbers, financials and data. Managing a business is not possible without mastering the financials of your venture; in fact your data and numbers should be on your fingertips. In case you’re not so confident about the financial aspects, you must upskill yourself and learn this from someone experienced and good at it. You should have answers to questions such as “What are the capital requirements of your business over time?”; “What are your gross margins?”; “What’s the time frame you are looking at for a break-even?” etc.


4. Don’t think twice and ask for help if needed:

You should not hesitate to look for help and advice in case you are have any doubts in how to set up your business. In this, networking is a very critical skill that should have so as to flourish in the entrepreneurial world. You must confidently tap into your network of acquaintances and friends, which is crucial to run your own business.


5. Have a useful board of advisers:

Having a board of advisers in an early stage in your company could really benefit your company’s image. While deciding the board members, make sure that you pick experienced people who can act as trusted advisers in your venture. These investors can advise you in all decision-making process and could even take you to your initial customers. So to start with, check and invite individuals from your own network who might have relevant experience. After deciding the board members, you could plan in-person or even virtual meetings on a periodic basis for discussing important issues.


6. Create a hiring roadmap:

Make a list of people you will require in your company in the coming 1 year or so and then start finding and hiring them. These people could be working with you full or part time or could be working for equity till the time you get some funding.


7. Work harder and faster than others!

Last but not the least, get ready to work harder than your competitors, or what you have done earlier. Do you know that most of the small business owners or entrepreneurs put in over 60 hours every week? Also, be ready for the inevitable failures or setbacks. It’s all part of the game. You must also not ponder too much and delay making the decisions, as others might launch the same product or service before you.

So, starting your own venture might have multiple challenges but if you keep these tips in mind, you’re surely off to a great start!

Read More

UAE Announces the Introduction of Economic Substance Regulations
  • Newsletter, U.A.E

UAE Announces the Introduction of Economic Substance Regulations

In the earlier part of 201, the Cabinet of Ministers in the UAE announced the release of Resolution No 31 of 2019 (Resolution), which was regarding the Economic Substance Regulations (ESR) that would be applicable with immediate effect.

ESR was introduced to make sure that all the companies that are conducting their business in the UAE, pursuant to the trade license gained from relevant authorities, comply with the Economic Substance Test. The resolution offers useful and important guidelines and parameters to perform any such substance tests.

This particular resolution is also a move to meet the EU’s obligation to remove UAE from the EU black list. EU has had a list of non-co-operative jurisdiction aimed for tax purposes. Consequently, on 10 October 2019, the EU has struck off UAE’s name from its black list.

Where is it applicable?
  • ESR is applicable to all UAE companies who have gained a trade license or permit from relevant authorities to perform ‘Relevant Activity,’ which includes the Free Zone and also the Financial Free Zone.
  • Nonetheless, this resolution would not be applicable to the companies that are owned by the Government of the state, other Government authority or body, or Emirate of the state directly or indirectly.

Relevant businesses and their core income-generating activity

Relevant Business or ActivityCore Income-generating Activity
Shipping
  • Managing the crew or voyages
  • Maintaining or overhauling the ships
  • Managing and tracking shipments
Holding Company
  • All the activities performed and related to the business
  • For income besides dividend or capital gains, any activities to earn such other income
Banking
  • Raising the funds and controlling the risk
  • Taking hedge positions
  • Offering loans or credit
Insurance
  • Forecasting and calculating the risk
  • Insuring and re-insuring against any possible risk
  • Underwriting insurance and re-insurance
Investment Fund Management
  • Making decisions upon holding or selling
  • Computing the risk and reserve
Lease-Finance
  • Agreeing on the funding terms
  • Recognising and acquiring assets that are to be leased (for leasing activity)
  • Managing and controlling the risks
Headquarter
  • Taking various management decisions
  • Managing the operating expenditure on the behalf of various group entities
  • Managing and coordinating group activities
Intellectual Property or IP (where IP is patent/non-trade intangible) and it is a High-Risk IP Licensee*
  • Making strategic decisions and handling the risk factor related to developing, exploiting or protecting the company’s intangible assets
  • Carrying out ancillary trading activities aimed for exploiting intangible assets
Distribution and Service Centre
  • Transportation and storage activities
  • Handling inventories

* High-Risk IP Licensee is defined as a licensee who:

  1. Did not create an IP that is held for business and acquired an IP from any related persons, in deliberation for funding any research and development activities carried out by another person located outside of the UAE and licenses such IP to related persons or generates any income
  2. Does not perform any research and development activity, or any marketing, branding, or distribution activities as part of main income-generating activity

 

What are the main parameters for the Economic Substance Test?

Licensee should mandatorily satisfy the below-mentioned criteria to be able to meet the Economic Substance Test in relation to the Relevant Activity:

  • Perform the core or key income-generating activities in the UAE
  • Licensee should be guided and managed in the UAE
    • Required frequency of the Board of Directors meetings to be held in the UAE
    • Directors should be having the required knowledge and expertise to carry out their duties
  • To hire the required number of qualified and trained full-time employees, or satisfactory outsourcing expenditure spent for third party service providers
  • To own the required amount of physical assets in the UAE

Requirement from the compliance point of view

  1. Notifications to be submitted
    Licensee has to notify the authority on following every year:
  • Whether or not it is performing the Relevant Activity
  • If yes, then the gross income for the Relevant Activity depends on the tax outside the UAE
  • If the financial year is followed by the licensee
  • Reports to be submitted
    If the licensee is performing the Relevant Activity, then it is needed to submit a detailed report every year within 12 months from the end of that Financial Year, detailing all the operations-related information, which includes but is not limited to employee details such as their experience, qualifications, type of contract, duration of employment, etc. and also detailed information on intangible details of the licensee.

What are the various offenses and penalties that are prescribed?

The resolution has recommended the following offenses and their penalties as mentioned here:

OffensesThe related penalty
 

 

Failure to comply with the Economic Substance Test

AED 10,000 – AED 50,000 (First Year)
AED 50,000 – AED 300,000 (Subsequent Year)
Failure to give the required information or provide inaccurate informationAED 10,000 to AED 50,000


However, before a penalty is levied, the relevant authority should issue a notice (that is, giving an opportunity of being heard) to the licensee.

In addition, the authority can neither decide the economic substance test of the licensee nor levy any penalty after 6 years from the end of that financial year (an exception is only if there is deliberate misrepresentation or any fraudulent action done by the licensee or any other individual)

What lies ahead?
  • The UAE has announced Country-by-Country-Reporting (CbCR) Regulations recently, which are in line with its commitment for implementing the Base Erosion and Profit Shifting (BEPS) standard for Action Plan 13. After the introduction of ESR, UAE has been able to send a positive signal to the rulers of its trade partners located in the other jurisdictions.
  • Additionally, announcement of these regulations have already aided the UAE in striking off their names from the EU blacklist. However, the execution and implementation process of these regulations in the UAE, could pose some challenges as it does not have any taxation related law till date.
  • In spite of the regulations offering some very useful guidelines, the licensees will need a lot of judgment professionally to decipher if a particular activity meets the substance test or not.
  • The above-mentioned regulations also bring out extra compliance requirements on part of the licensee and all the businesses operating in the UAE who are still struggling with the GST-related issues and compliances in the area.


Multinational companies are recommended to be pro-active and reconsider their current operational activities to alleviate and avoid any probable risk of non-compliance with regards to the above regulations.

Read More

Follow Us

Recent Posts

Get updated by Signup
to our Newsletter!

IMC Logo

Get Started

About

Locations

© 2024 IMC Group. All Rights Reserved.

IMC Logo

Get Started

About

Locations

© 2024 IMC Group. All Rights Reserved.

IMC Logo

Get Started

About

Locations

© 2024 IMC Group. All Rights Reserved.