The UAE (United Arab Emirates)
Established on 2 December 1971, the country is a federation of seven emirates . The constituent emirates are Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah, and Umm al-Quwain. The capital is Abu Dhabi, which is one of the two centers of commercial and cultural activities, together with Dubai. Whilst the Federal Government governs the country as a whole, the rulers in each emirate are at liberty to pass laws applicable in their respective emirates.
His Highness Sheikh Khalifa Bin Zayed Al Nahyan is the president of the United Arab Emirates, and also ruler of Abu Dhabi Emirate. His Highness Sheikh Mohammed bin Rashid Al Maktoum, Ruler of Dubai, is also the Vice President and Prime Minister of United Arab Emirates. Thanks to the vision of the Ruler of the U.A.E., massive investments have been undertaken for building its infrastructure. Today, U.A.E.’s airports, ports, roads, electricity, desalination plants and other facilities are truly world class, and naturally U.A.E. has established itself as a hub of economic activities in the region. U.A.E.’s trade, industry and services sectors are all very well developed and the country can pride itself in attracting the best of talent from all over the world, in disciplines ranging from accounting, legal, business advisory services, banking, finance, travel, tourism, leisure, health care, education and information/media technology.
The UAE, apart from being a member of IMF, OPEC, WTO, etc., is a member of the Arab Gulf Cooperation Council (AGCC) whose other members are Saudi Arabia, Oman, Qatar, Bahrain and Kuwait. Like its neighbors in the Arabian Gulf, the UAE is primarily known as a petroleum-producing economy which has achieved tremendous economic and social development in the last two decades. Most of the UAE’s petroleum reserves are located in Abu Dhabi Emirate. Whilst the petroleum sector has dominated economic development in the UAE, attempts are being made to diversify into other sectors. Although the country is a federation, the members Emirates largely pursue their own policies. The Emirate of Dubai in particular is positioning itself as a regional trade centre and transportation hub and is rapidly developing into a tourist destination.
The economy of the United Arab Emirates is the second largest in the Arab world (after Saudi Arabia). UAE has the most diversified economy in the Middle East. The UAE, the world’s eighth largest oil producer, maintains a free-market economy with minimal restrictions on private-sector activities, international trade and capital movements. Despite the impact of the global economic downturn, the UAE’s economy has proved to be remarkably resilient.
Higher oil prices, increased government spending and a noteworthy resurgence in tourism, transport and trade have contributed to the upswing in the economy. In addition, the successful restructuring of debt owed by high-profile companies, solidarity among the emirates and accommodative monetary and fiscal policies have all played a role in bringing stability to the market.
Tourism is one of the main sources of revenue in the UAE, with some of the world’s most luxurious hotels being based in the UAE. Although the UAE is now less dependent on natural resources as a source of revenue, petroleum and natural gas exports still play an important role in the economy, especially in Abu Dhabi. A massive construction boom, an expanding manufacturing base, and a thriving services sector are helping the UAE diversify its economy. The UAE is a member of the World Trade Organization and OPEC.
According to the UAE Economic Report 2012, the country’s Gross Domestic Product (GDP) (at constant prices) reached around AED 981 Billion in 2011 at a growth rate of 4.2 per cent compared to AED 942 Billion in 2010 at a growth rate of 1.3 per cent.The UAE enjoys a strong economy supported by an ideal investment climate with effective economic and investment policies, based on legal and institutional structures in line with global standards, which created a positive impact on the foreign investment flows to the UAE and supported its economic orientations.
The currency of the UAE is the Dirham (AED), which is pegged to the US dollar at a rate of approximately AED3.67 to $1 world trade organization and OPEC.
Under United Arab Emirates (UAE) law, there are five types of business establishments applicable to foreign entities interested in establishing a formal presence in the UAE. A company can create:
- Permanent establishment
- Establish a branch office.
- Create an entity in a UAE free zone.
- Create a civil company (currently limited to Sharjah and Dubai)
- Enter into a commercial agency agreement.
There are seven different forms of companies under permanent establishment: General partnerships, Limited Partnerships, Joint Participation (Ventures), Public Joint Stock Companies Private Joint Stock Companies, Limited Liability Companies and Partnerships Limited with Shares.
Free Trade Zones
Free zones allow for up to 100% foreign ownership and are subject to reduced or different trade barriers, tariffs, and quotas. However, free zone companies may only operate within the free zone boundaries and are generally limited to performing solely those activities listed in their license(s). If a free zone company chooses to operate outside these boundaries, it must adhere to the requirements of the UAE Commercial Companies Law in compliance with the licensing procedure in the applicable Emirate.
At present, only banks and oil companies are subject to taxation. Otherwise there are no income, capital gains, inheritance, corporate or wealth taxes. Similarly, other than some municipality taxes on hotel and restaurant services and on property rental contracts, there are no sales related taxes.
The UAE Central Bank is the primary financial regulatory authority. It is mandated to direct monetary, credit and banking policy and supervise over its implementation in accordance with the state’s general policy and in such ways as to help support the national economy and stability of the currency. There are about 50 banks in the UAE, about half domestic and half foreign.
The Dubai International Financial Centre (DIFC) is an onshore financial centre which provides a secure and efficient platform for business and financial institutions to reach into and out of the emerging markets of the region focusing on several sectors of financial activity: Banking Services, Capital Markets, Wealth Management, Insurance, Business Processing Operations and Ancillary Services.
The Dubai Financial Services Authority (DFSA) grants licenses and regulates the activities of all banking and financial institutions in DIFC.
The UAE hosts two stock exchanges: the NASDAQ Dubai and the Abu Dhabi Securities Market (ADSM). The Emirates Securities and Commodities Authority regulate these exchanges.
NASDAQ Dubai is the international financial exchange in the Middle East. It allows companies to benefit from a unique investor pool that combines regional and international wealth, making it a globally unique platform for companies to raise money and for investors to find exciting opportunities. NASDAQ Dubai offers a wide product range. Companies can raise capital through shares, Sukuk and bonds. Exchange-traded funds, derivatives, exchange-traded commodities as well as Real Estate Investment Trusts (REITs) can be listed and traded too. he exchange’s broad investor base sets it apart from others. As well as investors in the UAE and the region, those in the US, Europe, Asia and elsewhere can easily trade its securities.
The Dubai Multi Commodities Centre (Dmcc Approved Auditors) is a free zone authority for the JLT Free Zone. DMCC regulates, promotes and facilitates trade across a range of commodities including gold, diamonds, pearls, precious metals and tea. DMCC is the Government of Dubai Authority dedicated to establishing Dubai as a global gateway for commodity trade and master developer of JLT Free Zone. JLT Free Zone is one of the largest free zone developments in Dubai. (Dmcc Approved Auditors) DMCC comprises modern infrastructure, free-hold property and trade networking platforms as well as industry including secure vaults and purpose-built storage facilities.
The Dubai Gold and Commodities Exchange (DGCX) is the regions first commodity derivatives exchange and today it has become the leading derivatives exchange in the Middle East. It mandates to enhance commodity trade flows through the Emirate by providing the appropriate physical, market, financial infrastructure and services required. In addition, DGCX offers trading opportunities to financial communities and investment houses in both the Middle East and around the globe who wish to access the growing asset class of commodity and currency derivatives.
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Roa and Ross Chartered Accountants- Dubai
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