Doing Business

Doing Business
in
in Dubai
Dubai

Bahrain
Bahrain •• Egypt
Egypt •• Iraq
Iraq •• Jordan
Jordan •• Kuwait
Kuwait • •Morocco
Morocco• •Oman
Oman• •Qatar
Qatar• •Saudi
SaudiArabia
Arabia• •UAE
UAE
Doing Business
in Dubai
Al Tamimi & Company
Dubai Office T: +971 4 364 1641
Central Park Towers, Floor 7, F: +971 4 364 1777
Omlaat Street, E: info@tamimi.com
Dubai International Financial Centre,
PO Box 9275, Dubai, UAE

Key Contacts
Samer Qudah
Managing Partner
s.qudah@tamimi.com

Samir Kantaria
Partner, Head of Employment & Incentives
s.kantaria@tamimi.com

Shiraz Khan
Partner, Head of Taxation
s.khan@tamimi.com

6
Barbara Koenen-Geerdink
Business Development and Marketing Director ABOUT US
b.koenen@tamimi.com

9
Design
Shriya Sanjeev FOREWORD
Brand and Creative Lead
s.sanjeev@tamimi.com

10 ABOUT DUBAI

Published by Al Tamimi & Company © 2023

14 SETTING UP IN DUBAI

34
The content of this book is not intended to be substitute for specific legal advice on any individual matter. No
part of this publication may be reproduced, distributed or transmitted in any form or by any means, including TAXATION IN THE UAE
photocopying, recoding, or other electronic or mechanical methods, without the prior written permission of the
publisher, except for individual use and other non-commercial uses permitted by Copyright Law. The permission
to recopy by an individual does not allow for incorporation of the material in part or in whole of any work or

38
publication, whether in hard copy, electronic or any other form, unless specific mention is made to the source,
“Doing Business in Bahrain, published by: Al Tamimi & Company”, and written permission is granted by the firm.
For more information, please contact us info@tamimi.com. EMPLOYMENT LAW IN DUBAI

V4 October 2022
 About Us Our Regional Footprint

Al Tamimi & Company has unrivalled experience, having

operated in the Middle East and North Africa (“MENA”) region
for over 30 years. Our lawyers combine international experience
and qualifications with expert regional knowledge and
understanding.

We are a full-service firm, specialising in advising and

supporting major international corporations, banks and financial
institutions, government organisations and local, regional
and international companies. Our main areas of expertise
include arbitration & litigation, banking & finance, corporate &
commercial, intellectual property, real estate, construction &
infrastructure, and technology, media & telecommunications.
Our lawyers provide quality legal advice and support to clients
across all of our practice areas.

Our business and regional footprint continues to grow, and we

seek to expand further in line with our commitment to meet the
needs of clients doing business across the MENA region.

Doing business in the Middle East and North Africa? So are we. Bahrain Morocco
Manama Casablanca
Our regional footprint means that wherever our clients are
doing business in the region, we are there to support them. Egypt Qatar
Our expansion has been strategic and client driven. Our values Cairo Doha
define who we are and what is important to us. As a firm, we Port Said
have grown based on a set of core values, which are integral to Saudi Arabia
all that we do.
Iraq Al Khobar
Erbil Jeddah
Baghdad Riyadh
Basra
UAE
Jordan Abu Dhabi
www.tamimi.com Amman Dubai
Ras Al Khaimah
Kuwait Sharjah
Kuwait City

6 7
 Foreword
Welcome to our latest edition of “Doing Business in Dubai”.

This guide provides companies and individuals with the vital

information they need when considering their operations in the
Emirate of Dubai. The guide seeks to answer some of the most
important questions that investors have regarding their business
structures based on the specific activities they wish to undertake.
We have also provided an insight into the key issues in respect of
taxation and employment law for companies and employers alike.

As a regional business hub, Dubai has experienced exponential

growth in recent years, and consistently strives to reinforce its
position as a commercial, cultural and economic leader in the GCC
and beyond. Our “Doing Business” series of books has become
increasingly popular in helping business leaders to set up new
businesses, and to remain up to date on legal policies and changes
in legislation.

We trust that you will find the information presented of value and
that it will provide you with a greater understanding of both the
business and legal aspects of operating in Dubai. We look forward
to the opportunity to work with you to ensure your success when
doing business here.

Essam Al Tamimi Samer Qudah

Chairman Managing Partner
Al Tamimi & Company Al Tamimi & Company

8 9
About
Dubai
 About Dubai

About Dubai
Dubai is a cosmopolitan city with With an economy historically built
a diverse and vibrant culture. on the oil industry, Dubai’s main
Government Language Currency
Considered to be the most liberal revenues now come from tourism, Under the leadership The official The currency
place in the MENA, it is home to trade, aviation, real estate and of His Highness Sheikh language of the of the UAE is
over 200 nationalities. Attracting financial services, with income Mohammed Bin Rashid UAE is Arabic, the United Arab
visitors from across the globe, from oil now accounting for less Al Maktoum, Vice although English Emirates Dirham
Dubai is also home to the Burj than 3% of the Emirate’s GDP. President and Prime is widely used in (AED). 1 dirham
Khalifa, the world’s tallest building, Committed to free trade, Dubai has Minister of the UAE and business circles. equals 100 fils
as well as some of the largest a modern business infrastructure the Ruler of Dubai, The
shopping malls and most luxurious with a corporation-friendly tax Government of Dubai’s
hotels in the world. regime and a healthy banking and strong commitment to
financial system. free market economy Population
Well known for its innovative and fair competition Approx. 3 million
construction and development Home to the world’s largest has seen the emirate
projects and having proven its man-made harbour and the become the region’s
ability to host world class events, in MENA’s largest port, Dubai is the most competitive
November 2013 it was announced region’s transport and logistics business hub. The Religion
that Dubai had won the right to hub - a key factor in the decision Government’s strategic Islam
host the World Expo 2020. With of numerous multinational infrastructure
an estimated 25 million visitors, companies in having a presence investment and
hosting the Expo will boost Dubai’s in the emirate. The creation of transparent corporate
economy and reinforce its position unique investment opportunities governance policies
as a world hub. with the establishment of have created a
industry-specific free trade zones world class business
throughout the emirate further environment
enhance the attractiveness of
Why do business in Dubai?
doing business in Dubai.
Dubai is one of the seven
emirates that form the
Federation of the United Arab
Emirates (UAE). It has the largest
population in the UAE and has
long been considered a business
and cultural hub of the MENA.

12 13
Setting up
in Dubai
 Setting Up in Dubai

Setting Up in Dubai b. Doing business

Dubai’s business environment has
licence will be 100 percent liable
for debts vis-à-vis any third party
much to offer companies of all sizes. who may not have any knowledge
A variety of registration options of the private arrangement.
a. Investment considerations personal taxation and no limits
on the repatriation of money. are designed to make setting up as
In recent years Dubai has emerged Foreigners may form sole
simple and practical as possible.
as a major global business hub. proprietorships if they reside in the
Government: UAE. However, the law restricts the
Visionary leadership has seen the
Dubai’s government is the driving activities a foreigner may engage
emirate’s economy - previously
force behind the emirate’s push 1. Legal Structures in as a sole proprietor to certain
reliant on hydrocarbons - diversified
to become the world’s leading fields. These include the following:
across sectors including trade, Business may be carried out
business destination. The
tourism, banking and logistics. through a direct business • Consultancy business
Department of Economy and
Dubai’s political stability, presence in Dubai, be it through activities.
Tourism (DET), previously known
advantageous geography, free a sole proprietorship or though
as the Department of Economic
market philosophy and strong a corporate entity. Business may • Professional business
and Development in Dubai works
prospects for future growth have also be carried out indirectly activities.
tirelessly to create a commercial
combined to attract considerable through commercial agents.
environment free of unnecessary • Similar services and non-
foreign direct investment (FDI).
bureaucracy in which companies trading activities.
The emirate’s growth story has
have everything required to
captured the global imagination, A foreign sole proprietor is required
thrive. The DET is mandated to a. Sole Proprietorship /
attracting tourists, entrepreneurs to appoint a local services agent.
actively pursue Investments Sole Establishment
and multinationals alike. Once The local service agency contract
into Dubai and recently took
a sleepy fishing village, today A sole proprietorship is a simple must be authenticated by the
steps to make Dubai a more
Dubai is a bustling metropolis business method whereby an Notary Public and the foreigner’s
attractive business destination by
able to compete on equal terms individual trades on his own account residence should be under the
simplifying licensing procedures.
with any of the world’s cities. pursuant to a trade licence issued new business sponsorship.
Political Stability: in his own name. This form of
Before setting up a business business entity is referred to as Thus, the procedures for
Dubai enjoys excellent political
in Dubai, some specific an ‘establishment’ rather than a establishing a sole proprietorship
stability, a factor that makes
factors to consider are: company and the sole proprietor is vary according to the nationality
it a very attractive business
destination in the MENA. personally liable to the full extent or identity of the prospective sole
Location: of his assets for the liabilities of proprietor. However, the common
Dubai is strategically located in the the business. The establishment
Infrastructure and Services: and main factor for establishing
heart of the MENASA belt (Middle will not have an independent legal
Dubai’s ultramodern infrastructure any type of sole proprietorship is
East, North Africa and South Asia) entity from that of the owner.
is purpose-built to facilitate that a licence should be obtained
and has superb international trade
business and tourism. The emirate’s from the DED after submitting
links. Emirates, Dubai’s globally Mainly UAE nationals and nationals
transport and telecommunications an application together with
famous airline, flies to more than of Gulf Cooperation Council (GCC)
networks are second to none. In all relevant documents.
140 destinations all over the world. countries (subject to certain
terms of legal and financial services,
Much work has taken place in recent conditions) are permitted to form
the most successful banks and law
years to ensure Dubai is the best sole proprietorships in Dubai.
firms all have headquarters in Dubai.
place to do business in the region. A practice has, however, arisen b. Corporate Forms
Dubai attracts foreign investments in recent years whereby a UAE Various legal corporate forms are
Laws: national obtains a trade licence for available for the establishment of a
because it offers an unrivalled
Dubai’s laws and regulations are a sole proprietorship and leases it to business in Dubai. The table below
environment in which to do
frequently amended to provide expatriates who then take on all of provides an overview of some of
business, with political stability,
a flexible and up-to-date legal the management functions of the the corporate vehicles available to
low set-up costs, excellent
framework for commercial best business and retain all of the profits. set up in Dubai and certain salient
geography and superb quality of
practice. Dubai is a dynamic, However, this type of arrangement comparative features of each,
life. The emirate offers year-round
business-friendly environment; is not recommended as it is which are based on the provisions
sunshine, a myriad of leisure and
companies can be established essentially unlawful and problems of the Commercial Companies
dining options and one of the
quickly in any of the emirate’s can arise if the business relationship Law, Federal Law No. 32 of 2021,
lowest crime rates in the world. At
freezones and incentives include between the parties breaks down. as amended (CCL) – the primary
every point, Dubai is focused on
virtually zero corporate or Furthermore, the legal holder of the law governing corporate entities.
achieving investor satisfaction.

16 17
 Setting Up in Dubai Setting Up in Dubai

Additional information on the Company and act in the capacity

Minimum Capital the corporate forms listed of a trader, in addition to one or
Corporate Forms Structure of Partners / Shareholders
Requirement above is as follows: more Limited Partners who are
held liable for the obligations of the
Company only to the extent of their
respective capital contributions, and
Partnership Company:
do not act in the capacity of a trader.
Partnership 2 or more partners who owe joint and A partnership company is an
None arrangement between two or more
Company several unlimited liability The provisions relating to General
partners, who are natural persons Partnerships shall also apply to
and are jointly and severally liable Limited Partnerships, subject to
to the extent of all their property certain provisions in respect of
for the liabilities of the Company, the Limited Partner. In addition, a
whereby each partners is jointly and limited partner’s liability is limited
General (active) partners who owe severally liable without limit for the to the extent of their share capital
Limited joint and unlimited liability and partnership company’s liabilities. in the company. limited partners
Partnership limited partners who owe limited None Hence, this form of business is should, of course, ensure they do
Company liability to the extent of the share in therefore not common in the UAE. not lead third parties to believe they
the company are anything other than a limited
partner (silent partner) otherwise
Limited Partnership Company: their limited liability will cease.
The CCL defines a Limited The management of the Limited
Partnership Company as a Company Partnership Company is vested
Public Joint 5 or more shareholders who owe which consists of one or more in the general (active) partners.
AED 30,000,000 General Partners who are jointly and
Stock Company limited liability
severally liable for the obligations of
Limited Liability Company (LLC):
A LLC is governed by the CCL. A
LLC is often the most suitable
method of establishing a business
Between 2 and 200 shareholders who in Dubai by foreign investors. This
owe limited liability. is similar to the private limited
Private Joint liability companies in the United
AED 5,000,000
Stock Company It is permitted for a legal person to Kingdom. However, as mentioned
incorporate and hold a private joint earlier, where the intended business
stock company. involves banking and/or insurance,
a LLC is not legally permitted to
practice such activities and a PJSC
will have to be established. The CCL
defines a LLC as a company “with
Generally between 2 and 50 partners/ limited liability… where the number
shareholders who owe limited liability. of partners may not exceed fifty and
Limited Liability
Nevertheless, one person, natural None should not be less than two. Each of
Company
or corporate may incorporate a one the partners shall only be liable to
person limited liability company. the extent of his share in the capital.
The CCL also allows any single
natural or legal person, to
incorporate and own a limited
liability company. The capital
Branch of A branch of a foreign company can owner of the company shall be
a Foreign be established. The branch will be None liable for the obligations of the
Company wholly owned by its parent company company only to the extent of
the capital set out in its MOA.

18 19
 Setting Up in Dubai Setting Up in Dubai

In the event of the single person The nominal value of each share projects are concerned. This allows
limited liability company, the of a PJSC should not be less than small foreign and local investors
name of the company shall be AED 1 and not more than AED 100, to participate in such projects.
accompanied with the phrase and the minimum share capital
“one person company”. requirement is AED 30 million for It should also be noted that,
a general company, AED 40 million where ones contemplating a
In addition, the following may for a banking entity and AED 250 business venture which involves
be noted with regards to a LLC: million for an insurance company. insurance or commercial
Public subscription for raising banking the establishment of a
capital is not permitted; Among the requirements for PJSC is a legal necessity and no
the establishment of a PJSC is other type of company may be
• Subsequent to the recent
the preparation of a founders’ established for such activities.
development in the UAE, the
agreement, a prospectus or
CCL currently allow foreign
invitation for public subscription
national to own a company
supported by an overall business
up to 100% subject to certain Private Joint Stock Company:
plan/ economic feasibility study
activities that are considered It is permitted for a legal person
and an auditor’s certificate,
as a strategic activities, that to incorporate and hold a private
a due diligence survey and a
are only permitted for UAE amounts to half of the total paid- joint stock company. The name
memorandum and articles of
nationals. up capital of the company. of the company must be followed
association, which must be in
by the phrase "Private Joint
• The day- today management accord with the specimen issued
In addition, the founder members Stock – Sole Proprietorship".
of the company may be by the Security and Commodities
must subscribe to a minimum of
vested in a foreign manager; Authority. Any deviation from the A private joint stock company is
30 percent and a maximum of 70
specimen form must be approved essentially the same as a PJSC,
• Managers may be one or percent of the share capital of
in advance by the Security and with the following differences:
more of the partners or the company. If new shares are
Commodities Authority which
any other parties (including issued, the existing shareholders
regulates PJSCs. Further, the 1. The minimum capital
foreigners); should be offered the opportunity
name of the intended company requirement is AED 5 million;
to subscribe for such shares
• It is necessary to appoint must end with the words ‘Public
in proportion to their existing 2. The shares of a private joint
an auditor who must be Joint Stock Company’.
shareholding in the company. stock company may only be
accredited in the UAE;
A PJSC must have at least five offered to the public after
There are additional requirements
• The auditor should be founding members and its two financial years have
for the incorporation and operation
appointed by the general management should be vested in been completed and upon
of a PJSC stipulated under the
assembly (which is a board of directors consisting of conversion to a PJSC (and other
CCL that should be considered
essentially a meeting of an odd total number of directors requirements are met); and
by interested investors. However,
all the shareholders of the of which the minimum is three
given the fairly restrictive rules 3. It is supervised by the Ministry
company). and a maximum is eleven persons
and controls governing the of Economy (as opposed to
whose term of office may not
establishment and management regulated by the Security and
exceed three years. Directors
of a PJSC and the substantial Commodities Authority);
can be re-elected when their
Public Joint Stock Company (PJSC): capital requirement, it is not
term of office has expired.
PJSCs are governed by the CCL, regarded as a suitable business 4. Only 2 founder members
which defines a PJSC as a company A public joint stock company is vehicle for most foreign investors. are required.
whose capital is divided into required to have a chairman of
The PJSC has become increasingly Considering the lower capital
equal value negotiable shares. the board of directors, and the
popular in the recent years vis-àvis requirement of AED 5 million,
nationality of the Chairman shall
A PJSC is very similar to the the private sector an indicator of private joint stock companies
be as set out by the Cabinet or the
public limited company in the which is that there are currently are more popular with foreign
competent authority while forming
United Kingdom. According to more than 100 PJSCs in the UAE investors than PJSC’s.
the Board of Directors of the PJSC.
the CCL, the shareholders of a due to the fact that such business
vehicles enable businesses to raise It is worth noting that the
PJSC are liable only to the extent At least 10 percent of the net profit
substantial amounts of capital, procedures for setting up a
of contributing the value of their should be allocated to a reserve
particularly where large-scale private joint stock company are
shares in the capital of the company. account until such reserve account
the similar to those of a PJSC.

20 21
 Setting Up in Dubai Setting Up in Dubai

Branch Office Therefore, the name of a branch Representative Offices The main difference between
of a Foreign Company: office will be the same as that of of Foreign Companies: entities under the CCL and
A very popular way for foreign the company of which it is a part. Representative offices aregoverned those under the Civil Code is
companies to benefit from 100 by the CCL. A representative that the activities which may be
percent foreign ownership is • It is necessary to appoint office of a foreign company is practised in the former are of a
to establish a branch office of an auditor who must be legally distinct from a branch commercial nature, whereas in
the parent company. The CCL accredited in the UAE; office of a foreign company in the latter, the activities that may
contains provisions regulating the As per the recent changes and that it is only allowed to promote be practised involve the use or
establishment of branch offices reference to the Federal Decree its parent company’s activities. investment of intellectual faculties,
of foreign companies in the UAE. by Law number 32 of 2021, branch Therefore, if a parent company acquired information or the use
of foreign companies can be deals in the sale and/or production of skills, for example, carpentry.
A branch office is legally part, and of certain products and opens The fact that civil companies
an extension of, its parent company registered without appointing a
local agent as per the previous Law a representative office in Dubai, do not practise activities of a
and does not have a legal identity the office will only be able to ‘commercial’ nature does not
distinct from its parent company. that was repealed by the Federal
Decree by Law number 32 of 2021. promote and market the sale and/ denote that they are non-profit
or production of such products making organizations. It is simply
and facilitate contracts in the a distinction made in the UAE’s
UAE, as distinct from conducting legal system in terms of the ‘types’
the sale and production itself. of activities a business practices.

It should be noted that in addition to Although the above three entities

the above limitations, representative are called companies, strictly
offices have other restrictions in and legally speaking they are not
that they are not allowed to obtain companies as the only companies
credit facilities or put forward offers. which may be formed in the UAE
are commercial companies as
As in the case of a branch office, it listed under the CCL. Instead, such
is not necessary when establishing entities are more representative of
a representative office to appoint civil activities that may be practised
a national service agent. rather than legal structures of
business in their own right.
A Representative Office, similar
to the branch of foreign company This distinction is particular to
must be registered with the the UAE. However, in practice,
Ministry of Economy, which requires most people do not differentiate
submission of a bank guarantee of between civil and commercial
AED 50,000 in favor of the Ministry entities and instead use the
One of the conditions for office. The activities the branch of Economy and a letter from a local term ‘company’ for all business.
establishing a branch office in the office will be allowed to practice, auditor confirming its appointment. The difference is, nevertheless,
UAE is that it may only be engaged therefore, will depend on the type
legally significant as civil entities
in activities similar to those of its of license it obtains and, more Civil Companies:
are subject to the Civil Code in
parent company (subject to such importantly, the activities of the Apart from the companies which
addition to local law and commercial
activities being licensed by the company of which it is a part. may be established under the
companies are subject to the CCL.
relevant authority). It is important CCL, the UAE Civil Transactions
to note that a branch office is A branch must be registered with Law, Federal Law No. 5 of 1985 Further, the only legal entity a civil
not permitted to carry on the the Ministry of Economy, which (Civil Code) provides for the company may be established under
business of importing, exporting, requires submission of a bank formation of three forms of civil is a partnership either between
manufacturing or distribution of the guarantee of AED 50,000 in or professional entities, namely: UAE nationals, between UAE
products of its parent company. favor of the Ministry of Economy
• Companies to perform nationals and foreigners or between
and a letter from a local auditor
work (service/professional foreigners only, provided that a UAE
The issuance of a branch license confirming its appointment.
companies); national is appointed as local service
from the DET allows the parent
agent, for the practice of civil rather
company to conduct business
• Speculative venture than commercial activities such
in Dubai through the branch
partnerships; as consultancy and carpentry.
• Mudaraba companies.

22 23
 Setting Up in Dubai Setting Up in Dubai

Companies to Perform Work Mudaraba Companies Thus, the Mudarib is given the
(Service/Professional Companies) A Mudaraba is a contract where power to make dispositions on
Under the Civil Code, service or one of the parties to the contract behalf of the owners(s) of the
professional companies are defined contributes a certain amount of capital. Nevertheless, the owner
as companies where two or more capital and in exchange, the other of the capital may stipulate the
persons agree to be bound to carry party, the Mudarib, contributes conditions of the contract provided
out work and to be liable thereafter his efforts/labour in order to they are not contrary to the Civil
to third parties against payment make a profit. Here, the Mudarib is Code. However, he alone will bear
of consideration, where they share treated as a trustee of the capital any losses incurred and under the
equally in the distribution of the as well as a partner to the profits. Civil Code any provisions made to
work, provided that the work is of the contrary are deemed void.
a single and inseparable nature. There are other conditions, many
of which must be satisfied for
a Mudaraba to be valid. Among
these conditions is a provision that
Speculative Venture Partnerships the contract must not stipulate
This form of partnership is a that the Mudarib will be liable for
contract between two or more any loss or waste of the capital,
persons to purchase property provided there is no wrongful
on credit, to sell it at a profit and act on part of the Mudarib.
subsequently to share the profits
as agreed between them.

24 25
Taxation
 Taxation in the UAE

Taxation or a standard price published

by the Federal Tax Authority.
6. Municipal taxes
The Emirate of Dubai imposes a
municipal tax on properties based
The responsibility for
1. Corporate income tax 2. Value added tax (VAT) on the annual rental value. This
accounting for excise tax
is generally payable by tenants
Currently there is no corporate VAT was implemented in the UAE at falls on importers of the
at 5% for residential
tax at the Federal level. the Federal Level on 1 January 2018. excise goods on import
properties and 10% for
into the UAE, producers
The Emirate of Dubai imposes Unless the supply is specifically zero certain commercial
of excise goods when
corporate tax on companies rated or exempt, VAT is imposed properties. The tax
they are released for
engaged in the production and on the supply of goods of goods is payable through
consumption in the country and
exploration of oil and gas at and services in the UAE as well as the monthly utility
stockpilers of excise goods when the
progressive rates up to 55% and imports of goods and services. bill in instalments.
goods are acquired by a stockpiler
branches of foreign banks at 20%. The standard rate of VAT is 5%. and excise tax has not previously
been paid on those goods.
A tax holiday for up to 15-50 years The export of goods 7. Hotel and tourism taxes
may be available for businesses and services outside
established in a free zone. the GCC, international The Emirate of Dubai imposes
transportation of 4. Customs duties various taxes on hotels based on the
The UAE has entered into more goods and passengers, value of the hotel services. These
The UAE has enacted the GCC
than 80 double tax treaties. medicine and medical equipment, include a municipality fee of 7% and
Customs law under which customs
the first supply of residential real a service charge of 10%. In addition,
On 31 January 2022, duty is imposed at the first
estate and certain healthcare and a Tourism Dirham Fee is chargeable
the UAE Ministry of point of entry into the GCC.
education services are subject to to hotel guests and tenants of hotel
Finance announced Customs duty apartments per night of occupancy
VAT at the zero rate. The supply of
the introduction of a applies to imported (for a maximum of 30
margin based financial services,
federal corporate income goods generally at consecutive nights) ranging
life insurance, local passenger
tax to be effective the rate of 5% of the from AED 7 to AED 20 per
transport and residential real
for financial years starting on cost, insurance and night depending on the
estate other than the first
or after 1 June 2023. The draft freight (CIF) invoice category/grade of the hotel.
supply are exempt from VAT.
legislation is expected to be value. However,
published before the end of 2022. A UAE business is required to certain goods may be subject
register for VAT if the value of to customs duty at a higher rate 8. Personal income tax and
The federal corporate income
annual taxable supplies exceeds the whereas other goods are exempt. Social security
tax is expected to be imposed on
mandatory registration threshold
businesses at the rate of 0% for The import of goods into free zones There is no personal
of AED 375,000. A UAE business
taxable income up to AED 375,000 is generally not subject to customs income tax in Dubai.
may register for VAT if the value of
and 9% for taxable income above duty and the duty is suspended until
annual taxable supplies exceeds Social security is due in
AED 375,000. A different tax the goods are imported into the
the voluntary registration threshold respect of GCC nationals
rate will apply for certain large UAE mainland. There are also other
of AED 187,500. Non-residents only. The employer and
multinational companies with exemptions from customs duty.
that are liable to account for VAT employee are required
global consolidated revenues
must register for VAT irrespective to pay a percentage
in excess of EUR 750 million
of the value of the supplies. of the employee’s
(approximately AED 3.15 billion).
5. Real Estate salary. The percentage varies
Companies engaged in the A registration fee is payable on depending on the nationality of
exploration and production of oil 3. Excise tax the transfer of ownership of land the GCC national employee.
and gas will be exempt from federal or property at 4% of the sale value.
In the UAE, excise tax became Under the labour law, foreign
corporate tax. In addition, charities This fee is also payable on the
effective on 1 October 2017 and employees are entitled to an end
and public benefit organisations, the transfer of shares in
applies to tobacco products at of service gratuity which is based
UAE government and entities wholly companies holding
100%, energy drinks at 100%, and on 21 days of the basic salary per
owned by the UAE government real estate based
carbonated drinks at 50%. The tax year after the completion of at
will also be exempt from federal on the value of the
is based on the higher of the retail least one year of employment.
corporate tax subject to meeting underlying property.
sales price of the excise goods
certain requirements. Special
rules will apply to free zones.

28 29
Employment
Law in Dubai
 Employment Law in Dubai

Employment Law in Dubai 1. Contracts under a probationary period, they

may be dismissed for any reason by
Dubai the employer within or immediately
The Labour Law provides that upon completion of the probationary
Employment relations in the UAE provisions as laid out in the Labour contracts of employment have to period without notice. When an
and Dubai are generally governed Law. Whilst some governmental be for a fixed period but the term employee has completed the
by Federal Law No. 33 of 2021 and corporations/entities operate can be determined by the parties. probationary period successfully
its Executive Regulations, Cabinet like private sector enterprises Fixed term contracts may be and continues employment, the
Resolution No. 1 of 2022 (Labour they generally fall outside the renewed automatically or by mutual probationary period is counted
Law) that set out a minimum scope of the Labour Law. agreement following the expiry towards their overall period of service.
standard of employment conditions. of the agreed fixed term period.
As a Federal statute, the provisions The only current exception to the
of the Labour Law apply to all private overarching application of the DIFC 3. Salary/wages
sector employers based in the UAE, Labour Law in Dubai is in the Dubai The Employment Law recognizes
including employers established in a International Financial Centre both unlimited and fixed- term Dubai
freezone. Although a freezone may (DIFC) that is a separate jurisdiction contracts. However, in the case There is no statutory minimum/
implement internal employment with its own employment legislation, of a fixed-term contract the maximum salary in the UAE however,
regulations applicable to companies namely DIFC Law No. 2 of 2019 as Employment Law does not expressly in order to sponsor a dependant
established and operating within amended (Employment Law). The restrict the length of the term. (spouse and children) to live in the
it, these regulations will merely application of the Employment Similarly, there is no restriction upon UAE, an employee must earn a
supplement the minimum Law is to all employees and entering into further fixed-terms. minimum salary of at least AED
employers who are based and
4,000 (approx. USD 1,100) per
ordinarily work out of the DIFC.
month. In order to sponsor parents
2. Probation to live in the UAE this minimum is
increased to AED 20,000 (approx.
Dubai USD 5,500) per month. Further, in
A probationary period can be for a order to sponsor domestic staff
maximum period of six months and for the purpose of residency in
cannot be extended beyond this the UAE, an employee must earn a
period even with the consent of the minimum of AED 25,000 per month.
employee. If an employee is working
under a probationary period, he may There are no statutory provisions
be dismissed for any reason by his governing matters such as the
employer following a 14 calendar provision by employers of itemized
day notice period. The notice period payslips. These matters are governed
that an employee must provide their by individual employment contracts.
employer if they resign during their Employees are typically paid monthly.
probation period is also 14 days,
The UAE operates an electronic
save as where they are resigning to
Wage Protection System (WPS)
join another UAE entity, in which
that has been established in order
case, the notice period is increased
to safeguard the timely payment
to 30 days.. When an employee
of employees’ salaries (primarily
has completed his probationary
aimed at protecting blue-collar
period successfully and continues
workers) and to ensure that payments
employment, the probationary
made are accurate. Employers are
period is counted towards their
required to pay salaries through
overall period of service.
the WPS, and these payments are
DIFC registered and monitored against the
employee list and registered wages
The Employment Law provides for for each employee. The WPS does
a maximum probationary period not operate in freezones, with the
in line with the period under the exception of Jebel Ali Free Zone.
Labour Law (i.e. up to six months).
Where an employee is working

32 33
 Employment Law in Dubai Employment Law in Dubai

4. Sick leave and health insurance Additionally, if the child has a employer for at least twelve months. not be rolled forward into a
health condition that requires a Paternity leave should be taken within subsequent annual leave year
Dubai constant companion, the employee one month of the child’s birth. without the consent of the
Sickness absence and pay under the is entitled to a further 30 calendar employer. On termination, an
Labour Law is 90 calendar days as days’ of paid leave, followed by Employees are also entitled to employee is entitled to accrued
follows: full pay for the first 15 days, another 30 days of unpaid leave. maternity or paternity leave as but untaken annual leave
half pay for the next 30 days, and above if they are adopting a child calculated on their basic salary.
no pay for the remaining 45 days. An employee is also entitled to younger than five years old.
An employee on probation is not an additional 45 calendar days • Compassionate leave of five
entitled to any paid sick leave. leave without pay, if such absence Part time employees in the DIFC
calendar days’ leave in the
is due to an illness occurring as a (i.e. those who work for less than
An employer may legitimately event of the death of a spouse,
result of her pregnancy. During five days a week) are entitled to
terminate an employee’s and three calendar days’ leave
the 6 months following delivery, parental leave on a pro- rated basis.
contract of employment, should in the event of the death of the
they fail to resume their duties employees are entitled to two employee’s parents, children,
An employee is not entitled to receive
at the end of the sick leave half hour nursing breaks each siblings, grandparents and
payment in lieu of parental leave.
entitlement, but not during it. day during the working week. grand children.
All employers in the emirate of Male and female employees are
Dubai must provide private medical • Study leave of 10 working
entitled to 5 working days of 6. Other leave
health insurance to all employees. days per year where the
parental leave upon the birth of
employee is enrolled in a
their child, which can be availed up Dubai
DIFC UAE educational instution
until the child reaches 6 months of In addition, an employee
The Employment Law provides a to sit exams provided the
age. Female employees can avail the is also entitled to:
maximum sick leave entitlement of employee has two years’ prior
5 days of parental leave in addition
60 working days in any 12 month service with their employer.
to their maternity leave entitlement. • two calendar days’ of annual
period, payable as follows: full pay for leave per calendar month DIFC
the first 10 working days, half pay for DIFC during the first year of service
the next 20 working days, and no pay An employee is entitled to followed by 30 calendar days’ • An employee is entitled to
for the remaining 30 working days. maternity leave of 65 working days of annual leave per year of 20 working days’ of annual
Employment may be terminated provided the employee has been service thereafter. Leave may leave per year of service. Five
immediately in writing where an continuously employed with the working days of leave may
employee has taken in excess of an employer for at least 12 months be carried forward into the
aggregate of 60 working days’ sick preceding the actual or expected subsequent annual leave year.
leave in any twelve month period week of childbirth. Any national On termination, an employee
(except where the sick leave taken holidays falling on a working day is entitled to a payment in lieu
is on account of a disability). within the maternity leave period of their accrued but untaken
shall be additional to and extend leave calculated with respect
Part time employees in the DIFC
the period of maternity leave. to their daily wage.
(i.e. those who work for less than
five days a week) are entitled to The employee is entitled • A Muslim employee who has
sick leave on a pro-rated basis. to maternity leave pay at completed at least one year
Employers in the DIFC are required the following rates: of continuous employment
to provide health insurance is entitled to 21 calendar days
• Normal daily wage for the
cover for their employees. of unpaid leave to perform
first 33 working days; and
pilgrimage once during the
• 50 percent of the normal course of his service.
5. Parental leave daily wage for the remaining
32 working days. • Part time employees in the
Dubai DIFC (i.e. those who work for
Female employees are entitled to 60 A male employee whose wife has a less than five days a week) are
calendar days’ maternity leave with baby is entitled to five working days entitled to annual leave and
the first 45 days’ at full pay, and the of paid paternity leave provided Haj leave on a pro-rated basis.
remaining 15 days at half pay. that the employee has been
continuously employed with the

34 35
 Employment Law in Dubai Employment Law in Dubai

Termination of an employee’s
7. Annual return ticket 8. Termination employment may be deemed opportunity for the employer
unlawful by a Labour Court where or gaining a personal
Dubai Dubai benefit to the employee
the employee files a complaint
There is no requirement under the
With notice to a UAE authority or the Labour • Is found under the influence
Labour Law to provide an annual
Court during his employment, of alcohol or drugs during
flight home, however this is market
An employment contract and as a result, his employment is working hours, or has
practice and some free zones make
can be terminated in any terminated by the employer. In such commiutted an act contrary to
this a mandatory requirement as
of the following ways: cases, the Labour Court may award public morals in the workplace
part of their internal employment
an employee up to three months’
regulations. The employer may • Where the termination total salary as compensation. • Assaults (verbally or
use their discretion to extend this is mutually agreed physically) his employer,
entitlement to the employee’s Without notice
• Upon expiry of the contract manager or a colleagues
family if deemed appropriate.
during work, or any other
• Upon notice by one of the There are limited grounds under
form of assult punishable
DIFC parties. Notice must be which an employer may validly
under UAE law
Likewise, the Employment Law between 30 to 90 days, terminate an employee’s services
does not require employers to as contractually agreed without notice. These exhaustive • Is absent from work, without
provide an annual flight home, grounds are if the employee: a valid reason for more
but it is customary to do so. • Upon the death of than 20 non- consecutive
the employee • Assumes a false identity or
days in any year or for over
nationality, or produces fake
• Where the employee seven consecutive days
documents or certificates
has suffered a total • Illegally exploits his
permanent disability • Makes a mistake which
job to obtain personal
causes the employer to suffer
• If the employee has been results and gains
substantial material loss,
sentenced by a final provided that the employer • Works for another employer
judgement of imprisonment informs the Ministry of without complying with the
of three months or more Human Resources and controls and proecdures
Emiratisation (the “MOHRE”) established in this regard
• For redundancy (as defined
of the incident within seven
in the Labour Law)
working days of discovering it DIFC
• If the employee is unable to
• Has violated instructions for With notice
obtain or maintain their work
work or work place safety:
permit for a reason outside Subject to the right to terminate
provided that instructions
of the employer’s control. employment for cause (see further
were written and displayed
in a prominent place and the below), the notice required to be
employee was informed of them given by an employer or employee
under the Employment Law to
• Fails to carry out his basic terminate a person’s employment
duties as provided in the (where the person has been
employment contract and has continuously employed for one
continued to do so despite month or more) shall not be less
the employer conducting a than (unless otherwise agreed by the
written investigation resulting employer and employee):
in the employee receiving
two written warnings that his • seven days if the period of
services will be terminated if continuous employment is
he fails to rectify the situation less than three months

• Discloses a secret related • 30 days if the period of

to industrial or intellectual continuous employment
property of the employer, is three months or more
resulting in losses to the but less than five years
employer, missing an
• 90 days if the period of
continuous employment
is five years or more
36 37
 Employment Law in Dubai Employment Law in Dubai

The parties may agree to longer the issuance of new eork permits for
notice periods but not shorter the employer for up to six months.
notice periods. Further the parties
may not agree to a payment in lieu In 2020, as a result of COVID-19,
of notice prior to the termination the MOHRE issued a circular
(i.e. payment in lieu of notice may in respect of a reorganization /
only be agreed upon at the time termination of UAE nationals in the
of termination of employment). workforce. In such circumstances,
an employer is required to:
Without notice
• Notify the MOHRE of any
The Employment Law adopts a reorganisation and refer
similar principle as the Labour Law the matter to a MOHRE
in respect of termination without committee; and
notice, referred to as termination • Consult with the MOHRE
for ‘cause’. Employment may be committee (now made up
terminated for cause where the of three MOHRE officials)
conduct of one party is such that in respect of proposed
a reasonable employer / employee • 21 calendar days’ basic pay for minimum benefits payable into
alternatives to avoid each year of service for the the Scheme on a monthly basis are
would have terminated the termination of UAE nationals.
employment in such circumstances. first five years 5.83% of an employee’s basic salary
By contrast with the above The circular provides that it is not for that month (for the first five
• 30 calendar days’ basic pay years of employment) and 8.33%
exhaustive list in the Labour Law, permitted to proceed with any for each year of service above
the Employment Law adopts a termination of a UAE national of the employee’s basic salary for
five years that month (once the employee has
principle of reasonableness in the before the MOHRE committee
has considered the position The entitlement is subject to at least five years of continuous
response to the particular conduct.
and proposed any alternative a cap of two years’ wages. employment). Employees may opt
In addition, the Employment
Law provides that gratuity must solutions. Subject to the committee Employers commonly divide an to make voluntary contributions
be payable when and employee approving the exit, the employer employee’s total remuneration into the Scheme in addition to the
is terminated for cause. is thereafter required to meet the into basic salary and allowances. statutory contributions made by the
criteria set out in the 2018 decree. However, there is no legal obligation employer, should they wish.
to break down salary this way. It Where an employee has been in
is common practice to set basic employment prior to 1 February
9. UAE national employees salary at 60 percent of the total
DIFC 2020 (and subject to the
Dubai Under the Employment Law, remuneration and in this way employee having at least one
There are two regulations that set UAE national employees do not employers reduce their overall full year of continuous service
out the expectations and rules enjoy any specific enhanced end of service gratuity liability. with their employer as at the
relating to the termination of a protection against termination Should the employer wish to provide termination of their employment),
UAE national’s employment. from employment. a pension scheme to non-nationals, the employee may either:
the employer must first obtain • be paid out any gratuity
The MOHRE issued a decree in 2018
UAE Cabinet approval, following (which they accrued in the
that limits the circumstances in
which, employees can be enrolled
which a UAE nationals employment 10. End of service gratuity period of employment prior
in the private pension scheme.
can be terminated by an employer (expatriate employees) to the implementation of the
by setting out specific grounds for Scheme) on termination of
Dubai DIFC
termination and what constitutes their employment; or
In the UAE, an employee who has With effect from 1 February
a legally valoid reason. 2020, all employees (other than
completed at least one year of • opt to have the accrued gratuity
If the MOHRE decides a termination continuous service is entitled to qualifying UAE and GCC nationals transferred into the Scheme.
is not based on a legally valid reason, an end of service gratuity payment and other exempted categories)
For the purpose of making
it may seek to mediate between on termination of employment, must be registered under the DIFC
contributions into the Scheme and
the parties with a view to amicably which is calculated with reference Employee Workplace Savings
end of service gratuity calculations,
resolving the matter and/or suspend to the last basic salary (excludes (DEWS) Scheme or other qualifying
basic salary should comprise at
any allowances) as follows: scheme as approved by the DIFC
least 50 percent of the total salary.
(collectively the Scheme). The

38 39
 Employment Law in Dubai Employment Law in Dubai

11. Pension for UAE and The current rates of Emiratisation

GCC nationals are set at a minimum of two per
cent for all private sector employers
Dubai (where a company has at least
Employers are legally obliged to 50 employees), other than the
contribute to a state pension for banking and insurance sectors
all eligible UAE and GCC national where there are higher rates
employees, and an end of service applicable or based on the entity
gratuity payment for non-eligible meeting certain target points, as
UAE and GCC national employees determined by the UAE Central
(and expatriate employees). There Bank (with the UAE Insurance
is no legal obligation to provide Authority now having been merged
non-eligible UAE and GCC national with the UAE Central Bank) .
employees with a private pension;
however, as referred to above in In 2019, the MOHRE introduced a
certain circumstances, eligible program to promote Emiratisation in
employer maintained pension the private sector. When a company
schemes may replace the obligation applies for a new work permit for
to pay end of service gratuity. certain specified job titles, it will be
referred to the resumes of potential
UAE national candidates. The
company must review the resumes
DIFC
and/or interview any available UAE
The Employment Law requires an
national candidates and may choose
employer to enroll eligible UAE and
to hire one of the recommended
GCC nationals to the state pension
UAE national candidates or can
scheme in accordance with the
provide reasoning for not hiring the
applicable Federal legislation.
candidates. The authorities may
also require the company to meet
with UAE national candidates at
12. Repatriation ticket an “Open Day” recruitment drive.
Recently, the MOHRE introduced
Dubai
‘NAFIS’, a governmental federal
Where an employer terminates
program aimed at increasing the
a contract of employment, or
competitiveness of the Emirati
where it expires at the end of the
human resources and empowering
fixed term, it should provide the
13. Emiratisation them to occupy jobs in the UAE
employee with a repatriation ticket DIFC
private sector over the next five
to the employee’s home country, The terms of the Personnel
Dubai years. From January 2023, all private
except where the employee has Sponsorship Agreement between
This is essentially a positive sector companies with more than
been validly terminated without the DIFC Authority (DIFCA) and the
discrimination policy with financial 50 employees must comply with
notice. If the employee resigns, employer provide that unless an
incentives for employers to recruit the Emiratisation quotas. Failure
there is no obligation to provide employee obtains a new residence
UAE nationals in the private sector. to do so will result in fines being
the repatriation ticket unless the and work permit within 30 days
The policy seeks to increase imposed against the employer.
employee does not have the means from the date of termination of the
to pay. There is also no requirement employment contract, the employer the number of UAE nationals in Emiratisation quotas are not
to provide repatriation if the shall immediately apply to the DIFCA the private sector by providing applicable in the free zones.
employee takes up alternative for cancellation of the residence recruitment targets for employers.
employment in the UAE. and work permit and provide the The government offers lower
employee with a repatriation ticket transactions fees for processing DIFC
to his country of origin. entry permits, residency visas, and Emiratisation quotas are not
labour or ID cards for employers who applicable in the DIFC.
meet those targets and who seek to
maintain a diverse workforce.

40 41
 Employment Law in Dubai Employment Law in Dubai

14. Immigration considerations

In most instances, the issuance of residency visas for expatriates in
the UAE is linked to the employment of individuals by a UAE registered
employer. The employer is responsible for procuring either a work permit
from the MOHRE or a free zone identity card issued by the relevant free
zone authority. Employers in the UAE are required to provide sponsorship
to its employees for residency purposes, with the exception of persons
sponsored by spouses or on dependant residency visas, or nationals of
GCC states. Where an individual does not require sponsorship for visa
purposes from their employer, the employer is still obliged to procure a
work permit / identity card. In addition, it is compulsory for all employees
to apply for an Emirates ID card as part of the residency visa process.
Employers are obliged, as part of the residency process, to issue standard
form offer letters and employment contracts prescribed by the MOHRE or,
in respect of free zones, a relevant free zone authority prescribed contract.
These contracts are required to be submitted to the relevant authority as a
condition to obtaining a residency visa and/or a work permit/ identity card.

The residency visa process generally • Application for residency

follows the following stages: submitted to the immigration
Filing of countersigned offer authorities; and
letter to the MOHRE (not required
in respect of free zones); • Submission of application
to have the residency visa
• Filing of countersigned stamped in the passport.
employment contract and Residency visas are valid for
application made to the two years.
MOHRE / free zone authority
Residency visas do not always
for ‘entry permit’ to allow the
need to be sponsored by the
individual arrive in UAE;
employer, and an individual can be
• Security and background sponsored by other means, such as
check undertaken on a golden or green visas (individual /
the individual. Certain private sponsorship), their spouse
nationalities are currently (dependant sponsorship), via their
barred from obtaining new own company (investor visa) and
UAE residency visas; so on. The visa process highlighted
above is therefore subject to change
• Entry by the individual into in one of these circumstances.
the UAE for employment
purposes;
• Undergoing a medical
examination which usually
consists of a blood test
and chest x-ray to primarily
identify infectious diseases.
The presence of certain
infectious diseases will lead to
the application for residency
to be automatically rejected;
• Application for work permit/
identity card and Emirates ID
card;

42 43
 @AlTamimiCompany

Scan to download the

Al Tamimi & Company My Tamimi App

For any queries, please email info@tamimi.com www.tamimi.com

44