The year 2019 has already seen a lot of changes in laws and regulations in the business and banking industry. New tax laws, variations in the Central Bank’s guidelines and changes in the bank compliance criteria can be labeled the major ones.
Budding entrepreneurs planning to start or expand their business in the UAE will have to keep up with the following changes to ensure smooth flow of activities;
- Banking Regulations are tightening across UAE;
The UAE Government have made announcements that obligated companies to adapt quickly to hold their position in the market. Ever since the introduction of VAT in the UAE, companies have had to change their ways in how they negotiate with customers and suppliers. There has also been an impact on their price structures, cash flow, and business processes ever since VAT.
The excise tax was introduced prior to VAT and as a major change, The UAE government has joined hands with over 100 countries to establish a Common Reporting Standard (CRS). This commenced an exchange of information between various tax authorities which increased transparency. Under CRS, the UAE Central Bank demands the Local banks to be stricter and more precise in their diligence and compliance operations. An Ejari (lease agreement) and DEWA bill will be needed to back your VISA and EMID, for the bank to serve a resident for non-exchange.
It is recommended to stay up to date with the country’s laws and legislation as news quickly becomes outdated on the internet. It is also recommended to business owners to stay at the top of their game in terms of country laws and news as the UAE is moving far ahead with times and is accordingly creating opportunities for FDI.
Dubai and Abu Dhabi are becoming the country’s International Business Hub for new businesses: Due to the impact of these tax and banking regulations, there is an evident shift in the location chosen by companies to base their office. In order to open a Corporate account, you need to provide your UAE residency Visa and Emirates ID. You will need to have a local corporate address as a signatory as a
The Northern Emirates are not as cost-effective as they were in the past.
The E-channel Immigration System is an integrated immigration system implemented in 2017. The Northern Emirates has also introduced the system and has been in five emirates, but Dubai and Abu Dhabi continue to use their own self-regulating ones currently.
The E-channel offers many benefits such as Online Processing and faster approval, but it also brings in a lot of expenses which would be around 7,000- 8,000.
For example, in the Ras Al Khaimah Economic Zone, Registration alone costs AED 2,000. Along with that comes a guarantor fee of AED 5,050. Then annual registration cost would be around AED 1,200.
Due to the Northern free zones’ charges, businesses look to locate in Dubai and Abu Dhabi. This is also not an easy choice as the location of your business depends on numerous factors; the field of business activity, scale of operations, visa requirements, capital to be invested etc. The UAE government is also introducing a dual license that allows companies to hold one license to run their business inland and another to run in a free zone without an office space. This gives the companies more choices but also makes decision-making complex.
- Banks favor different business activities;
Business activity field is more scrutinized by banks in 2019 based on what’s deemed ‘high-risk’ or ‘vague’ activities. Certain nationalities are also viewed as riskier compared to others on a geopolitical view. This leads to background checks and more compliance papers. Which eventually leads to higher costs or even rejection of your application due to the absence of necessary supporting documents.
It is advised to contemplate well over how a business describes their operations. The company may come across problems in the future during audits or face questions about their suppliers and clients and they may have to pay fines as well.
Over the past years, UAE has transitioned immensely in terms of its economy and legislation.
You can consult with us to stay up to date with these transitions as Executive Business Solutions vows to offer one of the most reliable services in Company Formation and help you along the steps involved in its procedures. With our knowledge of dealings with local banking regulations, you can ensure that your new venture will be off to a good start.