A glimpse into UAE laws

Jay Krishnan, Partner


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    Before you plan a visit to any country, be it for a short trip or to start a company, basic knowledge about the laws and regulations governing that place is a must.

    UAE has issued several laws related to the economy, trade, trade license and investment since its formation in 1971. There are many local laws pertaining to alcohol consumption, dressing and public displays of affection as well. Expats should be aware of these as ignorance of the law will not be considered or accepted as an excuse in court and breaking the law will get you into legal trouble.

    Labor law

    Federal Decree Law No. 11 for the year 2008 governs the labor rights of employees in the public sector and in the private sector, the Federal Law No. 8 of 1980 is applicable. These laws oversee issues associated with working hours, vacation and public holidays, sick and maternity leave, employing juveniles, employee records, safety standards, termination of employment and end of service gratuity payments.

    Generally, free zones are not governed by the UAE Labor Law as each free zone has its own employment law.

    Commercial Companies Law

    The law specifies that UAE should be the nationality of every company established in the country. All mainland companies are subject to Commercial Companies Law, whereas free zone companies are exempt from the provisions of this law. The new UAE Commercial Companies Law (Federal Law No. 2 of 2015) (“CCL”) came into force on 1st July 2015.

    As per the new CCL, all companies with public accountability are required to use full IFRS as issued by the IASB. IFRS standards play a pivotal role in global financial reporting as they are being embraced by countries across the globe. Companies listed on NASDAQ Dubai, Dubai Financial Services Authority (DFSA), and Abu Dhabi Securities Exchange need to comply with IFRS standards.

    Anti-Money Laundering law

    Money launder­ing, illegal transfers of money and criminal activity are well monitored in UAE and the country maintains a strong Anti-Money Laundering (AML) system. To better scrutinize cash flows and combat terrorist financing, the government has taken various steps.  This includes the enactment of Anti-Money Laundering law and the counterterrorism law. Two laws serve as the basis for the country’s Anti Money Laundering (AML) and counterterrorist financing (CTF) efforts: Law No 4/2002, the Anti Money Laundering law, and Law No. 1/2004, the counterterrorism law.

    Bankruptcy Law

    The Federal Bankruptcy Law (under the federal decree No. (9) for 2016) identifies various techniques to avoid bankruptcy cases and the liquidation of debtors’ assets, that include consensual out-of-court financial restructuring, composition procedures, financial restructuring and the potential to secure new loans with respect to the rules and regulations.

    Tax laws

    The landmark Federal Law No. 7 of 2017 (Law No. 7) issued by The United Arab Emirates (UAE) Ministry of Finance (MoF) “sets the foundations for the planned UAE tax system, regulating the administration and collection of taxes and clearly defining the role of the Federal Tax Authority (FTA).” The law deals with tax procedures, tax implementation, tax rates, tax obligations, cases of tax exemption, as well as procedures and rules of tax registration and cancellation.

    There are many more laws in UAE and these are just some of the major laws that primarily concerns businesses.  It’s the responsibility of every one of us to follow and respect the laws of a country, if we wish to live and work there.

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