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Dubai's Department of Finance (DOF) unveiled an initiative on Tuesday to review government fees and gradually reduce them to improve the ease of doing business in the emirate.

The Public Revenue Structuring Programme by the DOF will include a study of fees collected by all government entities, the Dubai Media Office said in a statement.

The move was announced after the UAE introduced a 9 per cent federal corporate tax on the profit of businesses from the financial year starting on or after June 1, 2023.

While the federal tax is among the lowest in the region, "the new reality requires us to study and review the government fees system, in order to help businesses and entrepreneurial projects", said Abdulrahman Al Saleh, director general of DOF.

"The fees imposed by the government of Dubai on commercial activities are affordable in the absence of corporate tax. Following the introduction of this tax, however, we will be keen, under the supervision of the General Secretariat of The Executive Council, to study those fees and look into the possibility of gradually reducing them in line with emergent trends."

The UAE's economy is expected to grow 4.6 per cent this year, up from an estimated 1.9 per cent in 2021, according to Emirates NBD.

The DOF's initiative will help the government to achieve revenue sustainability while supporting businesses. It reiterated that current corporate tax incentives made available to free zone companies in Dubai will continue.

The government is also working to develop "supportive and attractive policies" to attract foreign investments to the emirate, the DOF said.

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On Monday, the UAE announced the introduction of a federal corporate tax on business profits effective from 1st June, 2023. This will be a 9% tax rate and is the lowest in the six-nation Gulf Cooperation Council.

PRO Partner Group sheds light on what this means for businesses in the UAE and talks to @khaleejtimes. Read the full article for more in-depth look at the new tax regime: For the full article click here

Strong foreign direct investment flows into Dubai are likely to continue throughout 2022 as it continues to manage the Covid-19 pandemic well and on the back of business reforms in the Gulf city.

Dubai, the financial hub of the United Arab Emirates, raked in AED15.9 billion ($4.3bn) in foreign direct investment across 378 projects in the first nine months of 2021, making it the third most popular destination for FDI globally.

“Although competition for global FDI will intensify, reforms implemented over the past year in Dubai and across the UAE stand the economy in good stead. FDI inflows to Dubai are likely set for another strong year,” Scott Livermore, ICAEW economic advisor and chief economist and managing director, Oxford Economics Middle East, said.

Meanwhile, analyst and director of research at Derasat, Omar Al-Ubaydli pointed to the emirate’s steady handling of the pandemic, which was recognised internationally as one of the best.

“A central component of this successful strategy is the competent management of the pandemic, which has made many elite expatriates seriously consider the UAE as a permanent domicile,” Al-Ubaydli said.

FDI reinvestment projects accounted for 11 percent of the total FDI projects in the emirate. FDI job creation witnessed a huge growth of 36 percent during the first nine months of 2021 compared to the same period last year, as 16,430 new jobs were created compared to 12,090 jobs in the same period prior to last year. As much as 58 percent of the inbound FDI is in strategic sectors and 52 percent is in greenfield projects, or projects developed on a vacant site, according to data released by the Dubai Investment Development Agency.

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Ahead of the changes that are set to shake up the private sector work landscape in the UAE from February 2, recruiters say the new laws will give more security and stability to jobseekers in the Emirates.

The amended labour laws, which were first outlined by the government in November 2021, provide options that were not available before and strengthen employees' rights. One of the major changes under the new rules is that employees will be able to live in the country for up to six months after leaving a job.

Louise Vine, managing director at Inspire Selection recruitment agency in Dubai, said she is encouraged by the new law. “When someone loses their job, they have six months to find a new one instead of only 30 days, so it offers more stability for their family,” she said.

“It also gives them time to find a job that they're really happy with, at the right level and the right salary and so on.”

In her years as a recruiter, Ms Vine said she has come across people who have “accepted jobs out of desperation”, only to have a visa, which buys them time to find their ideal job. She said this short-term employment is financially detrimental to the employer and creates an unstable work environment.

Emirati lawyer Awatif Mohammed said the new law enhances the rights of both employers and employees. “Employees will not fear losing jobs on the spot with the mandatory 14-day notice period during probation that employers must abide to,” he said.

“The market will further attract talents and skills from across the world, especially after allowing different styles of work, a move that came in response to the challenges forced by Covid-19 but proved necessary to the progress the country is witnessing.”

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The Ministry of Finance has announced that the UAE will introduce a federal corporate tax on business profits that will be effective for financial years starting on or after 1st June 2023. Businesses will become subject to UAE corporate tax from the beginning of their first financial year that starts on or after 1st June 2023.

With a standard statutory tax rate of 9 percent and a 0 percent tax rate for taxable profits up to AED375,000 to support small businesses and startups.

No corporate tax will apply on personal income from employment, real estate and other investments, or on any other income earned by individuals that does not arise from a business or other form of commercial activity licensed or otherwise permitted to be undertaken in the UAE.

The UAE will not impose withholding taxes on domestic and cross border payments, or subject foreign investors who do not carry on business in the UAE to corporate tax.

As an international headquarter location, a UAE business will be exempt from paying tax on capital gains and dividends received from its qualifying shareholdings, and foreign taxes will be allowed to be credited against UAE corporate tax payable.

Recognising the contribution of free zones to the UAE’s economy and competitiveness, the UAE corporate tax regime will continue to honour the corporate tax incentives currently being offered to Freezone businesses that comply with all regulatory requirements and that do not conduct business with mainland UAE.

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Abu Dhabi has removed more than 20,000 requirements to set up businesses in the emirate as part of an ongoing overhaul of procedures led by the Abu Dhabi Department of Economic Development (ADDED).

Twenty-six local and federal partner entities participated in the reductions programme, which amounted to 71 per cent of the total 28,788 requirements previously in place, Added said on Wednesday. The programme was first introduced in August.

"We are telling the world that Abu Dhabi will continuously seek to enhance its regulations, systems and services making up the ecosystem necessary for any businesses and investors to thrive," said Rashed Al Blooshi, undersecretary of Added.

Abu Dhabi has taken various measures – such as providing rent rebates, discounts on utility bills and loan guarantee packages – to support businesses and stimulate economic growth throughout the coronavirus pandemic. Last year, Abu Dhabi slashed business set-up fees by 94 per cent in a move to strengthen its position as a destination for new ventures and boost foreign direct investment into the emirate.

The department reduced its own business licensing requirements for the 118 business activities that it regulates, cutting them by 77 per cent to 162. The Securities and Commodities Authority made 40 cuts to 700 requirements.

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Mubadala Health, the integrated healthcare network of Abu Dhabi-based Mubadala Investment Company, has announced its foray into Dubai for the first time.

The expansion of Mubadala Health into Dubai is in collaboration with the Dubai Health Authority (DHA) and the Ministry of Health & Prevention (MOHAP).

Mubadala Health said it is committed to a “significant investment” in Dubai’s healthcare sector, starting with the opening of an advanced stand-alone day surgery and medical facility in Jumeirah in the third quarter of 2022.

The announcement – made during the Arab Health Congress and Exhibition 2022 at the Dubai World Trade Centre – will see a new 125,000 square foot facility opening to offer a wide range of in-demand specialties delivered by world-class physicians and medical experts including Cleveland Clinic Abu Dhabi, Imperial College London Diabetes Centre, Healthpoint and Amana Healthcare.

Services will include gastroenterology, sleep medicine, ENT surgery for adults and pediatrics, rehabilitation, neurology, orthopedics and respiratory medicine services.

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The Abu Dhabi Securities Exchange will have its first SPAC listing later in the year. SPACS – or Special Purpose Acquisition Company – has emerged as one of the hottest trends in companies seeking public funds via stock market listings - but not as an IPO.

Abu Dhabi has become the first financial market in the Gulf to come up with a regulatory framework exclusively to oversee listings by SPAC. The framework was developed by ADX and Abu Dhabi’s Department of Economic Development (DED) in conjunction with SCA (Securities and Commodities Authority) as well as legal and investment specialists. It has been benchmarked - and assessed - against US and international SPAC regulations.

The platform will “provide international investors with access to unique growth opportunities”. There are provisions for SPAC sponsors from outside of the UAE, giving them the ability to apply for approval to list their SPACs on ADX. (As a case in point, the Arabic music streaming service Anghami will soon list on Nasdaq in New York after being acquired by a SPAC. It is the first tech company from the region to list on Nasdaq.)

The UAE SPAC regulations provide sponsors of a future listing with a "seamless and efficient process" to take companies public.

Sponsors will be required to raise a minimum of Dh100 million in the Initial Public Offering (IPO) and units sold will comprise warrants that give investors and sponsors the right to convert into shares.

To protect investors, once the IPO is complete a SPAC must ensure that 90% of proceeds are placed in a non-interest-bearing account.

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Companies have made a beeline for Abu Dhabi’s Masdar City as the free zone slashed business set-up rates to a highly competitive Dh1,000 last year, and more than 200 companies could set up shop in 2022.

“We generally announce specific targets, but it wouldn’t surprise me at all if we had easily a couple of hundred new companies in 2022 to continue with the growth rate we had in 2021,” said Stephen Severance, head of program management and marketing at Masdar City.

Masdar City, which currently hosts around 1,100 firms, has introduced new packages and offers to lure companies and investors as competition among UAE’s free zone operators heats up. “We have some very attractive pricing for startups and new innovation companies – the market is pretty competitive out there,” said Severance.

“Dubai Economy has made it possible to have 100 per cent foreign ownership with a DED license – we need to compete with that,” said Severance.

As per the guidelines from Dubai Economy, 100 per cent foreign ownership is available for more than 1,000 commercial and industrial activities, excluding economic activities with a strategic impact, which relate to seven sectors.

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