Dubai’s non-oil trade reaches Dh339 billion

Jay Krishnan, Partner

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    Dubai non-oil foreign trade witnessed a growth of 7 percent in the first quarter of 2019. The figure that stood at Dh316 billion in the first quarter of 2018 has increased to Dh339 billion in the current year’s first quarter.

    The maximum growth happened in the exports sector, which reached Dh42 billion with a rise of 30 percent. While re-exports grew by 7 percent to Dh106 billion and imports are worth Dh190 billion (an increase of 4 percent).

    The non-oil trade volume of Dubai increased by 32 per cent to reach 28 million tons. There has been a surge in the exports and it reached 6 million tons. Re-exports increased by 41 per cent to 4 million tons and imports rose 16 per cent to reach 17 million tons.

    Surge in UAE non-oil trade market

    Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of The Executive Council of Dubai, said: “This robust performance and marked growth of Dubai’s non-oil foreign trade is an indication that we are on the right path of revenue diversification in alignment with the values and standards outlined in the 50-Year Charter. The Dubai Silk Road Strategy supports decades of successful investment in developing the emirate’s infrastructure. In line with the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, we are committed to developing our government services so that we can become a world-class model for future governments based on knowledge, innovation and advanced AI applications.”

    Free zones contributed AED 147 billion via trade. Direct trade was the major contributor to total trade at AED 189 billion and customs warehousing accounted for AED 2.3 billion. Air and sea trade also have a major share of contribution and accounted for 85 percent of the total trade. AED 158 billion is the outcome of air trade and sea trade accounted for AED 129 billion. Trade by land reached AED 52 billion.

    Dubai’s trade with Asia reached AED 208 billion (7 percent increase), with Europe AED 58 billion and with Africa AED 42 billion. Among these, the trade with Africa witnessed the biggest growth, which rose to 36 percent. Americas and Oceania also contributed to the trade sector.

    AED 90 billion was the total value of gold, diamonds and jewellery traded through Dubai. Phones market was also a major contributor and accounted for AED 42 billion.

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    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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      Taxation in UAE

      Jay Krishnan, Partner

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      HLB HAMT - Accounting Firm in UAE
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        UAE is basically known to be tax-free country, and this was true to a great extent, until the introduction of Value added tax. VAT was introduced in UAE on 1st January 2018 at a standard rate of 5 percent.

        Apart from VAT in UAE, there are certain other forms of tax that one should be aware of.

        Property tax/ fee

        The property registration fee in UAE is 4 percent on the purchase price. For commercial sector, this has to be paid by the buyer and an additional 5 percent VAT is also applicable. In the case of residential sectors that are ready for occupation, as a general practice, the fee of 4 percentage will be split 2 per cent each between the buyer and seller.

        However, the transfer of properties between close relatives are charged at a nominal value which ranges from 0.5 – 0.75 percentage.

        Excise tax

        Excise tax is levied on specific goods that are harmful to human health or the environment. The excise goods that will be charged tax in the UAE include;

        • Carbonated drinks

        This includes any aerated beverage and any concentrations, powder, gel, or extracts intended to be made into an aerated beverage. Unflavoured aerated water is exempted.

        • Energy drinks

        Any beverages which are marketed, or sold as an energy drink, and contains stimulant substances that provide mental and physical stimulation or includes caffeine, taurine, ginseng and guarana, will fall in this category. Substances that have similar effects as the ones mentioned above and any concentrations, powder, gel or extracts intended to be made into an energy enhancing drink will also be levied tax.

        Tobacco and tobacco products are also categorized as excise goods.

        Rate of excise tax

        The rates of excise tax in the UAE are;

        • 50 per cent for carbonated drinks
        • 100 per cent for tobacco products
        • 100 per cent for energy drinks.

        Excise tax intends to reduce the consumption of unhealthy and harmful commodities. Businesses that are engaged in any of the below activities must register for excise tax;

        • the import of excise goods into the UAE
        • the production of excise goods, wherein the goods are released for consumption in the UAE
        • the stockpiling of excise goods in the UAE in certain cases

        Also, anyone who is responsible for overseeing an excise warehouse or designated zone i.e. a warehouse keeper should register for excise tax.

        If you are on a vacation and planning to stay in any of the hotels in UAE, do not forget to check the tax charges. Certain restaurants, hotels, hotel apartments, resorts etc. in the UAE charge tax. Hotels charge ‘Tourism Dirham Fee’ per room per night of occupancy in Dubai and the price range from AED 7 to 20 depending on the category/grade of the hotel.

        Whereas in Abu Dhabi, a fee of 4 percent of hotel stay bill and AED 15 per night per room will be levied.

        In Ras Al Khaimah, hotels charge AED 15 tourism fee per room per night.

        The UAE charges corporate tax on oil companies and foreign banks and rest of the industries are exempted. Companies functioning in UAE free zones doesn’t have to pay corporate tax for a specific period.

        Unlike many other countries, UAE individuals are exempted from paying income tax.

        If you are someone planning to start a business in UAE or going on a vacation to the country, basic knowledge on taxation is a must

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