Month: October 2022
UAE Finance Ministry modifies certain VAT Regulations, beginning January 2023
HLB News Team
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Modifications to some of the provisions of the federal decree legislation No. 8 of 2017 on value-added tax have been announced by the UAE’s Ministry of Finance (MoF) and will come into force on January 1, 2023.
The Federal Decree-Law No. 18 of 2022, which modifies several sections of Federal Decree-Law No. 8 of 2017 on VAT, among other significant changes, includes the following:
- Authorized individuals who produce taxable supplies are eligible to request for an exemption from VAT registration, if all their supplies are zero-rated or if they withhold any other supplies besides zero-rated supplies.
- Providing a 14-day window for the issuance of a tax credit note to pay output tax, in accordance with the window designated for the issuance of tax invoices.
- In some circumstances, the Federal Tax Authority may find it appropriate to forcefully deregister registered individuals.
Additionally, the Decree-Law updates several clauses in order to make them more clear and reinforce their intended meaning, to rewrite them, or to better align them within the legislative structure.
In view of the GCC Unified VAT Agreement, the modifications implemented are in accordance with global best practices. They are based on personal experiences, difficulties experienced by various business sectors, and suggestions from parties concerned. As part of its efforts to broaden its economy and lessen its reliance on oil, the UAE adopted a 5% VAT on the majority of products and services in 2018, and no further adjustments were announced to the VAT rate, which remains at 5%.
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Salary Payment Currency under the New UAE Labour Law
HLB UAE Payroll Team
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Salary payment currency refers to the currency in which the organization actually pays salaries to its employees as remuneration for the services they offer. Each nation has its own regulations on the payment currency to be applied for processing payroll. If specified in the employment contract, salary payment may be made in either Emirati Dirhams, the UAE’s official currency, or in any other currency.
Arab Emirates dirham, the official currency of Dubai and the other Emirates, is referred to by its currency acronym, or AED. It is frequently shown with the letters Dhs or DH. The United Arab Emirates Central Bank is responsible for printing the nation’s currency.
According to Article 22 of Federal Decree-law no 33 of 2021, salary shall be paid in UAE’s official currency i.e AED or any other currency upon agreement between both the employer and employee in an employment contract. UAE law has provided the freedom of choice to private sector companies to choose their payment currency in salary, but this should be mentioned clearly in the employment agreement.
Frequently Asked Questions
Can a company pay their employee salary in USD or any other foreign currency?
Yes, as per the new UAE labor law; the company has the option to use USD or any other currency for salary payment. But this should be clearly written in the employment agreement between the employee and the company.
Is there any specific pay date in UAE which is to be considered as the pay date?
There is no such specific pay date in UAE; company can decide this as per company policy.
How is non-AED payment processed through WPS salary transfer?
There is no option to process non-AED payments through WPS, according to the existing WPS salary upload file template used by banks. For more info about WPS, Click here.
What is the minimum salary payable in UAE?
There is no minimum salary payable in UAE.
Can the employee demand a salary in any currency from the employer?
No, an employee has no right to demand a salary in any particular currency unless the same currency is mentioned in the employment contract.
Can the employer change the payment currency of an employee’s salary without his\her consent?
No, an employer has no right to change the payment currency of an employee’s salary without employee consent. Moreover, the company must pay the salary in the same currency that is mentioned in the employment contract.
Relevant article regarding “payment currency” from New UAE Labor Law (Federal Decree Law No 33 of 2021):
Article 22: The salaries shall be paid in UAE Dirham and may be paid in another currency if it is agreed upon between both parties in the employment contract.
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Umm Al Quwain (UAQ) has declared the fine cancellation for delayed or revoked business licenses
HLB News Team
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According to resolution No. 5 for 2022, which was issued by His Highness Sheikh Saud bin Rashid Al Mu’alla, a member of the Supreme Council and the ruler of Umm Al Quwain, implies that the fines collected on business entities in the UAQ emirate that are registered with the Department of Economic Development for delayed or terminated licenses must be cancelled.
The resolution which will go into effect on the day it is issued, be effective through December 31, and be released in the Official Gazette, will encourage the UAQ emirate’s citizens and businesses. The resolution further states that the UAQ Department of Economic Development shall offer suitable assistance in accordance with pertinent requirements.
A brief about Umm Al Quwain
A vibrant, pleasant, and engaging workplace environment is generated by Umm Al Quwain, which has been nicknamed the “free zone of the future.” Due to its stable economy, welcoming investment environment, and affordable labour costs, the emirate has experienced tremendous growth since its formation in 2014, making it an attractive commercial hub in the United Arab Emirates.
The free zone’s advantageous geography, adjacent to the main seaports in the United Arab Emirates and the international airports in Dubai and Sharjah, contributes to its appeal.
HLB HAMT will assist you in setting up a business in Umm Al Quwain on schedule and within your budget. Our experts handle the correct documentation for government registrations, company secretarial services, visa services, and other approvals.
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DMCC Plans to Implement Wage Protection System (WPS) for its Entities
HLB News Team
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Headquartered in Dubai, Dubai Multi Commodities Center (DMCC) is one of the most connected free zones in the world and the leading hub for business and trade in commodities. DMCC offers a wide range of world-class financial services, trading resources, and investment platforms and provides easy access to the world’s key commodities markets.
To curb unscrupulous practices and enhance employee welfare, DMCC Free Zone is currently working on adopting wage protection system (WPS) for firms registered with them. DMCC Free Zone will be the second Free Zone after JAFZA to fully adopt the use of WPS.
A brief about WPS
The Wage Protection System (WPS) is an electronic salary transfer system that allows institutions and organizations in the private sector to pay their employees through banks, exchange bureaus, and financial institutions approved by the UAE Central Bank to provide the service. UAE WPS was introduced in 2009 by the UAE Central Bank to meet the desired objectives of the Ministry of Labour. The purpose of WPS is to ensure wages are paid on time and in full. Currently, it is applicable to the private sector under the jurisdiction of the Ministry of Human Resources and Emiratization (MOHRE) and Jebel Ali Free Zone Authority (JAFZA) All government entities and public-sector institutions are exempted from WPS compliance.
If you would like to know more about UAE WPS, please go through the link
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The UAE Unveils a New Unemployment Insurance Scheme
Rajesh R Pillai
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The Ministry of Human Resources and Emiratisation (MoHRE) has recently taken a major step in the form of unveiling the new unemployment insurance scheme, which will go into effect in January 2023 and assure the financial stability of individuals working in the nation.
The main features of the UAE’s new unemployment insurance scheme are given below :
- All UAE federal government and private sector employees must obey the new law’s terms & conditions, with the exception of investors, domestic workers, part-time workers, and minors under the age of 18, and retirees who get a retirement pension and have started a new job.
- To be eligible to collect the insured amount, the employee must have been insured for 12 consecutive months starting on the subscription date.
- The payment will be made on a monthly basis, based on 60% of the employee’s basic salary, and will not exceed AED 20,000 each month.
- If an employee accepts a position at another company while receiving remuneration, the compensation will be suspended.
- Moreover, neither fraud nor dishonesty should be utilized in the compensation claim. The penalties outlined in the law shall be subject to the establishment as well as the insured in the event that it is discovered that the establishment where the employee works is not a legitimate one.
- The insured may be entitled to extra benefits for service providers, insurance companies that have been granted Central Bank of the UAE (CBUAE) licenses, and other parties, as long as they meet the requirements set forth in the UAE cabinet’s unemployment insurance regulations. Other governmental bodies designated by the UAE cabinet to offer services for unemployment insurance may also be service providers.
- Some other compensation or rights mentioned by other UAE law that is now in effect are unaffected by the compensation that the insured is eligible under this decree law.
In Summary
Most government policies have been prioritized with regard to the well-being of both residents and citizens of the UAE. The main purpose of building facilities and employment-related laws in the UAE is to enhance the lives of the people and uphold employees’ rights. If you are employed by a public or private company in the UAE, this brand-new scheme will benefit you.
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How can businesses be equipped for ‘black swan’ events?
Ankita Krishnan
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In risk management, we often come across the term “black swan”. A black swan is an unforeseen occurrence that goes beyond what is often anticipated in a situation and might have very negative impacts. The likelihood of the event occurring might be very low, but the impact is very high, or even catastrophic. Basically, it is an outlier that carries an extreme impact. Of late, ‘black swan’ has become a generally accepted term to describe low probability, high-impact events.
Some of the examples of black swans in the past are the Dotcom crash, the 1997 Asian financial crisis, Brexit, the 9/11 attacks, the 2008 global financial crisis and the Fukushima accident. The most recent addition to the list is the COVID pandemic though some might debate that such worldwide pandemics were in existence since a long time.
The following strategies are some that businesses could employ to prepare for black swan events.
- Crisis Management Plan (CMP) – Organizations need to have a Crisis Management Plan (CMP) which outlines how to respond to a critical situation that would negatively affect an organization’s profitability, reputation, or ability to operate. Responsibilities for addressing the press or public, and communicating with vendors, employees etc. are some of the important topics that should be covered in a CMP.
- Business Continuity Plan (BCP) – A business continuity plan (BCP) is a document that contains the vital details a business requires to keep running in the case of an unanticipated occurrence. The BCP outlines the fundamental operations of the business, points out the systems and procedures that must be maintained and provides instructions on how to accomplish that. Basically, all organizations need to start by asking themselves the million-dollar question of ‘What happens to the business if we cannot access our corporate headquarters or place of work?’
- Disaster Recovery Plan (DRP) – A disaster recovery plan (DRP) maps out the process of resuming normal business operations, reconstructing, or salvaging vital and other important records and equipment, and becomes a guide for all employees during and after a disaster.
- Employee Training – It is not enough that organizations formulate a well-defined Crisis Management Plan or Business Continuity Plan or Disaster Recovery Plan. Employees should be trained in various scenarios, and their respective tasks in times of crisis should be clearly communicated.
- Monitoring world events – It is the duty of top management to track trends across the world. This helps in identifying emerging risks and the need to modify the impact and/or probability of already identified risks.
Bottom Line
Risk management is complicated by black swans, particularly given how quickly technology is evolving. However, such revolutionary advancements in cutting-edge technology increase our capacity for analytic forecasting and attempt at black swan event prevention.
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UAE New Visa Rules 2022: What do the modifications imply for investors, visitors and job seekers?
HLB News Team
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UAE has become one of the world’s most well-liked travel destinations for investors, tourists and entrepreneurs due to its attractive visa procedures. UAE new visa rules introduced mark a significant shift in the UAE’s immigration regulations. The revamped visa system for the United Arab Emirates came into effect, and among its other changes were the extension of tourist visit visas, the expansion of the Golden Visa programme, and streamlined procedures.
The key updates that were implemented are listed below.
A. Visit Visa
The major development for travellers visiting the UAE is that, instead of the existing 30 days, tourist visas will now be granted for 60 days.
Additionally revealed was a five-year, multiple-entry tourist visa that permits travellers to remain in the UAE for up to 90 continuous days, but not exceeding 180 days.
B. Golden Visa
A long-term residency visa known as the “Golden visa” allows foreign nationals to reside, work, and study in the United Arab Emirates for up to ten years.
The minimum wage threshold has been lowered from Dh50,000 to Dh30,000, allowing for the long-term residency of more qualified professionals. The Golden Visa will continue to be legitimate under the new arrangement, regardless of how long the owner stays abroad.
Children of any age may be sponsored by Golden Visa holders. Also, the number of domestic workers they can sponsor is unlimited.
C. Green Visa
The Green visa in the United Arab Emirates is a form of residency visa that entitles the bearer to five years of self-sponsorship. They are not dependent on an employer or an individual from the UAE to sponsor their visa.
For the period of their stay, those with green visas can now sponsor family members (spouses, kids, and first-degree relatives).
Male children can be sponsored by their parents until they become 25 (up from the previous 18). No age restriction applies to sponsors of unmarried daughters.
D. Job Exploration Visa
This visa is granted to those that fall into the first, second, or third skill level, as well as recent graduates from the top 500 colleges globally, according to the Ministry of Human Resources and Emiratization. A bachelor’s degree or its equivalent is the minimal educational qualification. This visa does not need a host or sponsor.
E. Remote Work Visa
The UAE cabinet authorized a new ‘Remote Work Visa’ programme to allow workers from around the globe to work remotely from the UAE in an effort to recruit skilled, talented and experience individuals from various parts of the world. Foreign nationals may enter the UAE on their own initiative and engage in employment according to the rules and regulations of their one-year visa.
Bottom Line
With the new visa reforms, the UAE government has made an effort to raise living standards and make it more enjoyable to live, work, and setup a business. Also, the significant move offers businesses and innovators the chance to work in the UAE’s secure and alluring business climate, with exposure to all required facilities like top-notch infrastructure and connectivity.
Both foreigners travelling to the UAE and those who live and work there would benefit greatly from the new visa regime. Hence, the UAE will be even more accessible to visitors and anyone looking to settle permanently in the emirates.
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Qatari citizens’ social security contributions to private employers in Qatar to commence in January, 2023
HLB Payroll Team
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The Qatari government’s recent adoption of a new law discusses the extension of the private sector social security system and an increase in social security contribution rates. This extended law has been passed to motivate Qataris to work in the private sector and to reduce the adverse effects of early retirement.
Beginning on January 3, 2023, the new law will also be applicable to private sector employers who hire Qatari citizens are required to make contributions to the social security funds of their Qatari citizen employees, whereas presently, the law pertains only to employers in the public sector.
The monthly contribution rates to these funds will rise from 15% to 21% of an employee’s basic income or compensation as from January 3, 2023, with a threshold of QAR 100,000. Employers will be required to provide 14% and employees will be obligated to contribute 7%, with few exclusion. Employers who violate the proposed regulations incur a maximum six-month jail sentence and a QAR 30,000 penalty.
Also, this law is intended to support Qatar’s 2030 National Vision, which aims to ensure that Qatar develops into an advanced society able to maintain its growth and ensure a high living standard for its citizens.
HLB HAMT to assist!
Employers that are impacted by this can get assistance from HLB HAMT by reviewing their mandatory contributions and, if necessary, revising internal procedures.
If you have any queries, please get in touch with our experts or send an email to payroll@hlbhamt.com
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Overtime Calculation in UAE
HLB Payroll Team
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When an employee works extra hours than the normal working hours, those extra hours are considered as overtime and the payment made for the extra hours worked is known as overtime payment.
In this article, we are trying to answer some of the frequently asked questions related to overtime in UAE.
What are the maximum working hours in UAE?
As per Article 17 of the UAE Labor Law, the maximum working hours for workers shall be (8) eight hours per day or (48) forty-eight hours per week. The period spent by the worker during the commute between his place of residence and the workplace, shall not be counted in the working hours.
What are the types of overtime applicable in UAE?
There are 2 types of overtime as mentioned below;
- 125% applicable for additional daytime working hours.
- 150% applicable for night hours, weekly off and public holidays. The time between 10 PM and 4 AM will be taken into consideration while calculating night hours’ overtime; workers working based on shifts shall be excluded from this overtime. Also, work performed during the weekly off day or during the official holidays is also compensated with another day off or 150% of overtime.
Is UAE overtime calculated against employee basic salary or total salary?
As per UAE labor law, overtime is calculated against employee’s basic salary.
What is the law relating to overtime of juveniles?
The actual working hours of juveniles shall not exceed six hours per day and they shall not work between 7 PM and 7 AM. Also, the juvenile shall not work overtime or work on weekends or official holidays.
What is the formula to calculate overtime in UAE?
Please see the below formula to calculate overtime.
(Basic salary per month/Standard Monthly Hours* OT hours* OT Type)
Please see the below example for a better understanding
Basic Salary : 4,000/-
Standard monthly hours : 240
1 – Employee Worked 10 Extra Hours between 6 PM to 8 PM in a month.
OT Type: 125%
Over time amount = 208.33
i.e.,4,000/240*10*125%
2 – Employee worked for 15 Extra Hours during nighttime (i.e., 10 PM to 4 AM)
OT Type: 150% (Overtime hours belong to nighttime hours)
Over time amount = 375.00
i.e.4000/240*15*150%
3 – Employee worked 10 hours during the weekly day of rest and no compensatory off provided
OT Type: 150% (Overtime hours belong to weekly holiday)
Over time amount = 250.00
i.e.4000/240*10*150%
Note – There are no defined standard monthly hours in Labor law; we considered 240 hours as standard monthly working hours for our calculation.
Please see the below Article 19 from UAE labor law Federal Decree-Law No. (33) of 2021.
Article (19)
Overtime
- The employer may instruct the worker to work overtime over the normal working hours, provided that they do not exceed two hours per day. The worker may not be instructed to work for more than that period, except in accordance with the conditions and rules specified by the Implementing Regulation hereof. In all cases, the total working hours shall not exceed (144) one hundred and forty four hours every (3) three weeks.
- If the work conditions necessitate that the worker works for more than the normal working hours, the excess period shall represent overtime, for which the worker shall receive a wage equal to the wage corresponding to the normal working hours, which is calculated according to the basic wage plus an increase of not less than (25 %) twenty five percent of that wage.
- If the work conditions require that the worker works overtime between 10 pm and 4 am, the worker shall be entitled, regarding the overtime, to receive the wage prescribed for the normal working hours calculated according to the basic wage plus an increase of not less than (50%) fifty percent of that wage. The workers working based on shifts shall be excluded from this clause.
- If the circumstances require that the worker works on the weekend specified in the employment contract or work regulation, he shall be compensated with another day off or he shall be paid the wage of that day according to the wage established for normal working days, plus an increase of not less than (50%) fifty percent of the basic wage for that day.
- A worker shall not be instructed to work for more than two consecutive weekend days, except for day workers.
Disclaimer:
Whilst every effort has been made to ensure the accuracy of this information, HLB HAMT will not accept any liability arising out of errors or omissions. Please note that this blog is not all-inclusive. Our guidance is designed only to give general information on the issues/topics covered. It is subjected to change and not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.
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The six major elements for efficient Enterprise Risk Management
Ankita Krishnan
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In today’s transforming business landscape, businesses face new challenges and become more complicated. You can build good strategies for addressing risk if you have access to the most advanced Enterprise Risk Management (ERM) expertise.
As defined by COSO ERM Integrating with strategy and performance, Enterprise Risk Management (ERM) is about the culture, capabilities, and practices that organizations incorporate with strategic planning and utilize when they implement that tactic with the purpose of managing risk in creating, preserving, and realizing value.
The six elements of ERM are explained as below:
- Establishing a Governance Framework: For ERM to be successful, it is required to first establish a well-defined governance framework. There should be a senior executive to head the ERM function. A risk committee should be established to monitor ERM activities. The committee should have a charter listing the objectives, frequency of meetings, reports to be presented, etc. In addition, there should be policy and procedure documents that serve as guiding practices.
- Conduct ERA: After establishing a governance framework, the next step is to conduct an Enterprise-wide Risk Assessment (ERA). ERA is the process whereby risks are identified, assessed, prioritized, and categorized. Adequate care must be taken to limit the number of risks to only the key ones. Key risks are the ones that pose a threat to the efficient and effective achievement of organizational strategies.
- Identify Risk Owners/Key Stakeholders: Once all key risks in relation to the strategy are identified, each key risk should be assigned a risk owner. A risk owner can be a department head or a process owner and is responsible for addressing their risks and reporting their progress.
- Create Risk Mitigation Plans: Risk owners should create risk mitigation plans to help bring residual risk within the organization’s risk appetite. These plans should have an agreed target date for implementation.
- Risk Committee Meetings: The Risk Committee should meet at periodic intervals to monitor ERM functions as defined in the charter. Risk owners can provide the status of risk mitigation plans, which will help the committee members gauge the pace at which risks are being mitigated.
- Communication/Reporting: The Risk Committee should provide status to the board on a quarterly basis. Based on this, the BOD can ensure the risk appetite set by management is not too aggressive. In addition, employees should be made aware of their role in contributing to ERM.
Implementing ERM might look like a very daunting task at first. Initially, organizations might need the help of internal auditors to do the first ERA. There might not be an owner or framework in place. Keeping it simple is always recommended for the first year of ERM implementation. As the ERM passes to the developing stage, organizations see recurring updates to ERA based on emerging risks identified. Risk owners are regularly providing updates on risk mitigation plans and the BOD is actively involved in understanding the status.
Finally, as the ERM moves to an optimized stage, organizations see that the ERM is aligned with strategy and risks are measured using Key Risk Indicators (KRIs) and Key Performance Indicators (KPIs). It takes time to bring an ERM up to an optimized stage. The more complicated or mature the organization, the more robust the ERM process should also become.
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