The growing landscape of opportunities and entryway for businesses to U.A.E

The U.A.E. business landscape witnessed various progressive decisions recently, which hold the promise to bring positive changes in the investor confidence, transparency & ease of doing business within the nation. These recent updates include:

A new decree was announced by the U.A.E. government, issued by the President of the U.A.E., His Highness Sheikh Khalifa bin Zayed Al Nahyan. This Decree is set to create new rules in terms of ownership for commercial organizations within the U.A.E. Earlier; it was legally permissible for foreign investors to only own 49% of the shares of any ‘Onshore’ firm. Due to the rise in demand of foreign investment inflow, the U.A.E. government is working towards relaxing laws on foreign investments. Which is why the U.A.E. has now side-lined the 2015 law that required the U.A.E. partners to hold majority share. More firms will therefore show an inclination towards investing in this region. This Decree is expected to come into effect from December 1st 2020. This holds the scope to open new opportunities & potential with U.A.E. from private equity firms because of improved ease of business. This Decree overhauls the previous FDI No.19 of 2018 and now allows 100% foreign ownership that will be done through an approval process. This, however, will not be applicable to critical sectors such as oil & gas firms, utilities and transport-related sectors due to their strategic importance.

Diving into Abraham Accords Peace Agreement The Abraham Accords Peace Agreement comes as a diplomatic move that promises to strengthen relationships between Israel & U.A.E. This was an initial diplomatic move between the U.S, Israel and the United Arab Emirates that was agreed upon on August 13th 2020. This approval was issued by the Israeli cabinet on October 12th. Thus working positively towards smoothening the strained business relationships in the past. It also opens a new chapter for the nations in terms of economic upliftment. For instance, Israel’s technological prowess can be beneficial to U.A.E. too.

Exploring Economic Substance regulation (E.S.R.) Within the Economic Substance regulation (E.S.R.), has introduced added compliances on some U.A.E. organizations. This regulation only strengthens the trust factor on U.A.E. region when it comes to doing business. It is expected that the firms that come under the ‘Relevant Activities’ section work towards maintaining a reputed economic presence. With this new regulation, U.A.E. is working towards being a financial hotspot while being in line with the international standards defined by the E.U. & OECD. A positive step for U.A.E. is their removal from E.U.’s blacklist.

How does the CbC reporting work? When it comes to enabling financial freedom for foreign firms, transparency becomes an important factor for U.A.E. Which is why with the CbC reporting the taxpayers will have to extend all information on revenues, loss, profits and pay global taxes

Simplifying businesses with ultimate beneficial owners (U.B.O.) In a bid to improve relations and the inflow of global firms, the right regulations must be in place. The U.A.E. cabinet regulated the need to keep records of the list of partners, shareholders and ultimate beneficial owners etc. with the appropriate representative or U.A.E. authority (Registrar). The Ultimate Beneficial Owner regulations require to submit a necessary list of partners, shareholders and UBO’s to submit it timely to the relevant authorities.

Views of the firm currently thriving in the U.A.E. Mr Harsh Patel (Founder & Global C.E.O. – Water and Shark) believes that both these decrees have created new inroads for businesses. "Our role as a consultant entails helping firms with their business expansion plans. With these new regulations, we foresee a wide range of firms across sectors exploring this opportunity. With the financial and legal hassles made easier, it will open new avenues of revenue generation of firms. It will also create more opportunities for everyone. Multinational firms can now freely execute their expansion plans and set foot into U.A.E. This move by the U.A.E. is truly a game-changer for an already thriving economy."

Water and Shark has been a well-renowned name in the Accounting, Tax & Legal consulting foray. Water & Shark is a multinational Accounting & Legal consulting firm that has branched out in more than eight countries. They use their local know-how and their global expertise to simplify business expansions and legal hassles for firms.

With these new concrete steps by the U.A.E., business is expected to thrive and expand further, thus raising the global interest of the world in the G.C.C. area.

The article has been authored by the well-experienced C.A. Harsh Patel, Chartered Accountant (India), FIPA (Australia), F.F.A. (U.K.), FIAB (U.K.), A.S.A. (Australia), Dipl. Global Governance, D.B.A. (h.c. U.S.A.).