Business changes coming to the UAE25 January 2018 Category:
UAE Company Setup
You may have heard about some of the changes occurring in the UAE at the moment with respect to the so-called “Certificate of Good Conduct” and the E-Channel Immigration System. As always, Virtuzone aims to get this important information to you as quickly and as clearly as possible so that you can understand what impact it will be having on your current business or any business you plan to set up in the near future.
To this end we have put together a short Q&A that should help you understand the basics behind these upcoming changes. Please read on.
Certificate of Good Conduct
1. What is the Certificate of Good Conduct?
Beginning on February 4, 2018, a new law is being introduced to the UAE’s visa system which will require incoming expat workers to prove that they do not have a criminal record in their country of origin or any other countries in which they have resided over the past five years. If the applicant has lived in multiple countries over the past five years, a Certificate of Good Conduct must be produced for each country. This new rule is applicable to all UAE jurisdictions. For more information please visit the Official Portal of the UAE Government here.
2. Who must apply for a Certificate of Good Conduct?
UAE nationals born and raised in the country do not need to apply. However, any incoming worker – including domestic staff – who has spent time in their home country (or any other) prior to applying for a job in the UAE must obtain a Certificate of Good Conduct. The only people who are exempt are students, sponsored family members, tourists, and those on medical visas.
3. How does one obtain a Certificate of Good Conduct?
A Certificate of Good Conduct must be obtained directly from the country of origin of the applicant – or the country where they have been living for the past five years. Once obtained, the certificate must be legalised and ratified by the UAE Ministry of Foreign Affairs. For more information on the steps required, please check out this article by The National.
4. Will the Certificate of Good Conduct requirement bring positive changes?
Indeed. The new rules underline the UAE’s commitment to keeping our country safe and secure. High levels of criminal and security screening for residents help ensure that the ethical quality of expats residing and working here is always of the highest possible level, which in turn helps to keep crime and related activities at low levels. A safe and secure UAE is a benefit to us all.
1. What is VAT?
VAT stands for “Value Added Tax”, and as of January 1, 2018 it was introduced to the UAE for the first time ever, at a low rate of 5%. The UAE is still the most investment – and business-friendly country in the world, with 0% income tax and 0% corporate tax. The UAE is central to the majority of the world’s trading routes and continues to make doing business here as easy as possible.
2. What does VAT mean for your company?
VAT has been implemented successfully throughout the UAE and has had very few issues with implementation and there is no reason why this trend will not continue.
The major requirement for businesses in the region is to ensure all invoices are clear and thorough so VAT can continue to be collected efficiently. Business owners should also oversee the company audit once per year if you are generating income above the specified threshold – a task that most savvy business-oriented people already carry out.
3. What is the financial threshold to be aware of?
Companies earning above AED 187,500 per year may opt to register for VAT, and if they are generating income above AED 375,000 VAT registration is mandatory.
Note that even if you are not required to register, experts suggest that It is better to do so as you are then able to claim VAT back from the government on qualified business spending.
4. What benefits will VAT bring?
A robust and accountable VAT system will bring huge benefits to the UAE. The boost to the government coffers will help create a more stable economy and go towards improving the country’s infrastructure – something that every business in the UAE can benefit from. Standardised, VAT-compliant accounting systems are also likely to improve business efficiency in the long run.
These changes will also lead to a new level of prestige for the UAE on the world stage. The UAE is being removed from the blacklisted countries in regards to money laundering, and the business environment is set to skyrocket as more and more foreign companies expand their interest and investment in the UAE – especially in the lead up to Expo 2020.
E-Channel Immigration System
1. What is the E-Channel Immigration System?
The E-Channel Immigration System is a unified immigration system that has been implemented by six out of the seven Emirates (Dubai has its own independent immigration system). Businesses and individuals can now apply for visas and other official documents through a single online portal. It is known in Arabic as the “Tahaluf” system and it removes the need for hard copy documents, ensuring that all applications are processed in a much more efficient manner with improved integration across the Emirates.
2. How do I register?
To use the E-Channel Immigration System you must first register on the E-Channels website.
3. What are the costs to individual companies?
Registration varies depending on the Emirate and costs approximately AED 7,500 with a refundable deposit component of approximately AED 5,000.
4. What does this mean for my company?
Your license application, visa, amendments, upgrades, renewals and other associated activities will now, according to the authorities, be processed much faster, ensuring you have all the necessary tools to drive your business to new levels of success. By 2018, the E-Channel system is expected to have reduced the need for in-person visits to government centres by up to 80%, reducing the burden on official departments and making for a much-improved service for all.