Managing your business in the UAE: Your guide to success

Corporate secretarial support is an important aspect of governance in the UAE, though the exact requirement depends on the jurisdiction and business structure. For example, under the UAE Commercial Companies Law (Federal Decree-Law No. 32 of 2021), a public joint stock company (PJSC) must appoint a company secretary who is not a board member.

When appointing a corporate secretary, the individual must be knowledgeable in UAE laws and regulations to guide the board on compliance matters. Ideally proficient in both English and Arabic, they are crucial for assisting with internal corporate governance functions such as managing board resolutions, maintaining statutory registers and filing annual returns with the relevant authorities. It’s therefore best practice to have a designated secretary to keep your company records up to date.

Most UAE companies are required to maintain a register of their ultimate beneficial owners (UBO) and disclose this information to the relevant authorities. The UBO disclosure requirements fall under Cabinet Decision No.109/2023 by the Ministry of Economy (MOE).

A UBO is typically defined as an individual holding 25% or more of the company shares or voting rights, or who exercises control through other means. The UBO register must be filed with the relevant registry within 60 days after incorporation. Non-compliance may result in regulatory fines.

Should there be any change in your beneficial ownership, you must notify the registry within 15 days of that change. Note that while authorities collect UBO information, it will not be publicly available.

Many countries, including the UAE, are taking increased measures to mitigate illicit financial flows. The country’s anti-money laundering and counter-terrorist financing (AML/CFT) framework applies to financial institutions and a category of businesses known as designated non-financial businesses and professions (DNFBPs). DNFBPs include real estate brokers, precious metals dealers, auditors and accountants, corporate service providers and others that are seen as vulnerable to money laundering risks.

If you are a reporting entity, you will need to have proper customer due diligence (CDD) processes. This means confirming each customer’s identity, assessing their risk profile and conducting enhanced due diligence for high-risk clients such as politically exposed persons (PEPs).

Transactions must also be monitored on an ongoing basis to detect unusual patterns. Should there be signs of money laundering or terrorism financing, the UAE’s Financial Intelligence Unit (FIU) will need to be informed. To maintain regulatory compliance, records of customer information, transaction data and due diligence must be kept for at least five years from the date of completion of the transaction or relationship.

To align with global tax transparency standards, the UAE requires large multinational enterprises (MNEs) to file a country by country (CbC) report. The rules apply to any MNE group whose aggregate consolidated revenue in the preceding financial year equals or exceeds AED 3.15 billion. This threshold is in line with the Organisation for Economic Co-operation and Development (OECD) model.

If you are a UAE tax resident and ultimate parent of an MNE, you must submit a CbC report to the Ministry of Finance (MoF). The report will need to provide breakdowns of revenue, profits and other indicators for each jurisdiction where the group operates. The filing deadline is within 12 months from the end of your group’s financial year. UAE entities may have CbC obligations if they are the ultimate parent entity (UPE) or appointed as a surrogate parent entity (SPE).

Additionally, certain local filing requirements can arise if the foreign parent is in a non-exchange jurisdiction. For more information, you may refer to Cabinet Resolution No. 44 of 2020.

Additionally, data privacy is another key regulatory compliance area for your business. In January 2022, the UAE enacted its first comprehensive data protection law: Federal Decree-Law No. 45 of 2021 on the Protection of Personal Data (PDPL). PDPL Executive Regulations are now in force and certain exemptions apply (e.g., healthcare, public entities).

This law applies broadly to personal data processing inside or outside the UAE if it involves UAE residents, and to any controller/processor in the UAE regardless of where the data subjects reside.

If you’re operating a business within the UAE free zones, you will need to check if there are additional data protection laws. The DIFC and the Abu Dhabi Global Market (ADGM) also have longstanding privacy regimes that free zone entities must adhere to and may require DPO registration.

When hiring and relocating foreign employees to the UAE, you will need to manage the visa process. Every expatriate employee in the UAE must have a valid residence visa and work permit sponsored by their employer or a relevant sponsor.

The country’s residency framework has evolved in recent years, with various types of visas available for skilled professionals, investors, freelancers and business owners. The standard work visa is the common employer-sponsored visa for private- and public-sector staff. Beyond that, the UAE has introduced long-term visas such as the Golden visa and Green visa to cater to different interests.

The UAE has made Emiratisation a key part of its workforce plans, aiming for Emirati citizens to take up 10% of skilled jobs in the private sector. The programme started in 2022 by applying to mainland companies with 50 or more staff. A year later, the rules were widened to include firms operating in specific targeted sectors with 20 to 49 employees, showing the government’s push to involve more businesses in hiring local talent.

For international companies, the rules depend on where you set up. Mainland businesses must follow Emiratisation quotas, so planning ahead for recruitment and training is essential. Companies based in free zones, on the other hand, are not usually required to meet these targets.

Introduced by the Ministry of Human Resources and Emiratisation (MoHRE), the Wages Protection System (WPS) is an electronic salary transfer system that requires employers to pay wages through approved financial channels.

When onboarding new staff, you will need to register them in the WPS within 30 days of their start date. Salaries must be remitted at least once a month via WPS, either in UAE dirhams or the agreed currency. This must be done no later than 15 days from the stated payday in the contract.

The UAE is strict about on-time salary payments and has systems to monitor compliance, with penalties for employers who pay late. As such, you will need to abide by the WPS requirements and maintain accurate payroll records. Free zones have largely adopted similar requirements for their companies.

Besides visas and payroll, UAE labour compliance covers several other areas that you will need to manage, including managing employee relations and developing HR policies that align with UAE labour law. To prevent disputes and legal issues, you will need to comply with regulations that apply to your employees’ working hours, leave entitlements, end-of-service benefits and termination procedures.

Inadequate financial planning, poor budgeting and underestimation of costs are common pitfalls leading to cash flow constraints and financial instability. Implementing robust financial management practices, including accurate bookkeeping, regular financial reporting and proactive cash flow management, is thus essential. Diversifying clients and revenue streams can also help mitigate risks associated with reliance on a few key accounts.

Overlooking cultural nuances, local customs and consumer behaviour can impact a business' brand identity and reputation. As you manage your operations in the UAE, investing in cultural awareness training for staff and adapting business strategies can help you fully align with local customs and preferences. Building relationships within the local community can also be useful for market penetration.

The UAE's business culture places a strong emphasis on personal connections and building trust. Poor networking and failure to cultivate strong relationships with local partners, clients and government entities can hinder business development and access to opportunities. To establish a strong presence, you can consider participating in industry events and engage with local business councils to foster long-term collaborations.

Failing to adhere to the UAE's strict legal and regulatory framework, such as visa regulations, VAT and corporate tax laws, can result in substantial fines, legal issues, reputational damage and even business closure. Delaying the renewal of trade licences and overlooking crucial compliance obligations are common oversights that can lead to penalties.

To avoid this, you’ll need to stay informed about regulatory changes through reliable sources. You can also seek expert advice from compliance professionals for support in maintaining your legal standing.