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General and Legal News from the UAE – June 2021 № 2

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published on 15 June 2021 | reading time approx. 6 minutes

 

The following provides a brief overview about the latest business, economic and legal news from all around the United Arab Emirates and GCC region.

 

    

 

Saudization program Nitaqat gets overhaul with launch of second version

The main aim of the Nitaqat program is to increase the contribution of Saudi Nationals in the private sector industries in line with the governments Saudization efforts.
 
After having successfully launched its first version in 2011, the second version of the Nitaqat program has been launched. Along with several changes to the labor environment and system in the kingdom, main goal of the second version of Nitaqat is to establish 340,000 jobs by 2024 according to the Ministry of Human Resources and Social Development.
 
Within the first version, jobs within the kingdom have been localized to the maximum and a minimum wage for Saudi Nationals in the private sector has been set – initially starting at SR3000 ($800) and having been increased to SR4000.
 
The new version is structured around three new features:

  • Within the first feature the organizational stability of private sector companies should be increased within the next three years by means of a localization plan with a clear and transparent vision.
  • Secondly, the initial localization rates will be replaced by a calculative linear formula associated with the number of employees within a company. Aim is to balance the relationship between the required localization rate set by the initial Nitaqat program and the actual number of employees in the private sector.
  • Thirdly, the whole Nitaqat program shall be simplified in order to improve the end-customer experience by focusing on 32 choices of activities rather than initially 85.

 

The Ministry of Human Resources and Social Development worked closely with companies of both the public and private sector.

 

UAE restricts attendance of events to vaccinated people

From 6 June onwards, attendance to public events in the UAE is restricted to people who are vaccinated against the coronavirus as the UAE, who have one of the fastest vaccination rates in the world, opens up.
According to the National Crisis & Emergency Management Authority attendees at all public events have to also show proof of a negative PCR test not having been taken more than 48 hours prior to attendance of the event. Accepted vaccines in the UAE are vaccines from BioNTech Pfizer, Sinopharm and AstraZeneca Plc.

 

Saudi Arabia ends travel ban on 11 countries

As cases drop in more countries, Saudi Arabia has lifted the travel ban on 11 countries that up to 30 May were restricted to enter the kingdom and recently show steadiness in fighting the spread of the coronavirus. These countries include France, Germany, Ireland, Italy, Japan, Portugal, Sweden, Switzerland, the United Arab Emirates, the United Kingdom and the United States.
 
Passengers from these countries are welcome to enter the kingdom, however, they must adhere to the imposed quarantine regulations, which require arriving passengers to quarantine at an approved accommodation facility by the Ministry of Tourism for seven days providing a negative PCR test on the sixth day after arrival.
 
There are however still 13 countries on the so-called “red-list” of the kingdom’s Public Health Authority (PHA): Afghanistan, Armenia, Belarus, the Democratic Republic of Congo, India, Iran, Lebanon, Libya, Somalia, Syria, Turkey, Venezuela and Yemen.
 
All arriving passengers (Saudi Nationals are exempted) must provide a negative PCR test result not exceeding 72 hours prior to departure.

 

Update on the FTA VAT registration of Sole Establishments

The Federal Tax Authority (FTA) published Public Clarification VATP026 replacing PCVATP021 clarifying the VAT registration of “Sole Establishments”.
 
VATP026 states that a natural or legal person owning a number of sole establishments is required to obtain only one VAT registration for all its sole establishments, where it is not accepted to register any sole establishment distinctly for VAT.

In order to assess whether the VAT registration value threshold has been surpassed, the collective value of supplies generated by the legal person and its registered sole establishments has to be assessed.
 
After receiving cases where a legal person has previously received separate VAT registration, the FTA will inform the respective legal person of the corrective steps to be taken. However, no necessary steps or amendments to the VAT registration of previous VAT registrations have to be taken unless specifically directed by the FTA. All future VAT registration applications will have to adhere to the regulations outlined by VATP026.

 

Sheikh Hamdan bin Mohammed: Dubai supports the nation’s industries and promotes their exports in global markets

Dubai Exports has been renamed to “Dubai Industries & Exports” and has been tasked to further develop the UAE’s industrial sector by overseeing consolidating efforts to further diversify the UAE’s economy, initiatives such as “Operation 300bn” and the “Dubai Industrial Strategy 2030” aiming at turning Dubai into the hub for industries of the future and policies and initiatives for integrated industrial and economic development.
The industrial sector plays a major role in the diversification process of the country’s economy as well as in regard to Dubai’s integration with global markets. The Emirate put in place foreign investment friendly rules and regulations and a world-leading infrastructure.
 
67 initiatives are part of the Dubai Industrial Strategy all laying the foundation for sustainable, innovative-driven and knowledge-based industries in Dubai and aiming to add an estimated Dh160 million to the Emirate’s GDP by 2030. The main sectors identified by the Dubai Industrial Strategy 2030 are: Aerospace, Aluminum & Fabricated Metals, Food & Beverages, Machinery & Equipment, Maritime and Pharmaceuticals & Medical Equipment.
 
Moreover the UAE’s national strategy “Operation 300bn” aims at stimulating the country’s economy by achieving the ultimate goal of increasing the industrial sectors contribution to the national GDP from currently Dh133 billion to Dh300 billion by 2030. It is regarded as the Nation’s driving force of a sustainable economy.
Dubai Export Agency had already been tasked with overseeing the implementation of Dubai’s Industrial Strategy 2030 and supporting the manufacturing and export capacities of the Emirate. With the rebranding the agency into “Dubai Industries & Exports” the tasks of the agency have been taken further with a stronger emphasis on industrialization in Dubai and the UAE. The agency will therefore have to coordinate policies and regulations with various governmental authorities in order to achieve industrial development and promote national exports.
 
The Director General of Dubai Economy, HE Sami Al Qamzi, pointed out the competitive advantage of Dubai during this global pandemic and states that the Emirate with its crisis management has proven to continuously push for excellence where Dubai keeps connecting trade and people and sustains business activity, despite a slow-down of global economic activity.
 
In 2020, Dubai witnessed a total value of Dh167 billions of its industrial exports – that indicates a growth of 8 per cent to 2019.

Dubai Economy clarifies full ownership procedures for foreign investors

In accord with the Federal Law no.(26) of 2020 new guidelines outlining clarifications on full ownership of commercial companies by foreign investors have been issued by Dubai Economy.
 
As part of the UAE’s interest in diversifying its economy and creating a yet more (foreign) investor friendly business environment, the new guidelines are supportive of augmenting the UAE’s investment attractiveness. The decision will also support Dubai in holding its already high standing in international investment rankings relating to investor friendliness and ease of doing business where Dubai currently ranks 4th globally.
 
The new guidelines on foreign full ownership will be effective from 1 June onwards and simultaneously 100 per cent foreign ownership will be available for more than 1000 commercial and industrial activities, where economic activities with a strategic impact are still excluded from 100 per cent ownership outlined in Art.7 of Federal Law No.19 of 2018 regarding Foreign Direct Investment. On the negative list are activities in the Military Sector, the Banking & Finances Sector, Insurances, Haj & Umrah Services, Water & Electricity Services, Land & Air Transport Services amongst others.
 
Interested potential investors seeking full ownership of their companies can through the channels of “Dubai Economy” and the “Invest in Dubai” platform complete the required procedures, undertake changes to an existing MOA or obtain a license without having to visit a service center. The following services can be accessed through the platform: initial approvals, trade name reservations, issuance of instant licenses, Dubai SME licenses, Intelaq licenses, DED trader licenses, license renewals.
 
Within the first few days of the effectiveness of this decision a total of 59 investors have already profited from this new decision. Amongst these 59 companies that sought full ownership where companies in sectors including cars & trucks trading, contracting, general trade, gold, jewelry, pearls, luxury watches and foods trading. In the industrial sector investors sought full ownership in metals and construction, flooring, food building materials, water production and paints sector. Furthermore, 100 per cent ownership was sought for a hotel, a kindergarten as well as for a middle and elementary school.
 
Existing Business Licenses will remain unchanged and do not automatically disown the local partner of her/his shares, unless otherwise specified in a clause in the existing MoA with the local partner. Any changes that the foreign investor intends to undertake to an existing partnership with a local partner must be mutually agreed upon. It is also stated in the guidelines that no additional costs or guarantees are occurred and no further changes in capital required are mentioned.
 
From June 2021, the Sharjah Economic Development Department (SEDD) announces the 100 per cent full foreign ownership policy will be implanted in the Emirate as well. Branches of foreign companies no longer need an Emirati agent.

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