Changing the Rules


Recent regulations are changing the business landscape in Dubai but still favor the Emirate's steady growth as a regional economic hub.

The World Bank Doing Business Report 2017 highlights the UAE as one of the 10 most-improved economies when it comes to making significant advancements in its business regulations, and the country is ranked 26th out of 190 countries for the ease of doing business. The UAE was recognized for improving one-stop shop procedures for doing business, including streamlining processes for construction permits and registering property. And within the UAE, Dubai has been the most successful at attracting investment. In 2016, FDI amounted to USD6.9 billion, maintaining Dubai’s ranking in seventh place among the top-10 global recipients. The Emirate furthermore attracted 247 new investment projects, ranking third behind London and Singapore for the year, according to the Dubai Investment Development Agency (Dubai FDI).

New Laws and Regulations

Change is on the horizon in Dubai as the Emirate looks to implement VAT and introduce new bankruptcy regulations. The new laws and regulations will clarify how things will work and hopefully increase confidence for investors in the long term. However, in the short term, the changing tax landscape and regulatory reform may have somewhat unpredictable cost increase effects on doing business.

The bankruptcy law provides a framework to allow Dubai to continuing performing as a major regional trading hub, including mechanisms for enforcing debt payments while still protecting businesses against creditors and increasing cooperation during restructuring processes. The insolvency law, officially Law No. 9 of 2016 on Bankruptcy, was published in the Official Gazette September 29, 2016 and came into effect in December 2016.
Dubai, and the UAE as a whole, will implement VAT in coordination with other GCC states, and the VAT will be introduced on January 1, 2018. According to information from the Ministry of Finance, the rate will be low and is likely to be at 5%. All businesses in the UAE will need to record their financial transactions and ensure that their financial records are accurate and up to date. Businesses that meet the minimum annual turnover requirement, as evidenced by their financial records, will be required to register for VAT. One extremely important advantage of VAT on the economy is the improvement of transparency and need for businesses to have well-kept accounts. The VAT will replace the custom duty.

As the VAT applies across the UAE, the Ministry of Finance is overseeing the implementation of the VAT, and businesses will able to register for VAT online.

Free Trade Zones (FTZs)

Despite the introduction of VAT, there are 27 FTZs, which allow companies to remain 100% foreign owned and operate with complete exemption from all import and export duties in Dubai. FTZ registration allows companies to open a foreign bank account and places no restrictions on the number or range of business activities. The only condition is that of a local partner that can underwrite the business and provide administrative support.

Jebel Ali Free Zone hosts more than 7,000 companies, including more than 150 of the Global Fortune 500 companies. Dubai Airport Free Zone is one of the region’s fasting growing FTZs, and lists more than 1,600 companies. FTZs continue to be the backbone of Dubai’s economy, stimulating diversification and FDI. The growing number of FTZs indicates the free trade opportunities and industries are expanding as the overall economy continues to diversify and new industries emerge.

Special Economic Zones

In addition to FTZs, Special Economic Zones (SEZs) are hot beds for SMEs, providing many of the same benefits as FTZs without being defined by a specific sector. Dubai’s SEZs include Dubai International Financial Centre, Dubai Multi Commodities Centre (DMCC), and Dubai Industrial City. In 2016, DMCC was named the Global Free Zone of the Year by the Financial Times’ fDi magazine, based on criteria such as outstanding YoY performance, growth and expansion plans, strong customer offering, and presence of high growth industries. DMCC hosts more than 12,700 member companies with more than 87,500 workers. It is a government entity established to position Dubai as the preferred destination for global commodities trade. Other SEZs include Knowledge Village, Dubai International Academic City, Dubai Media City, and Dubai Studio City.