November 2020 / United Arab Emirates

UAE allows 100% ownership of businesses for foreign nationals from December 1, 2020. The new presidential decree announced on Monday 23 November amends the Federal Law No. 2 of 2015 on Commercial Companies (“Companies Law”), superseding the Decree Law No. 19 of 2018 on Foreign Direct Investment. It annuls the requirement for commercial companies to have a major Emirati shareholder (or agent), and thus providing full foreign ownership of onshore companies.

Under the new rules:

• Local authorities can set specific targets for Emiratis in capital allocation and boards of directors of companies. They can also approve requests to establish companies, except for joint stock companies.
• Firms wishing to become joint stock companies can now sell as much as 70% through initial public offerings, instead of the current 30%.

The legal changes come on the heels of reforms to personal status and family laws announced earlier this month that decriminalized cohabitation among unmarried couples and removed a requirement to obtain a license to consume alcohol as part of an effort to remain attractive to foreign expertise and investment.

Abolishing the need for local partners in onshore companies will ultimately pressure the business model of dozens of free zones across the UAE to help satisfy foreign companies unable to work onshore.

Further official updates detailing the implementation phase of new law will come up soon.

You can read more, here:

https://gulfnews.com/business/uae-allows-100-ownership-of-businesses-for-foreign-nationals-from-december-1-2020-1.1606134333609

https://www.bloomberg.com/news/articles/2020-11-23/uae-abolishes-requirement-for-local-partners-in-firms-national

The United Arab Emirates Ministry of Finance (UAE MoF) has confirmed the Economic Substance Regulations (ESR) filing requirements and deadlines.

The UAE MoF provides that the deadline for filing the ESR notification and the ESR report is 31 December 2020. Filing must be done through the UAE MoF portal, which will be made available in the first week of December 2020.

Licensees that file their notification to a regulatory authority before the UAE MoF portal goes lives must resubmit their notification. Failure to submit the notification will be subject to a penalty of AED 20,000. Failure to submit the ESR report will be subject to a penalty of AED 50,000.

The UAE MOF issued the ESR notice confirming the filing requirements and deadlines on 3 November 2020. The ESR have been prescribed under Cabinet Resolution No 57 of 2020 concerning Economic Substance Regulations and Ministerial Decision No. 100 of 2020.

Since the government of the United Arab Emirates (UAE) launched the mGovernment initiative in 2013, it has been spearheading digital transformation by integrating and coordinating between different government entities and other sectors to achieve paperless government and provide faster, easier and safer channels for round-the-clock digital public services. UAE PASS, the country’s national digital identity and digital signature solution, is one such service. Inspired by Vision 2021, a plan that foresees high quality of life built on world-class public infrastructure, UAE PASS also forms part of the UAE’s Centennial 2071, another plan that aims to build a future-focused government. Launched in 2018 during GITEX Technology Week as a joint initiative between the Telecommunications Regulatory Authority (TRA), Abu Dhabi Digital Authority and Smart Dubai, UAE PASS is also supported by key strategic partners including the Federal Authority for Identity & Citizenship, the Dubai Electronic Security Center, and the digital authorities of all seven emirates of the UAE. What is UAE PASS? UAE PASS is the United Arab Emirates’ national digital identity and digital signature solution. The service is free and is available for citizens and residents of the UAE. Individuals can start using it after registering on the UAE PASS mobile app, which is available on the App Store and Google Play.

The app enables all registered individuals to access more than 5,000 government, semi-government and private sector entities’ services through their respective websites and apps, and allows them to digitally sign and authenticate documents and transactions.

Citizens and residents can use UAE PASS to identify themselves to government or private sector service providers across the UAE through smartphone-based authentication. The application also enables users to request a digital version of official documents issued in their name. An improved user experience Before the launch of UAE PASS, citizens and residents needed to go to each entity separately to verify their identity and had to be physically present together with a government official to complete transactions and sign documents. With UAE pass, users only need to log in once without having to register for each entity separately.

Officially, UAE PASS digital signatures are valid and equivalent to handwritten signatures.

The adoption of UAE PASS and digital signatures supported the UAE government’s launch of the Bashr eService, through which businesses can be registered in the UAE in just 15 minutes. Additionally, by eliminating paper transactions and cutting on fuel trips to get these administrative services done, UAE PASS contributes to reduced CO2 emissions. State-of-the-art security The entire UAE PASS infrastructure relies on a secure environment with various security measures put in place to protect users’ identities and signatures. UAE PASS relies on national public key infrastructure (PKI) that utilizes industry standard signing certificates. Secure storage of the keys is done through secure element (SE) and trusted execution environment (TEE) on the user’s mobile phone itself, as well as through a cloud-based hardware security module (HSM). As a testament to the app’s security, several entities in the UAE financial sector use UAE PASS not only as an authentication method, but also as a blockchain-based document sharing platform that serves to onboard new customers and facilitate know your customer (KYC) updates. Enabling the opening of bank accounts without having to visit service centers physically was a welcome advancement especially during the COVID-19 pandemic. Uninterrupted service delivery amid COVID-19 Early in 2020, when the first wave of COVID-19 emerged in the United Arab Emirates, the government relied on UAE PASS to continue delivering public services to socially-distancing residents during the lockdown. Before the emergence of COVID-19, the number of UAE PASS verified accounts was 79,000 and the rate of user satisfaction with UAE Pass service was 70 per cent. After the pandemic hit, 30 additional partners were integrated into UAE PASS.

As of September 2020, the number of users increased to 243,970 verified accounts.

UAE PASS continues to serve as a stepping stone in the United Arab Emirates’ secure digital transformation journey.

Source:

https://www.itu.int/en/myitu/News/2020/11/24/12/13/UAE-Pass-digital-identity-United-Arab-Emirates-digital-transformation

The UAE Federal Tax Authority (FTA) has amended the list of services and fees it is providing to taxpayers. Amongst the services provided the issuance of the tax residence certificate is now within its competency (previously issued by UAE Ministry of Finance).

The list of services and the corresponding fees are provided as follows:

The UAE Federal Tax Authorities (FTA) clarified the registration and requests processes regarding the Tax Residence and Commercial Activities Certificates.

The FTA has issued a Tax Certificate User Guide informing individuals or legal persons requiring these certificates that they should register within the FTA portal and submit the related certificate request. The FTA will review the requests as well as the information provided and issue certificates accordingly.

The FTA was appointed to issue the Tax Residence as well as the Commercial Activities Certificates in accordance with the UAE Ministry of Finance decision.

The Guide was published on the FTA's official website.