SLG Newsletter Oct 2018
Dear Friends and Clients,
Merkel resigns. The euro is weakening. Life in the UAE has become more expensive. We have to reach for the ceiling – and our host country is helping as much as possible.
The visas and entry visas have been defused. The Free Zones and Financial Centers in Abu Dhabi and Dubai offer incentives and discounts for start-ups. The deposit requirement for foreign workers can be avoided by using a cheap insurance.
Local banks finance real estate purchases by foreigners up to 50% of the value.
A lot is being done to keep investors on board.
Without giving any prognosis for the future, I believe that this area of the world still has great potential, as long as peace is secured locally.
According to the the Institute of Chartered Accountants in England and Wales (ICAEW), the UAE’s GDP is expected to accelerate to 2.6 percent growth in 2018 and to around 3.8 percent in 2019.
Nonetheless, diversifying is always a good piece of advice. The markets in the Far East welcome investment, and the gold rush in Cambodia, Laos, and Vietnam is fueled by fabulous returns. The rule of thumb is: Better not to have direct investment from Europe, better invest through a Singapore legal entity to exploit the bilateral contracts, tax benefits and good legal certainty in Singapore.
This infrastructure is not only for Singaporean companies, but is also recommended for everyone. The Singaporean Arbitration and Mediation Centers are world renowned.
In times like these, one thing is recommended: getting up from the armchair and gaining a better overview. Don’t become too comfortable with the argument: It is indeed worse but it still works. Market leaders like Nokia and Kodak both crashed because of this philosophy. Look out for where or how it can be even better.
Business Owners’ Will – easy made succession planning for businesses in Dubai & RAK
The DIFC Wills Service Centre has launched a “Business Owners Will”, which gives the owners and shareholders the option of determining who will own and run their businesses if they pass away.
This shall help companies take advantage of the new rules on foreign ownership that are set to take effect in 2019. Shareholdings held by non-Muslims in any on-shore or free zone company can now be transferred to the owner’s chosen beneficiaries, provided the company is established in either Dubai or Ras Al Khaimah and through the Business Owners Will. This new initiative offers reassurance to management teams as well as surviving shareholders that a succession plan is in place and that the business will be able to continue as normal in the event of the death of a shareholder.
The Business Owners Will is open to either UAE residents or overseas investors as long as they own business in Dubai or Ras Al Khaimah. If you own a company in another emirate or even outside the UAE, you can establish a holding company in Dubai or RAK and transfer the shares of your existing company into this holding. Then you also can take advantage in this new opportunity.
Please do not hesitate to contact us if you have additional questions in this matter.
Licenses for tech startups in ADGM
In September the Abu Dhabi Global Market (ADGM) launched a commercial license for technology startups at a nominal cost of AED 2,570. These new licenses are highly flexible according to ADGM and offer four residential visas and as well meets the requirement for a registered address.
ADGM stated further that the startup license shall help companies to begin with seed funding and then progress on to an IPO (initial public offering) in a reputable legal framework and robust regulatory regime where the startups can access funds and meet bankers, family offices and advisors.
The other major financial center, Dubai International Financial Centre (DIFC), is also promoting financial technology startups through its Fintech Hive programme which is the first financial technology accelerator in the region. According to DIFC, the accelerator invites startups from the region and around the world to pitch their ideas to join a programme that grants them access to and feedback from potential clients and investors.
Furthermore, ADGM has launched a Professional Services Support programme in partnership with several local and international advisers, who shall help entrepreneurs from all sectors build their business skills and enhance the invest ability and scalability of their ventures.
Expat retirees are allowed to stay longer in the UAE
The Cabinet will allow expat retirees to stay in the country for a five year period. Expat retirees over the age of 55 will be provided with the “retirement visa” under the following conditions:
– The expat should have investment in a property worth AED 2 million or,
– have savings of no less than AED 1 million or,
– have an active income not less than AED 20,000 per month.
– The law will come into effect from 2019.
New visa rules for UAE visitors
Since October 21st, 2018 the Authority of Foreigners Affairs has changed some rules for visitors and tourists. Both categories can now apply for a new visa after the expiry of the first one without the need to leave the country. All types of visit and tourist visas, regardless of their validity, can be extended twice for 30 days, according to Brigadier Saeed Rakan Al Rashdi acting Director of Foreigners Affairs and Ports. The Authority will charge AED 600 for each extension and those who overstay their visas will have to pay a AED 100 fine for each day of their overstay. Applications can be submitted online via the e-channel, Tas’heel offices and residency departments.
Employment visa: change in bank guarantees for workers
Private companies in the UAE are now able to opt for an AED 60 insurance scheme to recruit workers instead of depositing AED 3,000 per worker as a bank guarantee. The Ministry of Human Resources and Emiratisation (MoHRE) has been implementing the low-cost insurance scheme since mid-October. The issuance of employee insurance was begun on October 15.
The bank guarantees, worth AED 14 billion, will also be disbursed when companies opt for the insurance scheme, MoHRE said, but the reimbursement will not apply to companies that have committed salary-related violations six months before renewing work permits. The scheme will cover up to AED 20,000 per worker and it will cover worker’s end of service benefits, vacation and overtime allowances, unpaid wages, return air tickets and work injuries.
According to MoHRE, this decision will lower the cost of doing business in the country and secures workers’ rights and salaries. Furthermore, the system will reduce the financial burden on companies by lowering the cost of recruitment. MoHRE signed an agreement with the Dubai Insurance Company, which will issue the policies electronically through a group of insurance firms.
Dubai: Check online if you have a travel ban or financial case
Since September, Dubai residents can check their criminal status in financial cases online with a free-of-charge service on the website of the Dubai Police. With this service, the residents will cut time and effort in getting information regarding any cases against them. In order to use the service the resident needs a valid Emirates ID.
How to check if you have a travel ban:
– Visit www.dubaipolice.gov.ae or download the Dubai Police app
– Click on “Services” link
– Click on “Individuals”
– Search for “criminal status of financial cases”
– Enter the service using the Emirates ID
– The new service provided by the Dubai Police is part of their strategy in implementing smart and unique services to the public for better customer service.
Al Baraka Banking Group launches Islamic digital bank in Germany
Bahrain’s Al Baraka Banking Group, which has operations in the Middle East, Asia and Africa, has launched a digital banking service in Germany with plans to offer its interest-free financial services across Europe through its Turkish subsidiary Albaraka Turk.
According to Albaraka Turk’s General Manager Meliksah Utku, the digital banking service would be the main strategy for penetrating the European market, including an estimated 20 million Muslims living on the continent. The Turkish lender Kuveyt Turk launched Germany’s first full-fledged Islamic bank in 2015, but Islamic financing has been slow to gain a foothold in mainland Europe due to a fragmented market and lack of industry-specific regulations.
Until now, Britain remains Europe’s main Islamic finance hub, with Luxembourg and Ireland also hosting Islamic bonds and Islamic investment funds respectively.
Emirates Islamic launches home loans for non-residents
In October Emirates Islamic announced the launch of home finance solutions to help non-residents purchase property in the UAE. Investors residing in Kuwait, Oman, Bahrain, India, the United Kingdom, China or Russia can now receive financing for up to 50% of their UAE property value for a 25-year tenure, they said in a statement. “Through initiatives such as the Dubai Land Department’s Dubai Property Show and the availability of financing options, overseas investors will find it much easier to realise their dreams of purchasing a property in Dubai, since Dubai still remains one of the world’s top destinations for second-home owners and investors alike.” said Wasim Saifi, deputy CEO of Consumer Banking and Wealth Management at Emirates Islamic.
And, he added, the launch is aligned with the bank’s strategy to expand its retail banking proposition.
Bahrain has approved a draft bill for VAT implementation on New Year’s day in 2019 and announces the draft VAT law in Arabic
It has been decided that a 5% VAT would be imposed in Bahrain, which is the standard rate and is as per the unified GCC VAT Agreement, which is going to be effective from 1 January 2019, and will place Bahrain at the third spot in the GCC countries, after the UAE and KSA, to have implemented VAT. As per the draft VAT law, the VAT regulations are going to be printed within 15 days of the effective date of the law (i.e. by 15 January 2019) and would list out the detailed applications of this law.
News from the Far East
CAMBODIA: NEW SOLAR PARK PROJECT RECEIVES APPROVAL FROM THE COUNCIL OF MINISTERS
The Council of Ministers of Cambodia has recently approved the long-awaited project for the construction of a 60MW solar power plant. This is the first part of a 100MW project to be financed by the Asian Development Bank (“ADB”), which, according to the pre-feasibility study, will prove to not only be viable, but will also contribute to national grid stability and an increase in energy access.
After the success of the first industrial-scale 10MW solar power plant in Bavet, Electricite du Cambodge (“EDC”) has been working closely with the ADB to move to the next stage of including renewable energy in the country’s power generation mix. Under the new project, we understand that a build-own-and-operate contract will be awarded under a public-private partnership (“PPP”) scheme. EDC would purchase the electricity under a Power Purchase Agreement at an expected tariff of seven to nine cents per kWh.
Government launches Myanmar Law Information website
The Union Attorney General’s Office has launched the Myanmar Law Information System aimed at providing the public with easier access to information and details about the laws of the country.
Union Attorney General U Tun Tun Oo said the website will host the Burma Code Volumes 1 to 13, which are laws enacted from 1955 until now, as well as rules, regulations, bylaws, orders, instructions, procedures and subordinate legislation including laws and rules enacted by state and region Hluttaws. “The public can now easily get legal information via their computers or mobile phones. This system will promote legal knowledge and help law enforcement,” he said.
The website will also enable those who access it to see international laws and conventions when Myanmar is a signatory. The project was implemented in cooperation with the South Korean government.
Singapore is leader in mediation and arbitration
Singapore has positioned itself as an international dispute resolution hub in Asia by providing a complete suite of services for international arbitration, namely: the Singapore International Arbitration Centre (SIAC), the Singapore International Commercial Court (SICC) and the Singapore International Mediation Centre (SIMC). SICC and SIMC build on Singapore’s reputation for quality legal services, including its status as the most preferred seat of arbitration in Asia and the third most preferred seat of arbitration in the world. They bring more options to parties facing cross-border disputes who need tailored solutions that meet their needs. Mediation, in particular, is a key component of Singapore’s ambitions as it complements both arbitration and litigation by offering an avenue for parties to amicably solve their problems with the aid of a professional facilitator. It can help parties fast-track their way to obtaining an enforceable arbitral award or order of court if used in conjunction with other modes of dispute resolution.