Dear Friends and Clients,
Have you already decided to give up your residence in Europe? We have hardly ever experienced such a rush to residence changes. Perhaps the weather, the lockdowns and the Austrian tax reform are contributing to this.
The Austrian tax reform is casting its shadow. The reduction of the corporate income tax, first by 1% and then by 2%, i.e. ultimately to 23% instead of 25%, is certainly welcome. But even at 23%, Austria is still among the leaders, especially in comparison with our Eastern neighbours. Hungary, for example, has a tax rate of 9%, Czech Republic 15-19%, and Slovakia 21%. Not to mention Singapore with 17%, most other ASEAN countries at 20% and the UAE with its famous zero percent corporate tax rate.
The changes regarding trades with virtual currencies, such as Bitcoin etc., seems more serious. Here, the tax reform lumps these currencies together with securities so that profits from buying and selling are now subject to capital gains tax. The one-year retention period is dropped as well, which means that gains from securities or virtual currencies purchased for longer than one year are also subject to tax. These changes come into force on 28 February 2022. Many Austrian owners of such currencies have already decided to protect their deposits by transferring them to foreign corporations and to continue to earn tax-free profits by taking advantage of intercompany privileges or re-investments.
Hydrogen might become the new oil. As the worldwide demand increases, the UAE wants to position itself as the main producer of hydrogen in the Gulf region. In recent months the UAE has entered into several bilateral agreements with European countries such as Germany, France, and Austria. As the political agenda is set, more and more European energy, manufacturing, and tech businesses are moving into the market.
In the UAE, the legislative machine continues to run, bringing us a new labour law with significant changes. Details can be found in the newsletter below. Meanwhile, the UAE has become more employee-friendly than many social democratic-oriented countries in the West.
The weekend regulation for government employees is somewhat surprising. A 6-day week has now become a 4.5-day week, and just 4 days in Sharjah. It is not yet certain to what extent the private sector will follow.
Among the ASEAN countries, Cambodia is now trying to achieve a pioneering role in investor friendliness. With Myanmar currently a tough target for investors, Cambodia is gearing up with tax incentives, visa facilitation for foreigners, as well as an extremely tolerant and efficient banking system. After forming a company in Cambodia it merely takes 24 hours to open a bank account, likewise in Thailand.
As the year draws to a close, may I, on behalf of our entire team in all offices, wish our friends and clients a happy holiday season and a prosperous, healthy and happy New Year.
Our offices are also available over the holidays should you need urgent legal advice.
Yours
Theodor Strohal
Client advisory for ESR Filing
Companies are advised concerning the filing deadlines for the financial year end 31 December 2020. ESR Report must be submitted on or before the financial year end 31 December 2021. For entities that are within scope, the ESR Report shall be filed via the Ministry of Finance (MOF) portal. The following table outlines the upcoming deadlines for a selection of Fiscal Year ends:
| Fiscal year end | Notification filing deadline | Report filing deadline |
| 31 December 2020 | 30 June 2021 | 31 December 2021 |
| 31 March 2021 | 30 September 2021 | 31 March 2022 |
| 30 June 2021 | 31 December 2021 | 30 December 2022 |
| 30 September 2021 | 31 March 2022 | 30 September 2022 |
| 31 December 2021 | 30 June 2022 | 31 December 2022 |
Dubai starts issuance of 5-year multi-entry visa for MNC employees
The General Directorate of Residency and Foreign Affairs (GDFRA) and Department of Economy and Tourism (DET) in Dubai has launched a five-year multi-entry visa for multinational employees. The new visa scheme will allow MNC employees to visit and stay in the UAE for 90 days, with the option to extend their stay for another 90 days.
Federal Decree Law No. 33 of 2021 – regulation of labour relations in private sector
The UAE has issued Federal Decree Law No. 33 of 2021 on 16 November to replace UAE Federal Labour Law 8 of 1980. As stated by the Minister of Human Resources and Emiratisation, the new law comes as part of the UAE Government’s efforts to create a flexible and competitive business environment as the nation prepares for its journey towards the next 50 years. Federal Labour Law 8 of 1980 is scheduled to end from the date the new decree-law comes into effect on 2 February 2022.
We have summarized a few of the significant changes of the new law:
Workplace harassment, bullying, and discrimination
The employer may not use any means that would force or threaten the worker with any penalty, force the worker to work or provide service to the employer against the worker’s will. Sexual harassment, bullying or any form of verbal, physical or psychological violence against a worker by the employer, his/her superiors, and colleagues is not allowed.
All forms of discriminations based on race, color, sex, religion, national or social origin or disability is also prohibited. The new law also gives emphasis on granting women the same wage as men if they are doing the same work or work of equal value, which will be determined by a Cabinet decision.
Part-time, Temporary, and Flexible work
Part-time work allows employees to work for a specified number of hours or days. Temporary work is work whose implementation requires a specified period of time or is focused on work that ends with completion of a specified job. Flexible work is work for which working hours or work days change according to the volume of work and economic and operating variable of the employer.
Wages, Working Hours, and Gratuity
The new law allows the employer to pay wages in UAE dirhams or in any other currency as agreed by both parties in the work contract.
A worker who has worked full-time and has completed one year or more of continuous service shall be paid end-of-service benefits calculated according to the basic wage, with a wage of 21 days for each of the first five years of service and 30 days for each succeeding year.
It is prohibited for employees to work over five consecutive hours without at least one-hour break. No more than two hours of overtime are allowed in one day for workers. If the job requires more than two hours overtime, employees must receive an overtime wage equivalent to regular hour pay with a 25 per cent increase. If employees are required to work overtime between 10pm and 4am, they are entitled to an overtime wage equivalent to regular hour pay with a 50 per cent increase. This regulation does not apply on employees working in shift basis. If workers were asked to work on a day off, they must receive a one-day leave or an overtime wage equivalent to the regular day pay with a 50 per cent increase.
Leave Days
Compassionate leave shall be granted to an employee for a period of 3 to 5 days depending on the employee’s relationship with the deceased.
A 5-day paternity leave shall be given to workers in the private sector. Maternity leave can extend to 60 days – 45 days with full wage, followed by 15 days on half wage. New mothers are eligible to receive additional 45 days without pay leave once they finish their initial maternity leave period in case of any post-partum complications with the newborn.
Non-compete clause
Workers are prohibited from competing with the employer or participate in any competing project in the same business. The maximum restriction period is two years from the date of the employee’s contract expiry.
Determine one type of employment contract in terms of duration
One type of employment contract in terms of the duration of the contract, which is a fixed-term contract. Accordingly, the duration of the contract should not exceed 3 years, but the parties to the contract may agree to renew or extend this contract for similar periods or less once. It is not permissible for the work contract to be of unlimited duration, as was the case in the past.
11 new commercial activities added to list of Freelance Professional License
The Department of Economic Development in Abu Dhabi has added 11 new commercial activities to the list of Freelance Professional License. The new activities are related to accounting and auditing, analyzing and reviewing accounting and auditing systems, Sharia review consultancy for the transactions of Islamic financial institutions, consultations in the fields of tax, electronic networks, electronic security, innovation and artificial intelligence, information technology network services, design and programming of electronic chips, as well as the design of database systems and electronic risk management services. To obtain the license, the applicant must have a minimum of 3 years of experience in the specific field or industry or have earned an academic or professional achievement in that field. The license allows the holder to obtain a residence visa for himself and his family.
UAE first country to sign up to the Paris Climate Accord
UAE is the first country to sign up to the Paris Climate Accord and the first country in the Middle East to commit to net zero by 2050. Abu Dhabi National Energy Company, known as TAQA, has announced two Memorandum of Understandings (MoU) with key Abu Dhabi entities. Firstly, Abu Dhabi Ports will develop an industrial scale green hydrogen to ammonia export project in the emirate. Second, Emirates Steel, will be developing a 160 MW green hydrogen cogeneration facility to enable the region’s first green steel manufacturing.
UAE capable of exporting renewable energy to Europe
European Union Commissioner for Energy, Kadri Simson, sees UAE’s potential to become an exporter of renewable hydrogen to Europe in the future. Simson stated, “What is important for us, in addition to scaling up renewable hydrogen in the EU, is to create a global hydrogen market that would facilitate production and trade. For this, we need other pioneers across the globe who prioritize renewable hydrogen, and UAE with its abundant solar power and interest in hydrogen has much potential in this field.” Simson said her recent UAE visit was very useful and interesting as she had the opportunity to have high-level discussion on energy policy with different stakeholders and to visit several pavilions at the Expo 2020 Dubai where the focus was on sustainability and renewable energy.
New work week for government entities announced in UAE
The UAE government announced longer weekends and shorter working hours for public sector employees to take effect on 1 January 2022. The new decision is in line with the UAE’s vision to enhance its global competitiveness across economic and business sectors, and to keep pace with global developments. Official working hours in Abu Dhabi, Dubai, Ajman, Ras Al Khaimah, and Fujairah government entities will be from 7.30am to 3.30pm, Monday to Thursday, with regular flexible timings remaining applicable, and from 7.30am to 12.00pm on Friday. The emirate of Sharjah is switching to a four-day work system with a three-day weekend, including Friday, Saturday and Sunday.
Far East:
Thailand maintains land and building tax for another two years
The Thai cabinet on Tuesday approved the maintaining of the existing tax rates for lands and buildings for another two years. Taxes for agriculture, residential and vacant land between 0.01% to 0.7% were approved by the cabinet and will be reviewed again in 2024.
Medical Treatment Visa now available in Thailand
The Medical Treatment Visa is available for patients who need medical services in hospitals and medical centers in Thailand. The multiple entry visa is valid for one year and is non-renewable and the visa holder can be accompanied by three people. Visa holders can stay in Thailand for up to 90 days upon arrival, and can seek permission to extend if their medical treatment requires them to stay longer. For those planning to stay longer than 90 days, they must present medical certificates issued by public or private hospitals or medical institutes in the government sector. Foreigners eligible for the new visa are patients who need medical services in areas of anti-aging medicine, health rehabilitation, plastic surgery, dentistry and treatment for cancer and cardiovascular disease.
Singapore’s new Copyright Act comes into force
The new Copyright Act which was passed in Parliament in September 2021, came into force on 21 November 2021.
Key changes on the Act as detailed by the Ministry of Law:
- Stronger Rights for Creators and Performers
- New rights and remedies have been put in place to reward and recognize the creative efforts and contributions of creators and performers, so as to enable them to get more exposure and more opportunities to commercialize their works.
- Commissioned creators of photographs, portraits, engravings, sound recordings and films, will be the first owner of copyright by default, consistent with creators of other types of commissioned works such as poems, paintings and music compositions. This will apply unless the contract they have with the commissioning party states otherwise.
- Anyone who uses or distributes a literary, dramatic, musical or artistic work or performance in public, including on online channels such as social media platforms, must identify the respective creator(s) or performer(s) in a clear and reasonably prominent manner.
- Permitted Uses to Benefit Society
- The Act contains new exceptions to copyright owners’ rights, known as “permitted uses”, to ensure copyright works are reasonably available for use by the general public.
- To support research and innovation, copyright works, if lawfully accessed (e.g. without circumventing paywalls), can be used for computational data analysis, such as sentiment analysis, text and data mining, or training machine learning, without having to seek the permission of each copyright owner.
- Teachers and students can use freely available online materials for their educational activities, including for home-based learning.
“Startup Cambodia” platform launched
“Startup Cambodia” is a National Program led by the Ministry of Economy and finance. It is an online platform managed by the Techo Startup Center and Khmer Enterprise. It is designed to act as a gateway for information provided by stakeholders on the state of the local start-up ecosystem, and as the starting point for community engagement and partnerships. It can be accessed at startupcambodia.gov.kh.
Cambodian Government extends tax exemptions
The Government of Cambodia confirms that the government would continue to provide tax preferences and subsidies to the most severely hit sectors as well as tourism and factory workers over the next few months. The government has already rolled out 10 rounds of economic relief measures worth more than $2 billion to cope with the impact of Covid-19 and the ongoing recovery process, during and after the crisis.