SLG Newsletter April 2018
Dear Friends and Clients,
The party is now over –time to begin more serious work.
For the 4th time, we held our office event last Thursday. Thank you all for attending and mainly thanks to the speakers, Richard Bandera, the Austrian Commercial Counsellor and Gordian Gaeta for their visionary outlook on the economy in the region.
Was it all positive? Yes, at least most of it. There are still a few challenges that have to be tackled. And we can help you find the right solutions.
Are you a shareholder in a UAE LLC, free zone or onshore? If you are still a resident in your country of origin you will have to pay income tax on the dividends distributed to you because dividends – according to all DTAs – are taxed in the country of the recipient. But there is an exception to most DTAs: If the shareholder receives the dividends through a permanent establishment in the LLC, then they can be taxed in the country where the LLC is registered. Just having a desk and phone in the LLC’s office is no longer sufficient. The shareholder needs a separate business license forming the permanent establishment. Sounds complicated?. We can help you with some easy steps to secure your dividends are not being taxed in your home country.
Austria’s new conservative/ right government has tightened the tax regime. Many new regulations will make it more difficult to use legal tax holidays and tax reliefs. As most of these new regulations will be put into force next year, you should use this remaining time to restructure your business. We are always ready to work with your local tax advisor to find the best solution for you.
In just 15 days, Ramadan begins. Be aware that principally no decisions will be made during the Holy Month. We suggest putting pressure on pending cases where you expect a decision from your local partner, otherwise you will be waiting until the end of June or even longer because the holiday season will have started by then and maybe your partner will only return in September.
Wishing you a good start into the hot season.
I remain yours,
UAE now allows for multiple employer contracts
The UAE Ministry of Human Resources and Emiratisation has recently implemented a decision, signed by the Minister of Human Resource and Emiratisation (Mr. Naser Bin Thani Al Hameli), permitting skilled workers to partake in multiple employer contracts with two or more different employers. The decision applies to both Emiratis and expatriates alike.
The new system is implemented alongside the existing system of fixed-term or indefinite contracts. The part-time contracts are subject to the same rules and penalties applicable to regular employment contracts. Under this decision, companies may now recruit “skilled employees”, who are already employed elsewhere, under a part-time contract. A skilled employee is classified as a holder of a University Degree or higher or those who have successfully obtained a two or three-year Diploma in any field. The kinds of jobs the workers must be employed to do must require a high degree of scientific, technical and administrative skills (this is for the university degree holders), alternatively, technical jobs should require mental, scientific, technical, practical and supervisory skills (this is for the diploma holders). Skilled workers include, but are not limited to: Holder of a university Degree – general manager, medical professionals, legal professionals and legal researchers; diploma holders – nurses, physiotherapists, medical assistants and real estate agents.
It’s also important to know that: The employer cannot prevent the employee from taking the part-time job (provided the employee has Ministry approval), even if the employee will be working in a similar facility as the current job. Furthermore, the employer will not even be able to rely on a non-competition clause. In fact, the employee doesn’t even require the old or new employer’s consent, (other than having to agree to employ the employee obviously) to work the new part-time job whilst still working for the original employer. Besides, the original employer is still liable for all the fees levied by the Ministry when contracting with an employee and is further liable for all legally required benefits, such as health insurance and end of service benefits.
Finally, the contract cannot be turned into a full-time contract. Should the employer and employee wish to convert the contract into a full-time contract then they will have to wait for the contract to be finalized or alternatively cancel the current contract.
The Dubai Multi Commodity Centre (DMCC) Free Zone allows the corporate re-domiciliation
The DMCC free zone recently issued guidelines permitting companies to re-domicile or migrate to the DMCC from other jurisdictions provided the laws of the jurisdiction in which it is incorporated permit the transfer of the company to the DMCC. The name indicates that the re-domiciliation is a concept whereby a company transfers its domicile to another jurisdiction while maintaining the same legal identity, its history, and without affecting its assets, obligations and liabilities. This means that the company continues to exist in the new jurisdiction (DMCC free zone), without having to undergo the liquidation process in the older jurisdiction, and is subject to the laws of the new jurisdiction. Free zones that currently permit re-domiciliation in the UAE include the Dubai International Financial Centre (DIFC), Abu Dhabi Global Markets (ADGM), and the Dubai Creative Clusters DCCA (which includes the Dubai Internet City, Dubai Outsource City, Dubai Media City, Dubai Studio City, Dubai Production City, Dubai Knowledge Park, Dubai International Academic City, Dubai Science Park, Dubai Industrial Park, Dubai Wholesale City, Dubai Food Park, and Dubai Design District).
The non-DMCC entity who wishes to re-domicile to the DMCC is required to submit a continuation application and will be subjected to the DMCC’s comprehensive due diligence process. The supporting documents for these applications are akin to that of establishing a new company in the DMCC. Under the guidelines issued by the DMCC, the non-DMCC entity would also have to comply with various conditions to re-domicile to the DMCC which includes being in “good standing” in its home jurisdiction, not being subject to any ongoing investigations or sanctions in its home jurisdiction, and subjecting itself to the DMCC company regulations.
If you have further questions, please do not hesitate to contact us. A similar opportunity had been published by RAKEZ some months ago.
UAE cabinet approves law on salaries
A law that will ensure equal wages for women and men has been approved by the UAE Cabinet. The “Law on equal wages and salaries for men and women” will ensure that women have equal opportunities as partners in the UAE’s development and will empower women to lead future national strategies and ambitious projects.
ADGM Courts and the Abu Dhabi Judicial Department formalize cross-court judgment and arbitral award enforcement regime
On 11th February 2018 the Abu Dhabi Global Market (ADGM) Courts and the Abu Dhabi Judicial Department have signed the long awaited and groundbreaking Memorandum of Understanding (MoU) allowing judgments for the direct enforcement of ADGM Courts judgments and arbitral awards into onshore Abu Dhabi. This is the latest of several new developments in the legal infrastructure within the ADGM. Not only does this cross-court enforcement regime now open up a path between the common law and civil law courts in Abu Dhabi, but it also now appears to offer foreign litigants seeking onshore enforcement of a foreign judgment or arbitral award via the new conduit jurisdiction of the ADGM. The MoU sets out “agreed procedures for the reciprocal enforcement” of both Abu Dhabi Court judgments in the ADGM, as well as ADGM Courts judgments in Abu Dhabi. In addition, the MoU is the final link in the chain of legal instruments governing enforcement of judgments within and outside of the ADGM Courts. The UAE’s legal and court landscape has changed with the signing of this MoU. With potential cost advantages and the ability for foreign litigants to avoid potential referral to the Joint Judicial Committee in Dubai, it is to be expected that foreign litigants will be quick to test the powers of the ADGM Court as an alternative way to recognize and enforce foreign judgments and arbitral awards in onshore UAE.
RAK launches six recycling locations
The Ras Al Khaimah Waste Management Agency launched six recycling locations to help divert more of its waste away from landfills and some include drop-off centres for household items people no longer need. Currently just 14 % of RAK’s waste is recycled which the authorities hope to increase to 30 % this year, and to 75 % by 2021. RAK aims to reach its ambitious target by distributing recycling bags to all residents before the end of June, which includes green bags for the collection of recyclables such as plastics, paper, cardboard, cans and glass bottles, and brown bags for food waste. Sonia Nasser, executive director of the Ras Al Khaimah Waste Management Agency said, “the [recycling drop-off centres] are for people who maybe have too many recyclables, or if you just have extra stuff like batteries, electronics or light bulbs that don’t go into the regular bags that we have provided for resident”. Furthermore, the emirate is encouraging people to use the six new locations to dispose of even more items they cannot put in their green and brown bags. The locations of these recycling drop-off centres for household items are at RAK Mall and Saqr Park.
AED 351 billion in cheques handled by UAE Clearing Cheque System in the first quater
According to the UAE Central Bank, a total of 7.168 million cheques worth AED 351.1 billion were handled by the UAE Clearing Cheque System during the first three months of 2018. From January to March, cheques worth AED 15.7 billion bounced, accounting for 4.3% of the cheques’ total value. On the monthly level, March registered the highest amount of cheques processed through the UAE Clearing System at AED 124 billion, followed by January at AED 117.7 billion and February at AED 109.3 billion, the figures showed.