SLG Newsletter: June 2020

Dear Friends and Clients,

In the meantime, we have opened our “Eastern European Desk” in our Ras al Khaimah office. It is headed by Mrs. Katya Kisser, LLM, born in Ukraine. She is fluent in Ukrainian, Russian, English and German. Furthermore, we have entered into a cooperation with the Ukrainian Business Council, according to which we support their members in legal matters and offer lectures and webinars.

The decision makers in the UAE seem to be aware of the excessive administration that hinders day to day business. Abu Dhabi does not require notarisation for the establishment of LLCs and sole proprietorships anymore. It would be important if the UAE decided to join The Hague Convention on Notarization in order to avoid the tedious and expensive ways to UAE embassies. RAKICC is a pioneer in this area – certifications are also accepted by foreign notaries or lawyers. Hopefully this is not only a time related relief during the COVID restrictions and also hopefully this example will set an example for other Freezones and DEDs.

Unfortunately, the extremely limited publicity in the land registers or commercial registers is still regrettable. In one specific case, in which we represent a condominium owner, we were denied information about the other co-owners. Only by court order would the co-owners be disclosed. This “secret jurisprudence”, which the UAE makes use of, does not contribute to investor confidence.

Please pay special attention to the presentation on the Economic Substance Regulations (ESR) available on our webpage (link). You will find all the essential principles and necessary steps contained therein. The great advantage of these regulations is that they make UAE businesses “compliant” for European tax authorities, which means that these businesses are different from all the letterbox companies in the Caribbean, Channel Islands and similar notorious jurisdictions. European tax authorities no longer need to obtain evidence of permanent establishments or activities of foreign business partners. If the economic substance is proven, these companies are suitable contract partners for European taxpayers.

We help you to meet the ESR requirements, even if your business itself does not meet the necessary criteria, we can offer outsourcing through our clients, which will help you to achieve ESR compliance.

So then, let’s play the game of the big ones, even if we are only small pawns on the chessboard of the world, these very pawns can often decide the game.

Have a nice summer, wherever you spend it.


Theodor Strohal

On Covid-19

DIFC back to business

DIFC now opens up for public allowing offices, private sectors, and clients to do business in the center. Companies can now operate at 100% capacity but have to maintain strict precautionary measures to minimize the spread of COVID-19. However, entertainment centers, barber shops and salons and fitness centers will remain at 50% capacity.

Oman: Levy of 4% fee on hotel clients

Oman plans to levy a 4% fee on hotel customers as they struggle with economic impact caused by the pandemic. The agreement has already been made with the Department of Finance, however, it has not yet been decided when the levy will take effect. Earlier, the Omani government has postponed collection charges from tourism establishments that were due from September 1, 2019 to August 31, 2020 which they can pay in the first quarter of next year.

Abu Dhabi DED launches e-system for issuance of LLC and OPC licenses

The Abu Dhabi Department of Economic Development, ADDED, announced that it has launched an e-contract and e-signature system for limited liability companies (LLC) and one person companies (OPC). This hastens the issuance of licenses for applicants through obtaining a certified Memorandum of Association (MoA) which eliminates the need for a notary to review the document. Business owners can easily obtain economic licenses by using their UAE Pass which can be done in Tajer Abu Dhabi and All-in-One licenses that already include the provision of certified MoAs in Arabic and English and would no longer require any notarial seal.

ADGM changes to its founding law

Abu Dhabi Global Market (ADGM) announced amendments on their founding law – Abu Dhabi Law No. 4 of 2013 and has published a guide for these policies regarding the new framework. The amendments include:

  1. Formalizing the dual licensing regime created with DED which enables ADGM entities to establish branches, subsidiaries or representative offices in Abu Dhabi without needing a place of residence outside ADGM; and obligatory legacy entities licensed by the DED on Al Maryah Island prior to establishment of ADGM to surrender their licenses and obtain an ADGM license.

2. Enhancing and strengthening of dispute resolution framework – allowing parties to select ADGM Courts to determine their disputes without any connection with ADGM. Reinforcing the status of ADGM courts as courts of the Abu Dhabi judicial system; providing for ADGM Courts’ judgments to be issued in the name of the Ruler of Abu Dhabi; recording the successful framework for the reciprocal enforcement of judgments between ADGM Courts and the ADJD; and clarifying that ADGM Courts’ judgments will not be used for the enforcement of non-ADGM judgments and arbitral awards in other jurisdictions.

Saudi Arabia: Delays planned customs fee hikes

Saudi Arabia delayed custom fees but no further clarification on when the implementation will begin. It has been decided earlier that the government will raise levies on a 74-page list of imported products to boost profit for domestic producers and raise revenue to help the country’s economy. Nevertheless, the 15% VAT hike will start in July as previously announced for other sectors.

Far East

Thailand: Entry for foreign business travelers!

In Thailand, the Eastern Economic Corridor (EEC) subcommittee which represents the eastern provinces and other nearby Asian countries is awaiting approval regarding their request to permit investors to enter the country to allow continuous flow of business. Investors can enter the country but they will be subject to 14-day quarantine but they can choose the location of their quarantine and be allowed to send business documents and do activities. In addition to this, the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) has also requested the government to allow foreign investors to enter Thailand to resume business expansion and investment.

Thailand: Rental cut proposed

The treasury department in Thailand has proposed a 50% reduction in rental fees for state lands used for commercial purposes by business. It aims to reduce financial burdens and maintain employment rate in the country. Details on the reduction are still being deliberated. Rental fees for state lands used for housing and agriculture are also waived for a year.

Myanmar: Investments continue despite pandemic

Myanmar has received a total of US$ 8 million despite of Coronavirus pandemic. Four businesses were given approval to invest in the country and it is expected that operations will provide around 600 jobs in the country. Workshops and factories for garments and footwear are among the largest investors in the region and they have started to operate normally and were not severely damaged by the effects of COVID-19.

Cambodia: Suspends e-filing of taxes until August

In Cambodia, the General Department of Taxation (GDT) has decided to suspend the e-filing of taxes by three months as requested by private sectors enabling them to learn more about the new filing system. The suspension will be in effect from June to August. During this time period, taxpayers can temporarily use the old forms and GDT’s Online-VAT Refund and Online-VAT Credit if they are unable to manage the new e-filing system. The government sees the new initiative as beneficial to save trips and manual processing at the tax centers and will limit unnecessary human intervention in the time of the pandemic.

Singapore: Travelers entering Singapore have to pay for Covid-19 tests

Travelers entering Singapore starting June 18 will be required to pay for COVID-19 test amounting to $200 few days before the end of their stay-home notice (SHN).  This also applies to travelers leaving Singapore. 14-day SHN may now be spent in their respective homes, hotels, with family members, accommodations, or hotels at their own cost. The new SHN rules applies to travelers who have been in Australia, Brunei, Hong Kong, Japan, Macau, mainland China, New Zealand, South Korea, Taiwan and Vietnam in the last 14 consecutive days before their entry. All other travelers except Singaporeans entering Singapore will be required to spend their SHN at designated facilities like hotels while bearing the cost which will is $2000. Singaporeans and residents are still advised to defer their travels abroad.

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