A GLIMPSE OF THE NEWLY IMPLEMENTED LAWS TILL MID 2023 IN THE UAE

14 August 2023

Ajmal Khan

There are few major regulatory changes that happened in 2023 which aimed to support professionals in their business and daily personal.

Image credit: freepik.com

Dubai: The UAE regulators are always open to accompany the growing expansion of the country by providing new regulations covering the needs of their residents and matching the new living trends.

1 -  Family business law

Federal Decree Law No. 37 of 2022 on family businesses, came into effect on January 2023. The law is part of the UAE’s comprehensive Thabat programme that aims to turn 200 family-owned businesses into major companies by 2030, with a market value of over AED150 billion and annual revenues exceeding AED18 billion.  According to the official website of the UAE government, this new law will build the regulatory environment necessary to ensure the expansion and diversification of family businesses' operations. Additionally, it will make the transition between generations easier while ensuring, through methods and practices that have been well researched, that these firms will survive the third and fourth generations.

This Law removes the restriction on the maximum number of shareholders in the family business if it is formed as an LLC and allows for any number of partners in the business. It also allows establishment of the family business to create a family charter, which defines the rules for ownership, goals and values of the family, and mechanisms for evaluating shares and methods of profit distribution. It further provides flexibility to manage affairs within the business and allows succession planning for business, that does not have to comply with the Personal Status Law. Furthermore, a family member has the priority right to buy the shares of the other bankrupted partner

According to the goals and projects of the 50 and the factors influencing the UAE Centennial 2071, these family businesses will be able to expand and grow in a sustainable fashion, ameliorate their competitiveness, and grow their businesses both in the local markets and on an international level.

2 -  Corporate Tax law

Federal Decree-Law No. 47 of 2022 on taxation of corporations and businesses, came into effect on 1 June 2023 whereby businesses became subject to the UAE Corporate Tax. The Corporate tax will not be applied to salaries or other personal income from employment, whether it is earned from work in the government, semi-governmental or private sector. The UAE's Ministry of Finance announced in January 2022 that a federal corporate tax on firm net earnings would be implemented and applied to all of the Emirates. Corporations and other firms will be required to pay a standard rate of 9% under the new tax system if their taxable profits reach AED375,000.

For more information on the new corporate tax, its reach, and its exclusions, you can refer to ALKETBI explainer  published on 11 & 25 April 2023. The most important angle in this law is that Small Businesses benefit from Relief, whereby it is decided that if the revenue received during the relevant tax period and the prior tax periods does not exceed the threshold determined by the ministerial decision, taxpayers who are residents of the UAE may choose to get small business relief. In general, taxpayers will need to arrange their financial statements in accordance with the acceptable UAE accounting standards which will form the basis for their corporate tax returns.

3 -  Unemployment insurance scheme

This scheme became effective on January 1, 2023, as a mandatory scheme. The employees will be able to get 60% of their basic salary with a premium of AED60 (AED5 per month) or AED120 (AED10 per month), based under which category they are classified. Employees should have completed a minimum of twelve consecutive months in their previous job, calculated from the day they subscribed to the insurance program, to be eligible to receive compensation under the insurance scheme.

The insurance plan is divided into two distinct categories; the first class is for employees whose basic salaries are AED16,000 or less, and the second class is for those having basic salaries at AED16,000 or more. Employees can earn 60% of their basic income for up to 3 months after losing their job by signing up for the insurance program.

There are some situations when individuals may not be eligible to receive the unemployment insurance compensation, therefore it is best if the guidelines to enroll in the insurance scheme are precisely followed.

4 -  Civil Personal Status law for Non-Muslims

Decided under, Federal Decree-Law No. 41 of 2022, it came into effect in February 2023. This law took into consideration that many UAE residents are actually Non-Muslims and this law came to organize the procedures for inheritance and testaments (wills), proofs of paternity, marriage, divorce, estate and custody of children. One of the main different aspects of this law is that it regulates the marriage and divorce conditions and the procedures of contracting and documenting the marriage & divorce before the competent courts. Divorce can be, under this law, initiated jointly or unilaterally and then its consequent financial repercussions and children custody will be settled.

5 -  Emiratisation – part of Nafis programme

The UAE Cabinet had approved the decision in May 2022 . The Emiratisation of the private sector became mandatory and came into effect on 1 January 2023. Two percent Emiratisation target must be met by the private companies operating in the UAE and having at least 50 employees. The concept of the regulator aims to create more than 10,000 job opportunities per year for the UAE youth, covering all economic sectors and targeting a learning curve to help transmitting the know-how to further UAE generations.

A fine of AED6,000 will be applied per month upon the non-compliant companies. We recommend that you get well informed about your company applicable recruitment targets.