UAE (United Arab Emirates) is a country located in the southeast end of the Arabian Peninsula on the Persian Gulf, bordering Oman to the east and Saudi Arabia to the south, as well as sharing sea borders with Qatarand Iran. In 2013, the UAE's total population was 9.2 million; 1.4 million Emirati citizens and 7.8 million expatriates.
Established on 2 December 1971, the country is a federation of seven emirates (equivalent to principalities). Each emirate is governed by a hereditary Ruler who jointly form the Federal Supreme Council, the highest legislative and executive body in the country. One of the Rulers is selected as the President of the United Arab Emirates. The constituent emirates are Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah, and Umm al-Quwain. Abu Dhabi is the capital of UAE. Islam is the official religion of the UAE, and Arabic is the official language. Its most populous city, Dubai, has emerged as a business hub and a global city.
The UAE's oil reserves are ranked as the seventh-largest in the world, along with the world's seventeenth largest natural gas reserves. The late Sheikh Zayed, ruler of Abu Dhabi and the first President of the UAE, oversaw the development of the Emirates and steered oil revenues into healthcare, education and infrastructure. Although UAE has the most diversified economy in the GCC, the UAE's economy remains extremely reliant on oil. With the exception of Dubai, most of the UAE is dependent on oil revenues. Petroleum and natural gas continue to play a central role in the economy, especially in Abu Dhabi. More than 85% of the UAE's economy was based on the oil exports in 2009.In 2011, oil exports accounted for 77% of the UAE's state budget. Dubai suffered from a significant economic crisis in 2007-2010 and was bailed out by Abu Dhabi's oil wealth. Dubai's current prosperity has been attributed to Abu Dhabi's petrodollars. Dubai is currently in extreme debt.
HISTORY
Although the UAE is still a very young country, the earliest settlements date back to the Stone Age. First to come were the Greeks, followed by the Portuguese who arrived in 1498. Here’s a brief history of the UAE...
- 1700s The Al Qasimi family ruled much of the Northern Emirates.
- 1800s The British regarded the Gulf region as a cardinal communication link with its empire in India and began asserting their presence in this region. It was known as the Trucial Coast until the departure of the British in 1971.
- 1833 Dubai was founded when a group of people of the BaniYas tribe seceded from Abu Dhabi and settled in Dubai.
- 1928 Accession of Sheikh Shakhbut as Ruler of Abu Dhabi.
- 1958 Petroleum was first discovered in commercial quantities beneath the coastal waters of Abu Dhabi. This discovery dramatically transformed the UAE from one of the poorest states into the richest.
- 1966 Accession of His Highness Sheikh Zayed bin Sultan Al Nahyan as Ruler of Abu Dhabi.
- 1968 The Trucial States, joined by neighbours Bahrain and Qatar, was named the Federation of Arab Emirates.
- July, 1971 six of the Trucial States (Abu Dhabi, Dubai, Sharjah, Umm Al Quwain, Ajman and Fujairah) agreed on an interim federal constitution for achieving independence as the United Arab Emirates.
- August, 1971 the interests of Bahrain and Qatar proved to be incompatible with others members of the Federation of Arab Emirates, and both seceded into separate independent states.
- December, 1971 The UK accordingly terminated its special treaty relationship with the States, and the UAE became independent December 2nd.
- 1972 The remaining sheikhdom, Ras Al Khaimah, joined the United Arab Emirates as the seventh emirate to form the present UAE.
Politics of the UAE
Politics of the United Arab Emirates takes place in a framework of a federal,presidential,absolute monarchy. The United Arab Emirates (UAE) is a federation of seven constituent monarchies: the Emirates of Abu Dhabi, Ajman,Dubai, Fujairah, Ras al-Khaimah, Sharjah, and Umm al-Qaiwain. According to convention, the ruler of Abu Dhabi is President of the United Arab Emirates, the head of state, and the ruler of Dubai is the Prime Minister of the United Arab Emirates, the head of government.
Law:
The UAE's judicial system is derived from the civil law system and Sharia law. The court system consists of civil courts and Sharia courts. According to Human Rights Watch, UAE's civil and criminal courts apply elements of Sharia law, codified into its criminal code and family law, in a way which discriminates against women.
Judicial corporal punishment is a legal form of punishment in UAE due to the Sharia courts. Flogging is used in UAE as a punishment for criminal offences such as adultery, premarital sex and prostitution. In most emirates, floggings of Muslims are frequent with sentences ranging from 80 to 200 lashes. Between 2007 and 2013, many people were sentenced to 100 lashes. Moreover in 2010 and 2012, several Muslims were sentenced to 80 lashes for alcohol consumption. Under UAE law, premarital sex is punishable by 100 lashes.
Stoning is a legal form of judicial punishment in UAE. In 2006, an expatriate was sentenced to death by stoning for committing adultery. Between 2009 and 2013, several people were sentenced to death by stoning. In May 2014, an Asian housemaid was sentenced to death by stoning in Abu Dhabi.
Sharia law dictates the personal status law, which regulate matters such as marriage, divorce and child custody. The Sharia-based personal status law is applied to Muslims and sometimes non-Muslims. Non-Muslim expatriates are liable to Sharia rulings on marriage, divorce and child custody. Sharia courts have exclusive jurisdiction to hear family disputes, including matters involving divorce, inheritances, child custody, child abuse and guardianship of minors. Sharia courts may also hear appeals of certain criminal cases including rape, robbery, driving under the influence of alcohol and related crimes.
Apostasy is a crime punishable by death in the UAE. UAE incorporates hudud crimes of Sharia into its Penal Code - apostasy being one of them. Article 1 and Article 66 of UAE's Penal Code requires hudud crimes to be punished with the death penalty, therefore apostasy is punishable by death in the UAE.
Emirati women must receive permission from male guardian to remarry. The requirement is derived from Sharia, and has been federal law since 2005. In all emirates, it is illegal for Muslim women to marry non-Muslims. In the UAE, a marriage union between a Muslim woman and non-Muslim man is punishable by law, since it is considered a form of "fornication".
Homosexuality is illegal: the death penalty is one of the punishments for homosexuality. Article 80 of the Abu Dhabi Penal Code makes sodomy punishable with imprisonment of up to 14 years, while article 177 of the Penal Code of Dubai imposes imprisonment of up to 10 years on consensual sodomy.
Kissing in public is strictly illegal and can result in deportation, kissing in public is a crime punishable by deportation. Expats in Dubai have been deported for kissing in public.
Article 1 of the Federal Penal Code states that "provisions of the Islamic Law shall apply to the crimes of doctrinal punishment, punitive punishment and blood money." The Federal Penal Code repealed only those provisions within the penal codes of individual emirates which are contradictory to the Federal Penal Code. Hence, both are enforceable simultaneously.
Investment Analysis
Investment laws and regulations are evolving in the United Arab Emirates (UAE) and are expected to become more conducive to foreign investment. At present, the regulatory and legal framework favors local over foreign investors. There is no national treatment for investors in the UAE and foreign ownership of land and stocks is restricted. The UAE maintains non-tariff barriers to investment in the form of restrictive agency, sponsorship, and distributorship requirements. In order to do business in the UAE outside one of the free zones, a foreign business in most cases must have a UAE national sponsor, agent or distributor, with at least 51% of the business. However, the UAE Government (UAEG) is opening up its trade sectors in line with its WTO obligations. The UAEG has publicly declared its commitment to cut red tape for foreign investors with the intent of not only becoming the most competitive economy in the Gulf but one of the top economies globally.
Regulation of the establishment and conduct of business in the UAE is shared at the federal and emirate levels, with the ultimate authority at the federal level on most matters. The UAE Federal Cabinet will from time to time send draft laws to the emirate governments for comment and definition, which must then be resubmitted for full promulgation by the federal government. Many federal government functions, such as customs enforcement, are enforced primarily by emirate level authorities.
There is no personal income tax in the UAE. Foreign banks, outside of the free zones, pay 20 percent tax on their profits. Foreign oil companies with equity in concessions pay taxes and royalties on their proceeds. There are no consumption taxes, and the GCC states formally implemented a single import tariff of five percent on most goods January 1, 2003. Companies located in the numerous "free zones" across the UAE are exempt from the tariff on imports and re-exports that do not leave the zones. The exceptions to the five percent tariff in the UAE area 50 percent tariff for alcohol, a 100 percent tariff for tobacco, and duty exemptions for 53 food and agricultural items. There are significant restrictions on importation of firearms and pork products. Import tariffs are collected and retained by each emirate. Dubai imposes a rental housing tax on expatriates equaling five percent of the rental charges. The GCC, including the UAE, has previously considered establishing a VAT across its six member states. However, according to local government officials, a VAT is unlikely to be imposed in next few years. Hotels and some restaurants/coffee shops charge 10 to 15 percent service charges, which may be listed as a “service charge” or “municipality fee” on the bill.
Currently, there are four major laws affecting foreign investment in the UAE: the Federal Companies Law, the Commercial Agencies Law, the Federal Industry Law, and the Government Tenders Law. These laws, especially the Federal Companies Law, are seen as the largest obstacles to foreign direct investment in the UAE.
The Federal Companies Law applies to all commercial companies established in the UAE and to branch offices of foreign companies operating in the UAE. Companies established in the UAE are required to have a minimum of 51 percent UAE national ownership. Regardless, profits may be apportioned differently and often are negotiated at fixed amounts. Branch offices of foreign companies are required to have a national agent unless the foreign company has established its office pursuant to an agreement with the federal or an emirate government. All general partnership interest must be owned by UAE nationals. The new draft Companies Law, as reported by government media, is near final form and awaits the final determinations from the President before it is decreed and published in the national gazette. However, the revised draft has been under consideration for several years and there has been no guidance given as to how quickly the new law might be issued and implemented.
Foreign investors may purchase 108 of the 135 issues on the UAE stock markets, the Abu Dhabi Securities Market (ADX) and Dubai Financial Market(DFM). Companies on the exchanges are subject to the Federal Companies Law, thus foreign investors are allowed to own up to 49 percent of a company. However, some company by-laws prohibit foreign ownership. The international financial crisis and foreign speculation contributed to significant declines in the values of local shares since2008, but the markets showed some signs of stabilizing in late 2012. The Emirates Securities and Commodities Authority (SCA), the UAE’s regulator, is considering raising the minimum level of capital for brokerages.
The Commercial Agencies Law provisions are collectively set out in Federal Law No. 18 of 1981 on the Organization of Commercial Agencies as amended by Federal Law No. 14 of 1988 (the Agency Law) and applies to all registered commercial agents. Federal Law No. 18 of 1993 (Commercial) and Federal Law No. 5 of 1985(Civil Code) govern unregistered commercial agencies. The Commercial Agencies Law requires that foreign principals distribute their products in the UAE only through exclusive commercial agents that are either UAE nationals or companies wholly owned by UAE nationals. The foreign principal can appoint one agent for the entire UAE or for a particular emirate or group of emirates. The Ministry of Economy handles registration of commercial agents. It remains difficult, if not impossible, to sell in UAE markets without a local agent. Only UAE nationals or companies wholly owned by UAE nationals can register with the Ministry of Economy as local agents.
The federal Industry Law stipulates that industrial projects must have 51percent UAE national ownership. The law also requires that projects either be managed by a UAE national or have a board of directors with a majority of UAE nationals. Exemptions from the law are provided for projects related to extraction and refining of oil, natural gas, and other raw materials. Additionally, projects with a small capital investment or projects governed by special laws or agreements are exempt from the industry law.
In September 2011, the Ministry of Economy announced that 19 federal laws were in draft status and government leaders say that these laws would address a number of concerns that have discouraged foreign investment in the UAE. Media outlets have said that these laws include updates to the Companies Law, Insolvency Laws, and Arbitration Law. Industry experts have noted that some of these 19 federal laws are near promulgation, and could be passed and implemented in 2013. In December 2011, the UAE Cabinet approved a draft version of one of those laws, a revision to the Companies Law. The latest draft of the Companies Law was reported by government media to be in near final form and awaits some final determinations on ownership structure proposals and exceptions that would be included in the Presidential decree promulgating the law.
The UAE restricts foreign ownership of land, with rules varying from emirate to emirate. Individual emirate policies allow non-GCC nationals to have freehold or leasehold rights in designated areas, but do not give property owners permanent residence visas or an automatic right to work in the emirate. However, because specific laws regarding "freehold" ownership remain to be codified and procedures for title documentation and conveyance remain to be established, potential buyers are unsure whether they will have an absolute “freehold" title that means the same as it does in Europe or the U.S.
In February 2009, the Higher Corporation for Specialized Economic Zones(ZonesCorp), an industrial zone based in Abu Dhabi, signed Memorandums of Understanding with the Ministry of Economy (MoE) and the Abu Dhabi Chamber of Commerce and Industry (ADCCI) to develop an industrial environment in Abu Dhabi and facilities, transactions and services for local, regional and international investors. Through the electronic exchange of data and information, the MoU gives ZonesCorp the authority to issue, amend and renew Chamber of Commerce Certificates for industrial businesses operating in the industrial cities, as well as collect fees on the Chamber's behalf, streamlining the process and saving time for investors. ZonesCorp has also established a one-stop-shop for investors.
In 2008, Abu Dhabi Chamber of Commerce and Industry also created a one-stop shop for investors, with the exception of investors dealing in Israeli currency and the currencies of those countries subject to United Nations sanctions.
In 2006, the UAE Cabinet amended the law regarding ownership of insurance companies to state that insurance companies must be 75 percent owned by a UAE national or 100 percent by UAE legal persons, i.e., a UAE corporation. No new insurance companies or new branches have been authorized since 2008.Any new companies entering the market are required to meet high level international rating criteria and must complete a viability study to prove that it will be offering new products to the market. About half of the insurance companies in the UAE are foreign.
The UAE Ranked 24th in the World Economic Forum’s Global Competitiveness Index.
References:-
https://www.state.gov/e/eb/rls/othr/ics/2013/204755.htm
https://en.santandertrade.com/establish-overseas/united-arab-emirates/foreign-investment
http://www.coface.com/Economic-Studies-and-Country-Risks/United-Arab-Emirates
