Decoding key laws that have impacted business in the UAE
A study of international supply and trade over the past few years reveals a fascinating insight — the UAE has emerged as one of the largest supply chain nerve centers on a global scale. In its recent study titled ‘Destination Digitalisation: The Future of Logistics, ADQ uncovered predictions that the UAE’s logistics market is poised to grow phenomenally by 2026 — at 8.41% annually to reach the $31.4 billion mark.
Much of the region’s logistics success story can be traced back to the UAE’s favorable procurement supply chain regulations. Here is a preview of some such legal provisions.
UAE’s free zone law
Free zones in the UAE are designated areas where foreign investors can establish and operate a business without needing a local sponsor. Operating in a free zone comes with benefits like 100% foreign ownership, 100% repatriation of capital and profits, more relaxed import and export regulations and, above all, exemptions from certain taxes and tariffs.
The region’s FDI regulations
The United Arab Emirates (UAE) has a relatively open policy towards foreign direct investment (FDI) and actively encourages investment in the country through various incentives. FDI regulations in the UAE allow for 100% foreign ownership of companies in most sectors, except for some like oil & gas and media.
By protecting foreign investors through bilateral investment treaties with many countries, the UAE has cemented its position as a central hub for businesses worldwide.
Tax regulations in the UAE
Although the standard VAT rate of 5% applies to the supply of most goods and services within the UAE, some supplies are exempt from VAT or carry a 0% tax rate. For instance, supplies for the export of goods/services to countries outside of the GCC and supplies related to international transportation are subject to zero-rated tax. These beneficial provisions reduce the overall cost of procurement of such supplies in the region.
Customs regulations in the UAE
The UAE is home to 12 commercial trading ports, and over 60% of the incoming cargo in the GCC arrives through the region’s seaports. Moreover, UAE’s strong and beneficial customs regulations make commercial activity via seaports lucrative for various international suppliers. As a result, the region has exempted all goods imported into FTZs from customs duties. Further, re-exports from these free zones are not liable to duties and taxes.
Want to expand your business in the UAE?
If you answered yes, it is vital to understand the different laws in the UAE that impact procurement. This way, you can manage compliance efficiently and take advantage of the laws in the region that promote supply chain mobility. With a procurement supply chain partner like Moglix, you work with business that are complaint with laws and regulations that govern the region, ensuring seamless business setup and operations. Know More