The United Arab Emirates, the hotshot notion of the middle east is well known for its magnificent landscapes and extensive business growth. After splitting into seven Emirates this middle eastern nation has made extensive changes in all its major laws and policies trying to make good terms and allies with other big nations allowing foreign entrepreneurs to establish businesses in UAE. Here are a couple of pointers mentioned below explaining the global business scenario in the UAE.
To Start With-
Owning a business in UAE is not as difficult as it sounds to be, the government there supports all scales of new business setups. Although the business set-up is way easier, running about business activities is a challenging task keeping UAE’s strict laws and jurisdiction in mind.
Businesses set up can be categorised under 3 different categories- Mainland Jurisdiction, Free Zone Jurisdiction and Offshore Jurisdiction; purely dependent on the kind of activities carried along in the name of the business. Similar to that of any other nation, companies can be solely owned, a limited or a private limited company or a foreign entity.
The company’s name and registration should abide by the rules of UAE where the name of the business cannot be irrelevant to the activity carried and the morale impact.
Employment Policies-
All the employees working in the UAE are to abide by all the Labour/Working laws of that nation, let he or she be a citizen or a non-citizen of that nation.
As a part and parcel of new employment, an employee whether a citizen or a foreigner is to tie up in an agreement called the Federal Labour Contract, which later is to be registered by the Labour Law authorities (a mandated field in case of foreign employees to get the visa processed).
Businesses that do not abide by the nation’s labour laws have a set of their own and their contracts are mostly mutual and on their own will and consent.
Employee Salaries/Wages-
According to the workplace laws in UAE, there is no such thing as a minimum wage. The only criteria to be met by employers is to make sure they cater to all the basic needs and requirements of employees. The whole process of paying salaries or wages in UAE takes place by first being enrolled on MoHRE and then getting on the Wages Protection System to electronically transfer salaries.
Payroll software in UAE act as a major helping hand to these businesses. Any employee working beyond 48 hours in a week is eligible for overtime pay. Termination pay, gratuity pay, pensions, and bonuses are other mandate fields that employers have to be keen on.
Taxes and Deductions-
The tax market is not well defined and stabilized in the UAE markets. Most of the businesses even today are run on traditional models and the same goes with the wages, more than half of the businesses pay in cash hence ignoring the taxes.
Not saying that taxes are a strict component in UAE business sectors, neither was it a strict rule to adhere nor does it seem to be a mandated field of concern anytime soon in the near future. Particular businesses like foreign banks and oil&gas companies are the ones that mostly pay taxes to the nation.
In the year 2018, a standard 5% Value added tax was added which neither affected the businesses nor employees.
Leave Policies-
The current work laws in UAE ask to provide a mandate of seven holidays throughout the year which is to be paid leaves. Apart from these paid leaves, employees can also apply for sick leaves, holidays, and paternity leaves.
The leaves apart from mandate leads can only be available when an employee meets the criteria of having completed at least six months of service with a company and only 2 per month. This set of leaves are for the initial 1 year period, after completion of a year in the system an employee is eligible to avail 30 days of leave per year.
Coming to sick leaves, after completing a year in the system, an employee can avail up to 90 days of medical leave with valid medical documents to support.
Take Away-
With the industrial expansion and political stability, UAE is to be considered one of the leading business hubs in the nation. With its zero tax free zone policy, this nation is catching the eyes of a ton of investors and entrepreneurs.
However bright the other side of the picture looks, coming to the ground reality there are a lot of challenges that are to be faced by companies and businesses willing to establish in UAE.
Considering payroll software in UAE is the wisest decision any business set up can take on an early stage to help face all the challenges and obstacles in terms of employee management in the most smooth way possible.
