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Corporate law in Dubai

May 2016

The rising profile of Dubai as a place in which to do business depends heavily upon appropriate legal, finance, and corporate foundations being in place. Many businesses naturally seek out locations where such robust foundations exist, offering security and ensuring that levels of risk are reduced as a result. Dubai is part of the United Arab Emirates (UAE), and being subject to the federal laws of the UAE. However, Dubai has the right to control its internal affairs and has considerable flexibility in many areas. Federal codes of law have been expanded in the last 30 years or so and cover a range of topics, including commercial law, immigration, banking, and employment. The laws that have been enacted locally within Dubai tend to focus more on administration. Dubai has its own independent courts, which are separate from the UAE Federal Judicial Authority. Each of the courts has 3 separate divisions:
  • A civil division
  • A criminal division
  • A Sharia division
There are no juries within the court system, with all cases being heard by one or more judges. All of the courts conduct their business in Arabic, making it essential that lawyers speak the language, as well as hold licenses to represent you in court. The establishment of free zones, which have some laws and regulations that differ from non-free zones, has undoubtedly provided a boost to enterprise. There are very specific conditions for doing business, with 100% foreign ownership of companies being allowed in these areas, unlike in non-free zones. Businesses, in return for the advantages on offer, must demonstrate that they have put down firm roots within the free zones. This mechanism is intended to allow for long-term stability. The best known of the free zones is probably the Dubai International Financial Centre (DIFC), which provides a regional centre for investment. Founded in 2004, the DIFC has its own legislation and laws, boasting its own court system too. Also providing the base for a stock exchange, which has grown at a rapid rate and is known as NASDAQ Dubai. There is no federal income tax or corporate tax, although Dubai did originally have plans to introduce a local income tax. That tax has, however, never been implemented and analysts do not appear to have noted any suggestion that such an implementation is on the cards. Those operating in free zones are offered a range of concessions, while there is no VAT applied in Dubai. Dubai leads the way within the region in terms of implementing foundations for proper corporate governance and anti-money laundering legislation. Laws are strictly enforced in Dubai and Davidson & Co is pleased to advise clients on all aspects of corporate law.
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