Just like other countries, the UAE has strict business laws. It is the responsibility of every citizen who starts a business or does a partnership to initiate business according to the regulations imposed by the government of the UAE. They must follow the federal tax authority and know about UAE labour law before setting up a business.
It is important to be aware of these laws to have smooth and fair conduct of the organisation, company, or business. Every entrepreneur must follow the laws that govern the business, protect the rights of labour, consumer, and intellectual property. Moreover, one must follow the laws to protect the environment and health. It means one has to ensure safety. Lastly, it is the responsibility of the citizen to follow the laws that govern the free zone where you start the business.
UAE has laws for each type of business. Some of the essential laws that every company must know are
Tax Cooperation and Economic Substance Regulation
This is the regulation or law in which the citizens of UAE must commit to following the international tax cooperation and transparency laws. According to the regulation, the free zone or onshore companies must perform activities according to the rules listed in the regulatory framework to maintain the economic presence in the UAE. Moreover, all activities must undertake economic substance tests listed in economic substance regulation laws.
Business Laws Related to Mainland Companies
Federal law no 22 is applied for all maintenance companies that practice financial, agricultural, commercial, real estate, or any type of economic activity. Each company needs to follow the rules given below.
These companies have to follow the laws listed in the UAE cabinet and must ensure the safety of workers, the environment, and customers. This law is not for the companies which are excluded by the resolution declared by the UAE cabinet.
Moreover, this law does not apply on the companies that are run by the local or federal governments. Also, the law is not for companies operating in power, gas, or oil sectors having a share of federal or local governments.
Free Zone Companies Business Laws
The UAE government has implemented special laws for the business governed by the free zone authority. Some other government entities may govern the business. There are specific laws, but federal law no 2 is not for this category. Furthermore, the free zone business is governed by the laws related according to the type of the business and in terms of practice like observance of property rights, respective free zone authorities, and QHSE compliance.
Laws in Case of Bankruptcy
Federal Law no nine is imposed for the business bankruptcy. It came into force in December 2016. The law has a well-organized framework to help distressed companies to avoid liquidation and bankruptcy through different methods.
Composition procedures
Consensual out of court restructuring on the financial base
·Financial restructuring
The potential to secure the new loans according to the laws
Conversion to the declaration of liquidation and bankruptcy of the debtor’s assets.
These laws are not for the companies that are governed by the laws for commercial companies. Also, they don’t apply to companies that are not working under the commercial company laws. Federal or local government-owned companies are also not directed to follow these laws.
Laws applicable to all business
For all types of businesses, it is mandatory to follow the electronic and commercial transaction law, federal law no 4, 20 of 2016, business laws in UAE< business offence law and protection of intellectual property. Plus, companies have to follow UAE trademark law and common custom law. The implementation of UAE labour law also holds great importance.
It is the key responsibility of citizens living in the UAE to start a business after learning laws to avoid inconvenience and any penalty. The best advice would be to hire a legal firm or consultant for this purpose. This may seem like an additional expense, however, in reality, it can save you from a lot of trouble.
There are numerous law firms in Dubai that specialise in business laws. Choose the best out of the lot after thorough deliberation and consideration. Dubai has strict laws; therefore, you need to have a professional legal consultant or law firm associated with your business to avoid any inconvenience on this front.