UAE

The United Arab Emirates is a state that is located on the Arabian Peninsula and bathes in the warm waters of the Persian Gulf. The country attracts with its unusual multifaceted culture, grandeur and beauty, high standard of living, high culture of the population, unusual sights and much more.

General information

United Arab Emirates (abbreviation UAE) — a federal state in the Middle East. The country covers an area of 83,600 km² (114th in the world). At the beginning of 2023, the population of the United Arab Emirates was approximately 10,399,717 people. Immigrants make up 87.9% of the country's total population. 11.6% of the population of the UAE are Emiratis, South Asians — 59.4%, Egyptian — 10.2% Filipino — 6.1%, citizens of other countries — 12.8%.

The official language of the country — Arab. English is widely used in business, business correspondence and as a means of international communication. In addition, most of the signs, information tables and road signs are duplicated on it. Due to the constant flow of immigrants from South and Southeast Asia, Hindi, Urdu and Farsi are widely spoken in the country. Tourism is widely developed in the UAE, so most employees in the trade, services, tourism and hotel business speak several foreign languages.

Islam is the state religion. Most UAE citizens — Muslims (about 77%), of which — Sunnis (85%) and Shiites (15%). According to the migration services of the Emirates, approximately 55% of immigrants — also Muslims, 25% — Hindus, 10% — Christians, 5% — Buddhists.

The official currency of the country is the dirham.

This is one of the richest countries in Central Asia and the Middle East. Over the past few years, the UAE economy has been steadily strengthening its position on the world stage.

The capital of the United Arab Emirates – the city of Abu Dhabi (the emirate of the same name). It is the political, industrial, commercial and cultural center of the country. Abu Dhabi is home to local and federal government offices, as well as the seat of the government of the United Arab Emirates and the Supreme Petroleum Council. Abu Dhabi's rapid development and urbanization, combined with its vast oil and gas reserves and production, and the relatively high average income of its population, has turned the city into a large and developed metropolis. Abu Dhabi accounts for about two-thirds of the UAE's economy, with a total value of about US$400 billion. A large petrochemical complex operates in the Abu Dhabi suburb of Umm Ann Nare. The export of oil is partially carried out through the port of Abu Dhabi Zayed. In another suburb, El Moussafah, there are cement, pipe and shipbuilding plants. Plastics, furniture, medical instruments are also produced. Abu Dhabi is home to a number of financial institutions: International Stock Exchange, Commodity Exchange, Financial Futures Exchange, Clearing House, major banks (including the National Bank of Abu Dhabi).

Dubai — the largest city of the United Arab Emirates and a deep sea port, the administrative center of the eponymous emirate, the most important commercial and financial center of the UAE and the entire Middle East. The third most important re-export center in the world (after Hong Kong and Singapore). Dubai does not have some significant taxes: corporate income tax, capital gains tax, personal income tax, and income repatriation tax. The United Arab Emirates also has double tax treaties with more than twenty countries around the world.

Dubai's low-duty seaport is the region's leading re-exporter of various commodities, including gold.

The FEZ — free economic zones. The offshore zone is located in the Jebel Ali area.

Sharjah — the third largest city in the UAE. The administrative center of the eponymous emirate of Sharjah.

In administrative terms, the United Arab Emirates consists of seven emirates: Abu Dhabi, Ajman, Dubai, Ras Al Khaimah, Umm Al Qaiwain, Fujairah and Sharjah.

History, geography, culture, mentality

From time immemorial, the territory of the modern Arab Emirates was a crossroads of trade caravan routes in the Middle East, and therefore it was ruled mainly by nomadic tribes. And only on the coast, apart from the desert inhabitants, fishermen and pearl divers led a leisurely existence. Then, the villages sheltered in the bays and oases grew into rich trading cities and emirates.

In the 7th century, the southern coast of the Persian Gulf became part of the Arab Caliphate, which spread Islam among the locals. During this period, the cities of Dubai, Sharjah, El Fujairah arose. As the central authority in the Caliphate weakened, the local tribal leaders — Sheikhs increasingly felt themselves to be independent rulers. In the 10-11 centuries, Eastern Arabia was part of the Karmatian state, and after its collapse came under the influence of Oman.

Europeans rushed to the Persian Gulf at the end of the 15th century. The Portuguese were the first to gain a foothold here, having conquered Hormuz, Bahrain and Julfar (the modern emirate of Ras al-Khaimah). Since the 18th century, the population of the coastal Arab principalities, which was mainly engaged in coastal trade, has been drawn into the struggle with the English East India Company, whose ships monopolized cargo flows between the ports of the Persian Gulf and deprived the inhabitants of the main source of livelihood. This led to ongoing conflicts between the East India Company and the local Arab population, which the British called pirates, and the region of principalities — «Pirate Coast».

The East India Company constantly sent military expeditions to the Persian Gulf, and in 1820 forced the emirs and sheikhs of seven Arab principalities to sign the General Treaty, which marked the beginning of English domination in this territory and the final division of Oman into three parts — the Imamate of Oman, the Sultanate of Muscat and the Pirate Coast. Since 1853, these principalities have been called Oman Trucial

British military bases were established on the territory of the principalities (in particular, on the territory of the principality of Sharjah). Political power was exercised by an English political agent. The establishment of the English protectorate did not lead to the destruction of the patriarchal system. The locals continued to hold on to ancient traditions. They could not offer serious resistance to the colonialists, due to their small number and constant civil strife between different clans.

In the early 1920s, cities in Trucial Oman developed a struggle for independence, reaching a particular scale in Sharjah and Ras al-Khaimah. At the same time, the richest oil reserves were discovered in the Persian Gulf. In 1922, the British established control over the right of sheikhs to grant concessions for oil exploration and production. However, there was no oil production in Trucial Oman, and the main income for the principalities was brought by trade in pearls. With the start of oil production in the 1950s, foreign investment began to flow into the region, and income from the oil trade made it possible to significantly raise the standard of living of the local population. But the principalities remained under the British protectorate, which was opposed in 1964 by the League of Arab States, which declared the right of the Arab peoples to full independence. In 1968, after the publication of the decision of the Labor government of Great Britain on its intention to withdraw British troops from the areas located east of Suez, including from the Persian Gulf zone, by the end of 1971, the principalities signed an agreement on the formation of a federation of Arab principalities of the Persian Gulf. This federation was supposed to include Bahrain and Qatar, but later they formed independent states.

On December 2, 1971, six of the seven emirates of Trucial Oman announced the creation of the federation of the United Arab Emirates. The seventh emirate, Ras Al Khaimah, joined in 1972. The granting of independence coincided with the rapid rise in prices for oil and oil products, which made it easier for the new state to take independent steps in the field of economy and foreign policy. Thanks to petrodollars and successful investment in the development of industry, agriculture, the formation of numerous free economic zones, the UAE was able to achieve economic prosperity in the shortest possible time.

The United Arab Emirates occupy the territory in the northeastern part of the Arabian Peninsula, washed by the Persian Gulf. On land, the country borders Saudi Arabia to the south and west, and Oman — in the east. The northern coast is opposite Iran across the Persian Gulf, while Qatar — just 50 km to the northwest. The emirate of Abu Dhabi accounts for 85% of the area of all the United Arab Emirates, and the smallest of the emirates — Ajman — only 250 km².

Most of the territory of the United Arab Emirates is occupied by the desert (Rub al-Khali) — one of the largest sandy areas in the world. There are salt deposits in the coastal regions of the country.

Despite the rapid social and economic progress achieved by the country in recent years, the indigenous people of the Emirates retain their national traditions and customs, centuries-old rituals and norms of behavior. Moreover, national cultural traditions are not only carefully preserved, but also receive additional development.

First of all, this is manifested in the adherence to national clothes, in traditional rituals during religious holidays, weddings and other solemn events. A lot of attention is paid by the government and society to folklore, dances, folk crafts. Traditional sports continue to live and develop: falconry, camel racing, sea regattas on dhow sailboats.

The traditions of Islam also have a great influence in business culture. There is some ritual and a certain order, which is determined by the traditions of tribal devotion, honor and hospitality. Many traditions of the Western world are seen as a threat to basic Islamic family values. Western dress must be in keeping with the climate and conservative Islamic morality, and foreigners are considered very impolite if they wear the local traditional dress code. Some businessmen from the UAE may wear light suits for business meetings. In most offices, trousers and a short-sleeve shirt with a tie are acceptable for men. Light suits and sports jackets are also allowed. For business meetings and official events, they always wear a long-sleeved shirt, while the tie — this is a required attribute. For business women, conservative, light suits or loose dresses are offered. At the same time, their length should be below the knee, they should be with a high neckline, the sleeves should cover the upper part of the arms.

Many government officials run the business, as do members of the royal families. The accumulation of wealth is associated with achievement and is seen as a sign of success. It is customary to talk about profits openly, and prices are set firmly: depending on the needs of the market, and not on the amount of profit.

Certain Western rules of conduct are prohibited by strict Muslim morality, but there are some exceptions for foreigners.

The working day in the country is traditionally divided into 2 parts: from 8.00 to 14.00, and then from 17.00 to 20.00. Some more modern companies work all day, from 8.00 to 16.00. Friday — this is a sacred day, besides, according to the law it is — the only day off, although some businesses close on Thursday afternoons. Basically, the working week lasts from Saturday to Thursday. Government offices are usually open from 7.00 or 8.00 to 13.00 or 14.00 (Saturday to Wednesday), and from 7.00 or 8.00 to 11.00 or 12.00 on Thursday. Banks are usually open from 8.00 to 13.00 (from Saturday to Wednesday) and from 8.00 to 11.00 or 12.00 on Thursday.

In the month of the Muslim fasting of Ramadan, during the daytime, the faithful are prohibited from eating and drinking, as well as smoking. In this regard, most of the restaurants and eateries are closed during the day, and open only at sunset. Foreigners staying in the country at this time are advised to refrain from smoking, eating and drinking in public places or in front of others during the day.

Non-Muslim tourists in the UAE are not allowed to visit mosques. The exceptions are a few large mosques, which are open to limited visits by tourist groups.

You can take pictures of local residents, especially women, only with their permission. It is forbidden to take pictures of government institutions, embassies, airports, bus stations.

Power

The state structure of the United Arab Emirates is a combination of republican and monarchical systems. The UAE is a federal monarchical state, consisting of seven emirates — absolute monarchies. The state is headed by the emir of Abu Dhabi, the government — Emir of Dubai.

The Supreme Council of the Union occupies a leading position in the hierarchy of the state structure of the UAE. The council consists of the heads of all seven emirates. The Council determines the general policy of the state, and the Council of Ministers is responsible to the Supreme Council for the implementation of this policy. In addition to determining foreign and domestic policy, the Supreme Council has the right to review the principle of the state structure of the country. The Council also approves a candidate for the post of Chairman of the Council of Ministers.

The position of President of the United Arab Emirates is combined with the title of Emir of the Capital Emirate of Abu Dhabi. Since the emirate itself is an absolute monarchy, power in it, and therefore in the entire state, is inherited. Until 1966, it was customary in Abu Dhabi to transfer power from an older brother to a younger one.

The President of the UAE is the Supreme Commander of the Armed Forces, Chairman of the Supreme Defense Council. The head of state signs decrees and resolutions approved by the Supreme Council, normative acts adopted by the Council of Ministers. In addition, the president appoints members of the diplomatic corps, senior civil and military officials, declares an amnesty or confirms death sentences.

There is a position of vice president. The Vice-President is appointed by the Supreme Council of the Union for a five-year term.

Since May 14, 2022, Sheikh Mohammed bin Zayed Al Nahyan has been the President of the United Arab Emirates. The Al Nahyan clan has ruled the emirate of Abu Dhabi for over 250 years.

The executive power is represented by the Council of Ministers, headed by the chairman, who is appointed by the president and approved by the Supreme Council. The powers of the government include the development of bills and the federal budget, the adoption of decrees and instructions for the implementation of laws and other regulations, monitoring the execution of court decisions, the ratification of international treaties and agreements, the appointment and dismissal of federal officials who do not require special orders from other higher state bodies.

Economy

The United Arab Emirates has been a member of the General Agreement on Tariffs and Trade (GATT) since 1994, and since 1996 — are members of the World Trade Organization (WTO). The country is also a member of the Arab Free Trade Area, which includes all member countries of the Gulf Cooperation Council (GCC).

The UAE is the most convenient place for doing business in the Gulf region, taking into account the developed infrastructure and investment climate. Over the past decade, the UAE has gained the status of the main business center in the Middle East.

The UAE is a global transport hub connecting the trade routes of the West and the East. The Emirates occupies a leading position in the world in terms of passenger and freight traffic. The country's economy is characterized by a high level of openness, the active development of the industrial sector, and the growth of foreign trade. Dependence on the oil sector remains, but its share in GDP is steadily declining.

Main sectors of the national economy:

• extraction and processing of oil and gas;
• tourism;
• manufacture of aluminum, cement, chemical fertilizers, pharmaceuticals, ceramics, clothing;
• transport services.

The foundations of sustainable economic growth were formed thanks to the income from the export of hydrocarbon raw materials, which were invested in significant amounts in infrastructure and industrial facilities.

The economic development of individual emirates in the federation is uneven. The emirates of Abu Dhabi (60%) and Dubai (30%) make the largest contribution to the country's GDP. The northern emirates of Fujairah, Ajman, Ras al-Khaimah and Um al-Quwain are the least developed. At the same time, Abu Dhabi stimulates the economic development of the northern emirates by creating new industries and developing infrastructure.

In terms of industry, Abu Dhabi specializes in oil and energy projects, Dubai — on trade, financial and tourist services, information technologies, Sharjah — in light industry, northern emirates — in agricultural production, quarrying, cement production.

Abu Dhabi, being the richest emirate (controls about 94% of oil reserves), dominates the revenue side of the federal budget and largely influences budget spending decisions.

The Emirate of Dubai remains the country's leader in diversifying the economy, reducing dependence on the oil factor, and attracting foreign investment. Dubai deservedly claims to be a regional center for trade in services — tourism, information, transport and commercial.

In the near future, metallurgy will remain the dominant link in the industry, primarily — export-oriented aluminum production. The industrial production of goods is actively developing. For example, the industrial development strategy of Dubai until 2030 includes 75 initiatives designed to attract more than 44 billion US dollars to the emirate's economy.

The strategy is based on tasks such as:

• increase in production in the manufacturing sector;
• innovation development;
• creating an attractive industrial base for international companies;
• introduction of energy efficient production;
• creation of the world center of the Islamic commodity market.

The following six areas of production are identified as priorities in the strategy:

• aerospace;
• marine;
• drugs and medical equipment;
• food;
• machinery and equipment;
• Production of aluminum and metal products.

The main countries supplying goods to the UAE — China, India, USA, Germany, UK. Top Emirati imports — precious stones and metals, equipment and machinery, electronics, vehicles.

The main countries importing decoctions from the UAE — India, Japan, China, Saudi Arabia, Oman. The basis of the Emirati exports are oil, oil products, aluminum, iron, plastic products.

Given the leading position of the UAE as a regional trade center, a significant part of the Emirati trade is re-exported. Countries such as India, Iran, Iraq, Afghanistan, Saudi Arabia, Kuwait, Belgium, Bahrain, and Oman, which account for 70% of export transactions.

Tourist services remain an important sector of the national economy. There are more than 1,100 hotels in the UAE. In 2019, 16.73 million foreign tourists visited the Emirates. Emirate of Dubai received 25 million visitors at EXPO — 2020, of which 70% are from abroad.

The development of the tourism sector is inextricably linked with the modernization and development of airport infrastructure in order to progressively increase its capacity — There are 6 international airports in the country, with which more than 200 airlines of the world work. The International Air Transport Association predicts an increase in air passenger traffic in the countries of the Middle East and North Africa by 4.9% annually until 2034. The UAE also has well-developed road and sea transport modes. There are more than two dozen ports in the country, through which more than 100 million tons of cargo are transported annually.

The energy sector plays an important role in the country's economy. By 2050, the UAE plans to receive more than 75% of the energy used by the country from renewable or alternative sources. The most promising in this regard is the development of solar energy in the region, as well as oceanic hydroelectric power plants. Abu Dhabi plans to allocate about 165 billion US dollars for the development of alternative energy sources over the next 30 years. In 2020, the first nuclear power plant was launched in the UAE.

The banking sector makes a significant contribution to the UAE economy. The UAE Banking Association includes 51 banks, (24 local and 27 foreign). "Fisrst Abu Dhabi Bank" — the largest in the UAE and one of the largest in the Middle East and North Africa region with total assets of over $203 billion.

The government pays increased attention to the food security of the country. The share of the agricultural sector in the UAE economy is still low, but since 2018 the National Food Security Strategy of the UAE until 2051 has been implemented, the goal of which is to take a leading place in the world in the food security ranking. To achieve this goal, the UAE is actively developing food production using modern technologies, establishing new international partnerships that provide for an uninterrupted supply of products that cannot yet be produced in the UAE.

In the post-COVID era, the government sees the technological development of the country as the main task. Thus, the UAE was the first country in the Arab world to launch a rocket to Mars to study this planet, primarily its climate (earlier in 2019, the first Emirati cosmonaut Hazzaa al-Mansouri flew on the Russian Soyuz spacecraft). The government announced the launch of a lunar exploration program, the essence of which is to study the atmosphere and climatic conditions on the surface of this planet. The UAE government also announced that the UAE aims to become the world capital of artificial intelligence within ten years (by 2030). The process of ensuring the universal availability of information and communication technologies in the 5G format is at the final stage. Pharmaceutics and advanced methods of treating diseases are developing at an active pace.

Business climate

One of the main advantages of the UAE in terms of doing business in this country is a very liberal fiscal policy regarding the income of individuals and legal entities. At the same time, fees are charged for state administrative procedures. The license for activities is also paid.

As of 2022, there is no tax on business income in the UAE. As an exception — foreign companies engaged in oil and gas production, as well as in the production of hydrocarbon raw materials, are taxed in the amount of about 55% of operating revenue (the figure is approximate, since the amount of tax is determined in agreements between companies and the government of the Emirates on an individual basis). Also branches of foreign banks are taxed — for example, in the emirates of Sharjah, Dubai, Abu Dhabi and Fujairah, foreign banks pay taxes in the amount of 20% of operating profits.

At the same time, for the first time in the history of the UAE, from June 1, 2023, a federal income tax for business at a rate of 9% was introduced. For companies with profits up to 375,000 dirhams (about $102,000), the tax rate will remain zero. The innovation will not affect companies registered in free zones. International headquarters will also be exempt from tax on capital gains and dividends. Natural resource companies will be exempt from the tax as they are already taxed at the emirate level.

From January 1, 2018, 5% VAT has been introduced in the UAE.

Import duties on the import of goods into the UAE are set at 0% or 5%, with the exception of certain categories of goods. The duty on alcohol and tobacco products is 50% and 100% respectively. Goods imported into the UAE SEZ for re-export are exempt from customs duties. The UAE is included in the single customs area of the Arab monarchies of the Persian Gulf, which allows you to sell goods imported into the country without paying duties in other states of the region — Bahrain, Qatar, Kuwait, Oman, Saudi Arabia.

Investment climate

In order to increase the investment attractiveness of the region, the Dubai International Financial Center (DIFC) was established in 2004 in the UAE. It became the first of 45 free economic zones in the United Arab Emirates and a leading financial center in the Middle East, South Asia and Africa. Registration of a company in DIFC allows a foreign person to have 100% control over the organization, allows foreign investors to repatriate (withdraw) all profits without restrictions, and also avoid taxation of income. Financial activity within DIFC is regulated by an independent regulator (Dubai Financial Services Authority) and its own judicial system. The center houses the region's only English-language common law court, as well as its own DIFC and Dubai Courts. Unlike the UAE legal system, which uses civil law, the DIFC uses a common law system (as in the US and UK), thereby creating a more familiar legal environment for Western investors. Currently, more than 4,000 companies operate on the territory of DIFC, employing 29,700 employees.

In 2021, the UAE ranked in the top 25 countries in the world in terms of the Kearney Investment Confidence Index, ranking 15th.

The advantages of the UAE markets for doing business:

• UAE economy is constantly growing due to diversification;
• developed transport and logistics infrastructure provides unhindered access to the main markets of the countries of the Middle East, Asia, Africa, turning the UAE into a powerful re-export hub;
• no income tax or income tax (as of 2022);
• the most open economy in the Middle East and North Africa region (in the global openness rating, the UAE traditionally ranks in the second ten countries);
• the developed banking system is fairly well integrated into the global one;
• stable internal political situation;
• The country has created comfortable conditions for foreigners to live and work.

Cooperation with Russia

Among the Arab countries, the UAE has become the absolute leader in terms of trade with Russia. The country is a favorable tourist and business environment for Russians.

The UAE is actively buying diamonds from Russia, as the Emirates hosts one of the world's largest diamond processing and cutting centers. The Russian Federation also exports services in the field of transport and information technology.

In turn, the UAE is engaged in the export of tobacco products for hookahs, broadcasting equipment and some aviation parts.

The UAE accounts for 55% of all trade with Russia among the countries of the Persian Gulf. And 90% of Russian investments in Arab countries — this is an investment in the UAE.

Under the sanctions, the UAE's interest in the Russian market has increased by 5-10 times. Russian products are popular in the Emirates, and small and medium-sized businesses in the UAE have increased their activity in Russia. The Emirates have become a "window of opportunity" for the Russian Federation in terms of parallel imports.

Political neutrality is one of the strategies of the Arab state, which has a positive effect on the development of mutually beneficial foreign economic relations between the UAE and the Russian Federation. The Emirates offer Russian businessmen favorable business conditions.

By registering a company in the UAE, Russian entrepreneurs can:

• use all the necessary business tools for conducting foreign trade activities;
• promote your products to international markets;
• lay the necessary logistics routes;
• enjoy tax benefits.

Today, there are more than 4 thousand large Russian companies in the Emirates, and the number of entrepreneurs who have become residents of the UAE is in the tens of thousands. In turn, 60 companies from the UAE are located in Russia.

The Emirates is an influential representative in the world market and has an independent opinion. All residents are under state protection.

Business and investment support structures

The United Arab Emirates has a developed business support structure, offering various tools and programs to attract and support foreign investors and entrepreneurs. Here are some of the main business support structures in the UAE:

• Governing bodies and regulatory organizations. There are several governing bodies and regulatory organizations in the UAE that are responsible for supporting business and providing a favorable business environment. Some of these include the Department of Economic Development (DED) in Dubai, the Department of Economic Development (DED) in Abu Dhabi and the Department of Economic Development (DED) in other emirates.
• Special Economic Zones. The UAE has established several Special Economic Zones to attract foreign investors and provide them with benefits such as tax incentives, 100% foreign ownership and simplified company registration procedures. Some of the well-known economic zones in the UAE include Dubai International Financial Central Area (DIFC), Dubai Mark (DMCC), Jebel Ali Free Trade Zone (JAFZA) and Masdar City in Abu Dhabi.
• Incubators and accelerators. The UAE also supports start-ups and small businesses through various incubation programs and accelerators. These programs offer funding, work space, advisory services, and mentoring to help entrepreneurs develop their business ideas.
• Financial support. There are various financial institutions in the UAE providing loans, investment funds and other financial services for businesses. Banks such as Emirates NBD, Abu Dhabi Commercial Bank and Dubai Islamic Bank offer financial support to businesses of all sizes.
• Simplified business registration procedures. The UAE has taken steps to simplify business registration and license procedures. Electronic registration systems have been introduced in various emirates of the country, which significantly speeds up the process.
• Visa support. The UAE offers various visa programs for entrepreneurs and investors that allow them to establish and operate a business in the country. Some of these programs include Long Term Investor Visa, Entrepreneur Visa and Talent Visa.