Specifics of banking in the UAE

Successful business management in the UAE requires an understanding of the local banking system and its peculiarities. The process of opening accounts, documentation requirements and tax nuances here have their own rules, which are important to familiarize yourself with in advance.

A clear understanding of the financial and legal realities of the UAE will allow you to confidently enter a new market, minimize risks and save time.

Why is the UAE attractive for business?

The UAE is considered one of the most important commercial and logistics hubs in the region. The presence of large ports, shopping centers and world-class airports makes the Emirates an ideal place for companies focused on the global market. But the attractiveness of the UAE is due not only to its advantageous geographical location - the state is actively improving legislation and infrastructure, striving to form one of the most advanced economies in the world.

The advantages of the UAE as a business environment often come down to the following points:

• Flexible corporate system.

The country has many free economic zones that allow foreign investors to own 100% of a company (without the need to attract a local sponsor).

The options for choosing an organizational and legal form are quite wide, and the registration procedure, with appropriate preparation, is relatively simple and quick.

• Low taxes for companies in the UAE

Corporate tax has traditionally not been levied, although a 9% rate has recently been introduced for companies with income above a certain level.

Since 2018, VAT has been applied — 5%, one of the lowest rates in the world.

• Developed infrastructure

The country is famous for its network of modern roads, ports and airports.

The Emirates are actively introducing digital technologies into public administration (electronic visas, online business registration).

• Legal stability

UAE legislation strives to comply with international standards, paying serious attention to the transparency of financial flows.

Strict regulation of the banking sector minimizes the risks associated with uncontrolled capital flows and illegal transactions.

• Convenient location

The UAE is located at the crossroads of trade routes between Europe, Asia and Africa.

This provides favorable conditions for international logistics, transit and export of products to different parts of the world.

Considering these factors, more and more entrepreneurs from all over the world are thinking about how to open a business in the UAE. At the same time, a number of questions arise about the banking system, requirements for foreign companies and the peculiarities of the currency regulation of the UAE.

Local banks in the UAE

While this list is not exhaustive, it includes some of the largest or most notable local banks in the UAE

Abu Dhabi Commercial Bank (ADCB) is one of the largest banks in the United Arab Emirates. It was founded in 1985 and occupies a significant market share throughout the UAE, and also has branches and offices in the USA, London, Singapore and Mumbai. Abu Dhabi Commercial Bank provides a wide range of universal banking and brokerage services. In 2019, it acquired Union National Bank. (Union National Bank was previously another major national bank from Abu Dhabi.)

Abu Dhabi Islamic Bank (ADIB) was established in 1997, and among its founders is the Abu Dhabi Investment Authority. As the name suggests, it is an Islamic bank with branches throughout the Arab world, as well as a real estate finance office in Knightsbridge, London.

Dubai Islamic Bank is another major regional bank with branches throughout the UAE. The bank was founded in 1975 and is a pioneer of Islamic banking. It is the largest Islamic bank in the UAE and one of the largest in the world. In 2020, it grew even further after completing the acquisition of Noor Bank.

Emirates Investment Bank — An independent bank headquartered in Dubai that provides private banking and investment banking services.

Emirates NBD was founded in 1963 in Dubai as the first national bank of Dubai, and later merged with Emirates Bank International in 2007. Emirates NBD has a wide coverage throughout the UAE and currently operates 221 branches and 1,023 ATMs in the country and abroad. The bank offers a full range of banking services, including retail banking, private banking and wealth management, as well as wholesale banking and Islamic banking.

First Abu Dhabi Bank is one of the largest banks in the UAE. It was created in 2017 through the merger of First Gulf Bank and National Bank of Abu Dhabi (NBAD). The bank offers a full range of universal banking services, as well as Islamic banking.

Mashreq Bank is another leading financial institution in the UAE, headquartered in Dubai and with a strong presence across the Arab world. Founded in 1967, it is the oldest private bank in the UAE and provides a wide range of banking services, from retail banking to commercial and investment services. Today, the bank operates approximately 45 domestic and 20 international branches.

United Arab Bank was founded in 1975. Located in Sharjah, the third largest city in the UAE, the bank offers a wide range of services including retail and corporate banking, treasury services and Islamic banking.

Foreign Banks in the UAE 

The success of the UAE economy has attracted several renowned international banks from all over the world to the region, including major investment and universal banks.

Arab African International Bank (AAIB) was established in 1964 as a partnership between the Central Bank of Egypt and the Kuwait Investment Authority. It is the first Arab multinational bank in Egypt and also has a representative office in Dubai. It provides a range of services with an emphasis on mobile banking.

Bank of China Limited — The fourth largest bank in the world, with offices in several key financial centres around the world, including offices in Abu Dhabi and Dubai.

BNP Paribas was founded in 1848 and is the largest bank in the EU (and the second largest in Europe after HSBC). It has branches and offices in Abu Dhabi and Dubai, and its operations in the UAE are heavily focused on property and asset management.

CitiBank UAE is a subsidiary of the American Citigroup. It has branches throughout the Emirates, opening its first branch in Dubai in 1964 and its second in Abu Dhabi in 1971. In addition to retail banking, credit cards and insurance, the bank also offers corporate banking and wealth management.

Deutsche Bank AG opened its first office in the UAE in Abu Dhabi back in 1999, and two years later in Dubai, after which it expanded its operations in the UAE and throughout the Gulf.

Doha Bank is one of the largest commercial banks in Qatar. Founded in 1979, the bank has two branches and an ATM network in Dubai and Abu Dhabi. It offers personal, corporate and international banking services.

Habib Bank AG Zurich is a Swiss multinational commercial bank headquartered in Zurich, Switzerland. It began operations in the United Arab Emirates in 1974 and is currently one of the top five foreign banks under the name HBZ UAE.

HSBC Bank Middle East Limited is the Middle East division of HSBC, the largest bank in the UK. In 2016, its headquarters were moved to Dubai. HSBC Middle East offers a full range of services: from personal banking, insurance and lending to asset and fund management.

Unique aspects of the UAE banking system

The financial sector of the Emirates combines features of conventional and Islamic banking. Islamic banks are regulated by Sharia principles, as a result of which their financial instruments may differ from the generally accepted interest rate-based schemes.

Islamic banking

Islamic bank - is a bank that provides loans and operates according to the principles of Islam. Islamic banks differ from corporate and financial institutions in the West in their approach to lending practices.

According to Islamic teachings, interest (riba) is considered haram or prohibited. Therefore, Muslims are advised to avoid engaging in any financial activity that involves interest.

Banking with an Islamic financial institution and using only a Sharia-compliant lender for loans is standard practice in the UAE and throughout the Middle East.

Many banks in the UAE offer Islamic banking in addition to regular retail banking and often provide special Islamic banking kiosks.

Conventional Banks

Along with the Islamic majors, the UAE also has branches of leading global banks. Here, the usual deposit, credit and investment products are provided.

Most banks in the UAE are equipped with modern account management tools, including Internet banking and mobile applications, which simplifies cross-border payments.

Thanks to such a diversity of the banking market, investors and entrepreneurs can choose the best product for specific tasks. For some, it is more convenient to use traditional lending schemes, while for others, Islamic mechanisms are important, excluding the accrual of interest.
Requirements for business from UAE banks.

Banks in the UAE have quite strict requirements for foreign clients. This is due to both global standards of financial transparency and the desire of the state itself to maintain a high reputation for its financial system.

Types of bank accounts

Depending on the client's status, objectives and plan for using the account, UAE banks offer several main categories:

• Corporate accounts

Created for legal entities, including foreign companies that operate or plan to operate in the UAE or abroad.

• Personal accounts

Opened for an individual (resident or non-resident). Suitable for personal financial transactions, savings, transfers, etc.

• Offshore accounts

Designed for companies operating in offshore jurisdictions. Usually minimal taxes, but higher requirements for transparency and confirmation of beneficiaries.

When choosing the type of account, an entrepreneur takes into account the business's needs for working capital, the required level of confidentiality, as well as the presence or absence of an intention to use the opportunities of Islamic banking.

Minimum deposit requirements

• Specific amounts vary from bank to bank. Some set a relatively low threshold (several thousand US dollars), others - higher (hundreds of thousands).
• The higher the projected turnover and income of the company, the more loyal the bank can be in terms of the minimum balance, however, the requirements for transparency and the set of documents also increase.

Documentation requirements

• Registration documents: Certificate of Incorporation, Memorandum and Articles of Association.
• Confirmation of business reputation: statements from other banks, financial statements, recommendations from partners (upon request).
• Beneficiary information: passports, visas, documents confirming the residential address.
• Activity license: if the company carries out activities that require special permission.

Some banks ask for executive resumes or a report on the economic feasibility of the project. It is important to be prepared for an in-depth KYC (Know Your Customer) procedure and AML (Anti-Money Laundering - combating money laundering) checks.

Currency Regulation and Taxes

The UAE financial system adheres to a liberal policy regarding capital movement, which makes UAE banking convenient for international transactions. At the same time, the state has introduced a number of taxes that affect the corporate sector.

Foreign Exchange Transactions

• No Strict Restrictions

Usually, currency transfer transactions abroad and from abroad are available without complex approvals if the company and the bank comply with KYC and AML procedures.

Pegged to the dollar: The dirham (AED) has a market rate to the US dollar, which ensures the stability of settlements and predictability of financial planning.

• A wide range of currencies

Banks offer accounts and transactions in AED, USD, EUR, GBP and other currencies.

Business Taxation

• Corporate tax

For a long time, the rate was zero, but a 9% tax was introduced for income exceeding the established limit (with the exception of special zones where tax breaks can be retained).

• VAT

Introduced in 2018 and is 5%. In some cases, there is an exemption from VAT (export of certain services and goods).

• Income tax

For individuals, there is no tax; however, indirect taxes (excise taxes, duties, etc.) are subject to accounting.

Double taxation

The United Arab Emirates has an Agreement on the Avoidance of Double Taxation with Russia, which has significant specifics of application — it applies only to financial or investment organizations, institutions, agencies, bodies or other entities wholly owned by the Russian Federation, the Government of the Russian Federation or the government of any subject of the Russian Federation, the Government of the United Arab Emirates or any local government of the United Arab Emirates, however, this Agreement also provides for the exchange of information between states.

At the same time, the United Arab Emirates are included in the list of offshore zones by the Ministry of Finance of Russia (According to the regulations: "Agreement between the Government of the Russian Federation and the Government of the United Arab Emirates on taxation of investment income of the Contracting States and their financial and investment institutions" (Concluded in Abu Dhabi on 07.12.2011), "Main directions of budget, tax and customs-tariff policy for 2025 and for the planning period of 2026 and 2027" (approved by the Ministry of Finance of Russia)).

Choosing a bank: what to pay attention to

The right choice of a bank and understanding the requirements for foreign companies in the UAE can significantly facilitate the process of doing business. Among the key criteria:

• Size and reputation

Large international banks (e.g. HSBC, Standard Chartered) offer a variety of products and services, but have high demands for financial transparency of clients.

Local banks (Emirates NBD, Abu Dhabi Commercial Bank, Dubai Islamic Bank, etc.) are more focused on the local market, including Islamic products.

• Bank specialization

Some institutions actively work with startups, technology companies, others are interested in the sector of trade and logistics services.
The compatibility of the bank with the needs of your business is important.

• Cost of service

Rates, commissions and other fees can vary significantly.

Terms depend on the client's status (resident/non-resident), planned turnover, number of transactions, availability of salary projects, etc.

• Service level

The quality of customer support and the convenience of digital tools (online and mobile banking) can become important factors with a large volume of daily transactions. In some banks, despite the fact that managers try to help, the service is poor, and the level of English often causes difficulties in communicating with clients.

Before opening an account in a UAE bank, evaluate whether its requirements meet your financial capabilities and goals. A detailed analysis of tariffs, the list of required documents and the specifics of a particular bank will help to avoid unexpected refusals and delays in the process.

The choice of a bank to open an account in the UAE depends on the needs of your business: local banks such as Emirates NBD or Dubai Islamic Bank offer flexible conditions for the local market, while international banks such as HSBC or Standard Chartered provide global access and a wide range of financial services.

The account opening procedure involves a thorough check of documents and compliance (AML/KYC), which can take several weeks. To avoid complications, it is important to prepare a transparent company structure, financial reports and confirmation of sources of income. UAE banks offer a wide range of tools for small and medium-sized businesses, such as corporate loans, multi-currency accounts, salary projects and developed online banking, which provide convenience for international business.