Business Guide: United Arab Emirates

Basic data

1) Location: The United Arab Emirates (UAE) is located on the south eastern shore of the Arabian Gulf. They are bordered to the north by the Gulf of Arabia, to the east by the Gulf of Oman and the Sultanate of Oman, to the south by the Sultanate of Oman and Saudi Arabia, and to the west by Saudi Arabia.

2) Capital: Abu Dhabi Area: 83,600 km2.

3) Reported by seven Emirates: Abu Dhabi, Dubai, Sharjah, Ajman, Umm al-Qaiwan, Ras Al Khaimah, Fujairah.

4) Creation of the State: December 2, 1971 (foundation of the Federation).

5) Population: 9,631,000 inhabitants according to the World Bank in 2018, of which 6.93 million (72%) are men and 2.69 million (28%) are women. Regarding the origin, it can be pointed out: Emiratis 11.48%, Indians 27.49%, Pakistanis 12.69%, Filipinos 5.56%, Egyptians 4.23%, other nationalities 38.55%.

6) Topography: The desert extends over 97% of the country’s territory, with a mountainous area in the northern part of the border area with Oman. A low coastal plain melts into the dunes of the Rub al-Khali desert. The highest point in the country is located in Jebel Jais, at an altitude of 1,934 meters, this mountain belongs to the Hajar Range.

7) Coasts: Approximately 1,320 kms.

8) Natural resources: Oil and natural gas, mostly located in the Emirate of Abu Dhabi.

9) Climate: It is characterized by high temperatures and humidity in summer and moderate winters accompanied by scant and irregular rains. The average annual temperature varies between 26 ° and 34 ° C. The summer season runs from May to October, with temperatures between 26 ° and 45 ° C. During the winter the temperature ranges between 14 ° and 25 ° C. Annual rains do not exceed 30mm.

10) Irrigated Area: Approximately 800 km2.

Trade Economic Profile of the United Arab Emirates

The United Arab Emirates (UAE) is the second largest economy in the Arab world after Saudi Arabia, with a GDP of US $ 421.14 billion and a per capita income of US $ 39,000.

The oil crisis, growing tensions in the region, the advent of COVID and certain fiscal austerity measures have affected the country’s growth. Despite this, its political stability, the strength of its banking sector and income from the tourism sector have helped to soften the impact.

To face the public deficit that began in 2015 after the drop in oil prices, the government is trying to reduce public spending, as well as make use of its financial reserves and the issuance of international bonds.

It should also be noted that the UAE is a key regional hub in terms of trade, investment and economic activities in general not only for its neighbors in the Arab world but also in the MENA region. It constitutes a true connecting axis between Africa and Asia.

According to the 2017 Annual Economic Report of the UAE Ministry of Economy, the country’s growth was expected to stabilize in the medium term thanks to the increase in crude oil prices, a better production capacity of this resource and investments related to Expo2020 . These were the expectations prior to the COVID-19 pandemic, due to which Expo2020 was postponed until 2021.

Taxes

In December 2015, the 6 members of the Gulf Cooperation Council: Bahrain, Saudi Arabia, United Arab Emirates, Kuwait, Qatar and Oman agreed to implement a regional value added tax of 5% to boost and diversify local economies after the fall of global oil prices.

On October 1, 2017, the UAE implemented a 50% tax on cigarettes and sugary drinks and a 100% tax on energy drinks, as a step prior to the implementation of the aforementioned value added tax.

Saudi Arabia and the United Arab Emirates were the first countries to apply the measure, finally launching the 5% tax as of January 1, 2018. Certain basic food products and everything related to health and education were excepted.
Due to its high dependence on oil as a generator of resources and the uncertainty surrounding the evolution of the sector, the UAE is one of the pioneer countries in the search for alternatives to diversify its economy. Their efforts are aimed at developing alternative income sectors, a fact that is evident when analyzing the evolution of the contribution of non-oil sectors to the national GDP, which according to local authorities grew from 69.2% in 2014 to 70.7% % in 2019.

Foreign Policy

Since independence on December 2, 1971 and under the influence of the late Sheikh Zayed, the UAE has maintained a “prudent” international policy in accordance with its status as a small and rich country in the regional concert. Since then, its foreign policy consists of a strategic alliance with the Western powers and friendship with all Arab countries.
The UAE is a powerful voice in the Middle East, particularly within the Gulf Cooperation Council (GCC) and in the Arab League. They participate with Saudi Arabia, Egypt and Bahrain in the land, air and sea blockade of Qatar declared on June 5, 2017. This breakdown of diplomatic relations and the blockade of Qatar has deeply affected political and economic relations in the region. Three years after the start of the blockade, the UAE, along with the other members of the Quartet, agree that the policies and actions deployed by this country do not agree with the objectives pursued by the Cooperation Council for the Arab States of the Gulf, for which reason they continue with the blockade.

The UAE maintains very good relations with the European Union, the US and the Arab countries. In mid-2020, it signed a peace agreement with Israel, a state with which it has initiated a very intense roadmap to channel bilateral relations. Instead, its ties to Iran and Turkey are often unstable for geopolitical and religious reasons.

International Trade

The international trade of the United Arab Emirates is one of the most dynamic in the world. According to the WTO, the UAE is within the top 20 exporters and 19 top importers of merchandise in the world ranking.

The decrease in global trade, accompanied by the negative effects of the armed conflicts in the region and the decrease in oil prices, has affected the country.

According to the latest figures published by the Economist Intelligence Unit, in 2019 Emirati exports reached US $ 304 billion and its imports US $ 225 billion.

Exports and re-exports of hydrocarbons (crude oil, gas and petrochemical industry) comprise 40% of Emirati activity abroad, with Hong Kong, Singapore and the United States being its main trading partners.

Regarding exports of non-hydrocarbon products, Saudi Arabia (6.8%), India (4.1%), Iraq (3.6%), Oman (3.2%) and Iran (3.2%) are its main business partners.

Regarding its imports, they are highly diversified in terms of product and participation. Broadly speaking, what the United Arab Emirates bought abroad in recent years were fine pearls (natural or seeded), precious metals, electrical machines or appliances, mechanical machines or appliances, nuclear reactors, boilers and vehicles for heavy machinery.

Its main trading partners are China (15.2%), India (10%) and the United States (7.5%), in addition to the important role of the member countries of the GCC Gulf Cooperation Agreement.

It should be noted that the United Arab Emirates has created an economy that is very open to the outside world and offers a fairly favorable trade regime for commercial exchanges, with low tariffs and efficient customs management.
As a result of the establishment of the Customs Union among the GCC members, all member countries apply a general common external tariff of 5% to almost all products. There are some products to which a higher tariff is applied, such as tobacco and its manufactures (a 100% tariff) and alcoholic beverages (a 50% tariff), among others. Likewise, there is a list of products exempt from tariff tax: live animals, some fresh fruits and vegetables, tea, wheat, oats, corn, rice, sugar, medicines, human blood, books, newspapers and other publications, as well as certain types of air and sea vessels.

Also exempt from duty are those raw materials that are imported by the GCC countries for their transformation into duly registered industries, and with an industrial license issued by the Ministry or the competent authority of the country in question. In industrial areas, there is also a duty exemption for all imported machinery that is used for the activity of the company in question.

Perspectives

Currently, the UAE imports up to 85% of the food that its population demands. For this reason, the Ministry of Climate Change and Environment (MOCCAE) has implemented a strategic plan for the period 2017-21 that aims to reduce the country’s dependence on foreign food.

In this context, various strategies are being carried out, among which they point to the VAT exemption for farmers as well as initiatives to optimize livestock production and to incorporate technical innovations.
It should also be noted that this country has made investments for food production in Namibia, South Africa, Tunisia, Morocco, Algeria, Sudan and Egypt. Morocco is one of those with the greatest potential due to its resources, food production and logistics.

A recent report by the local government estimates that the country will demand 59.2 million tons of food by 2021. This suggests that, in the medium term, food imports will continue to increase.

Market Overview

1. General technical standards on the products to be exported

a) As a general rule, the product must be fresh, clean and free of foreign agents, dust and insects. It will be free of traces of pesticides and chemical products, except the limits allowed according to the Standard Codex “Maximum Residue Limits (MRLs) for Pesticides 2001”. It must also be transported under appropriate refrigeration conditions.

b) According to the Consumer Protection Law (approved on April 11, 2007), all products marketed in the UAE must have a label in Arabic, including type, nature, composition, name, expiration date, weight. net, country of origin and form of use. For food, you should include product and brand information, ingredients and additives, nutritional data, net content in metric units, manufacturer’s name and address, production and expiration date, gross and net weight, special storage and transportation instructions (if applicable). applicable) and country of origin.

2. Documentation necessary for the entry of products

a) Health certificate from the official authority of the country of origin, country of export (or its delegated authority).

b) Temperature records during the transport of containers for cold and frozen shipping.

c) Packing list that includes information on the container loading date, types and quantities of food, description, production and expiration date (s) for each type / lot.

d) Certificate of Origin (original or stamped copy legalized by the corresponding body).

e) Import license or commercial license indicating authorization to import food or for commercial activities in general.

f) Air waybill or bill of lading, commercial invoice, certificate of origin, packing list, bill of lading, delivery order and / or necessary permits.

g) Document that certifies that the product is suitable for human consumption.

For more details, it is suggested to consult the following link: https://www.dubaicustoms.gov.ae/en/procedures/customsdeclaration/pages/import.aspx

3. Halal Certification

According to the religion of Islam, Muslims must consume food, flavors, nutrients, medicines and cosmetics that have the “HALAL CERTIFICATION”.

HALAL means “permitted, licit or authorized for consumption” by the Islamic Religion and is based on precepts that contemplate aspects of hygiene and health.

Any food that is considered Halal must comply with the Islamic regulations established in the Koran and the prophetic tradition: it must not contain any forbidden ingredients (intoxicating drinks, meat of animals found dead, blood, pork and all its derivatives, the animals that eat carrion or have claws, animals killed by suffocation, killed by other animals or sacrificed invoking another name than that of God). You cannot even maintain any contact with the aforementioned (for example, it is forbidden to use the same item to slaughter a pig as a cow that will later be destined for consumption by Muslims).

To be able to register in this Halal system, organizations must start by ensuring that they are meeting the established standards for the certification of food products, cosmetics and slaughterhouses. These standards are for sale at the following link: https://www.esma.gov.ae/en-us/Services/Pages/Purchase-Standards.aspx

Once it is confirmed that the requirements are being met, organizations will be able to complete the necessary applications and send them to the following email: [email protected] ESMA (Emirates Authority For Standardization & Metrology) is the authority in charge according to the 19th Ministerial Resolution No. 10 of the product legislative system. This authority will analyze the application and, if it is approved, it will inform the customer of the method of payment of the initial registration costs. Once the ESMA obtains the payment receipt, it will assign the application to one of the approved accreditation bodies, informing the client of what it is. It is after this step that the initial registration is considered completed.

Next, the client must contact the accreditation body and complete the formalities and application processes with it. You will receive the accreditation within eight months from the initial registration date.

Finally, once the accreditation has been satisfactorily completed, the client must return to ESMA to obtain the registration certificate after payment of the related costs.

Tariff Structure

As a member of the CCG, the UAE applies a common rate. The structure of its tariff system is based on the Harmonized System and there are 4 levels of tariffs:

A) 0% – Food, construction materials, medical products and products destined for the free zones are exempt from import duties.

B) 5% – General duty, except for products mentioned above.

C) 50% – Alcoholic beverages in general.

D) 100% – Tobacco and its products.

Source: United Arab Emirates Federal Authority for Competitiveness and Statistics

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