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The United Arab Emirates was formed as a federation in 1971 with the agreement of the seven heads of state of Dubai, Sharjah, Abu Dhabi, Fujairah, Ras Al Khaimah, Umm al-Quwain and Ajman. The UAE is a young country with a population of around 10 million, including nearly nine million expatriates. Fifty years ago, the economy of this bright star of the Middle East was based on fishing and harvesting pearls but since discovering oil, the UAE’s transformation has put them on a par with the top western European countries for GDP.

The strong economy, tax-exempt free zones, a business-oriented infrastructure, and quality of life are attractions for companies expanding into the country. As with many nations, the United Arab Emirates protects its borders and workforce with strict regulations. However, it is also a welcoming country. In September 2022, changes to the Federal Decree-Law on Entry and Residence of Foreigners came into effect for visitors, potential employees, and investors to make the UAE a more accessible and attractive location.

The opportunities that come with expanding into the UAE can be stimulating as well as intimidating and confusing, especially when you consider all the legal work that must be done and the documentation required. These can be worked through more efficiently and cost-effectively with the support of a Professional Employer Organisation (PEO) such as Bradford Jacobs, primarily through our Employer of Record (EOR) framework. This can be best utilised when businesses are just beginning their expansion process and require more information before incorporating an entity and fully establishing themselves in that market.

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United Arab Emirates – The Economy

The economy of the United Arab Emirates is a high-income open economy. It is the fifth largest in the Middle East (after Iran, Saudi Arabia, Turkey, and Egypt), with a gross domestic product (GDP) of AED 1.84 trillion (USD 501 billion) in 2022. The UAE economy relies heavily on petroleum and natural gas revenues, especially in Abu Dhabi.

However, there has been economic diversification recently, particularly in Dubai. In the 1980s, Dubai’s diversification centred around trade and the creation of shipping and logistic centres, notably Port Rashid and the port and Free Zone of Jebel Ali, as well as Dubai International Airport, leading to several major global plays in shipping, transportation, and logistic. High-class tourism and international finance continue to be developed. The Dubai International Financial Centre (DIFC) offers 55% foreign ownership, no withholding tax, freehold land and office space, and a tailor-made financial regulatory system with laws taken from best practices in other leading financial centres like New York, London, Zürich and Singapore.

Dubai has also developed some Internet and Media free zones, offering 100% foreign ownership and no tax office space for the world’s leading ICT and media companies, with the latest communications infrastructure to service them. Many top worldwide companies have set up branch offices and even changed headquarters to Dubai. The recent liberalisation in the property market, allowing non-citizens to buy freehold land, has resulted in a significant boom in the construction and real estate sectors. Famous signature developments such as the 2 Palm Islands, the World (archipelago), Dubai Marina, Jumeirah Lake Towers, and many others offer villas, high-rise apartments, and office space. Nationwide, there is currently USD 350 billion worth of active construction projects.

Tourism is one of the most significant non-oil sources of revenue in the UAE. The Dubai Government created the now-famous Emirates airline in the 1980s. It is presently one of the few airlines to witness intense levels of growth. Emirates is also the largest operator of the Airbus A380 aircraft. In addition, to finding new ways of sustaining the national economy, the UAE has also made progress in installing new, sustainable methods of generating electricity. Various solar energy initiatives at Masdar City and other renewable energy developments in parts of the country evidence this.

The UAE is starting to see the emergence of local manufacturing as a new source of economic development. Strata in the aerospace industry is an example of a successful government-led investment. Small-scale entrepreneurial ventures are also picking up, such as Zarooq Motors in the automotive industry. In August 2020, the Barakah nuclear power plant, the first nuclear power plant in the Arab world, became operational.

In late 2021, it was announced that UAE’s banking assets were expected to grow between 8% and 10% in 2022 as the second-biggest Arab economy continues to recover from the covid-19 pandemic. It was also announced that the UAE’s economy might grow at a faster-than-projected rate, reaching 4.6% in 2022.

The main import partners of the UAE in 2019 are China (15%), India (12%), and the United States (7%), and the main export partners are India (11%), Japan (10%), Saudi Arabia (7%), Switzerland (6%), China (6%), and Iraq (6%). The UAE is a member of the World Trade Organisation (WTO), the Gulf Cooperation Council (GCC) and the Organisation of the Petroleum Exporting Countries (OPEC).

The United Arab Emirates (or simply the Emirates)
Abu Dhabi
No. of Emirates
7 Emirates (states): Abu Dhabi (87% of the country’s area), Dubai, Sharjah, Ras Al Khaimah, Ajman, Umm Al-Quwain, and Fujairah.
Principal Cities
Dubai, Abu Dhabi, Sharjah, Al Ain, Ajman, Ras Al Khaimah, Fujairah, and Umm Al-Quwain.
Local Currency
UAE Dirham (AED)
Major Religion
Islam (76%) – Christianity (9%) – Hinduism (8%) – Buddhism (1.8%) – Others (5%)
Date Format
Time Zone
CET (UTC+1 /+2 in Summer DST)
Country Dial Code
10.2 million
Border Countries
Oman (450 km – 280 mi), Saudi Arabia (530 km – 330 mi), and Qatar (19 km – 12 mi).
Tax Year
1 January – 31 December (calendar year)
National Minimum Wage
For expatriates, there is no mandatory minimum wage. For UAE nationals, the minimum wage is determined by the level of education:

  • No high school certificate - 3,000 AED (EUR 788 – USD 817)
  • High school certificate - 4,000 AED (EUR 1,051 – USD 1,089)
  • College degree or higher - 5,000 AED (EUR 1,314 – USD 1,361)
Taxpayer Identification Numbers
As there is no tax in the UAE, the government does not issue TINs but Tax Residency Certificates (TRCs) upon application of an eligible individual or entity, based on the applicable Double Taxation Treaty.

The UAE introduced a Value Added Tax on 1 January 2018 but the VAT numbers issued do not correspond with the classification of TINs.
Leading Sectors
Industry (49.8% of the GDP) – Services (49.2% of the GDP) –Agriculture (0.9% of the GDP)

Primary industries: Petroleum, petrochemicals, fishing, aluminium, cement, fertiliser, ship repair, construction, materials, handicrafts, and textiles.
Main imports
Gold, broadcasting equipment, jewellery, refined petroleum, and diamonds (2019) – USD 229.2 billion (2017 est.)
Main exports
Crude petroleum, refined petroleum, gold, jewellery, and broadcasting equipment (2019) – USD 308.5 billion (2017 est.)
Main trading partners
Main Imports partners (2019): China (15%), India (12%), and the United States (7%).

Main Exports Partners (2019): India (11%), Japan (10%), Saudi Arabia (7%), Switzerland (6%), China (6%), and Iraq (6%).
Government Type
Federal Islamic parliamentary elective semi-constitutional monarchy
Current President / PM
President: Mohamed bin Zayed Al Nahyan (since May 14, 2022)

Prime Minister (and VP): Mohamed bin Rashid Al Maktoum (since 2006)

The Main Sectors of the Emirati Economy

The UAE has the most diversified economy in the GCC. The country was reliant on oil and gas for centuries. Still, the government has started giving equal prominence to all sectors, increasing revenue and leading to impressive development in the tourism, retail, and manufacturing sectors.

  • Oli and Natural Gas production – The United Arab Emirates is among the world’s ten largest oil producers. About 96% of the country’s 100 billion barrels of proven oil reserves are located in Abu Dhabi, ranking 6th worldwide. The UAE produces an average of 3.2 million barrels of petroleum and liquids daily. Hydrocarbons play a critical role in the UAE economy, with 30% of the UAE’s GDP based on the oil and gas industry and 13% of its exports. The UAE has prioritised the energy transition and was the first Arab state to set a “net-zero” emissions target. Abu Dhabi National Oil Company (ADNOC) is a global leader in the oil and gas industry, active in all industry sectors. ADNOC expects to reach 5 million barrels of maximum sustainable production capacity by 2030 and plans to spend AED 550 billion (USD 150 billion) for 2023-2027 to boost oil and gas production capacity. That is an increase on the previous spending plan of USD 127 billion. It will also form a new unit for gas processing and marketing. In 2020, the UAE announced the discovery of over 80 trillion cubic feet of gas resources at Jebel Ali. The country is seeking to become self-sufficient in gas supply by 2030. The UAE imports natural gas from Qatar through the Dolphin pipeline to supply power plants and desalination plants. In 2021, Mubadala Investment Company, ADNOC, Abu Dhabi Holdinfg (ADQ), and the Ministry of Energy and Infrastructure (MoEI) announced the Hydrogen Alliance to pursue producing blue and green hydrogen for export.
  • Manufacturing – Manufacturing is the second largest contributor to the country’s economy. It accounts for 80% of Dubai’s non-oil trade and 53% of its total non-oil exports. Some of the primary sub-sectors of the industry are processed food and beverages, plastics and rubber, electrical machinery and equipment, chemicals and chemical products, minerals and mineral products, publishing and printing, pearls, precious stones and metals. Organisations that plan to set up a manufacturing plant in Dubai are bestowed with various lucrative facilities. The UAE launched an initiative to increase the contribution of manufacturing to its GDP from USD 33 billion to USD 81 billion within a decade. The government has also signed a pact with Emirates Development Bank and defence firm EDGE to boost manufacturing in the sector. Innovation has also allowed the UAE to become the first country to produce green aluminium. Following these developments, UAE’s Minister of Industry and Advanced Technology, Dr Sultan Ahmed Al Jaber, has said the goal is to turn the country’s industrial sector into a global manufacturing hub.
  • Retail – The retail industry has witnessed massive growth in the UAE, specifically in Dubai. With numerous global retail players establishing their base in the country, the industry is expected to thrive in the coming years. Dubai hosts some of the world’s biggest shopping festivals, which helps boost retailers’ local sales.
  • Healthcare  UAE is home to an advanced healthcare system that aims to become one of the best in the world. The UAE government’s various initiatives to promote the sector, coupled with the latest technologies that are being embraced, have helped the healthcare sector evolve rapidly. The highly specialised doctors and events such as Arab Health Exhibition, which brings together healthcare companies, technology, and products, have helped the industry gain global recognition. A growth of 60% was expected in the healthcare industry between 2016 and 2021.


  • Construction – The sector is an inevitable part of the Emirati economy. The use of robots, uncrewed aerial vehicles (UAV), and “intelligent” tools and equipment have helped in the automation of various tasks at construction sites and have been contributing factors to the thriving industry. During 2014-2018, residential construction accounted for the largest construction market in the UAE, and it is expected to retain its position in the coming years. More than 15,000 projects worth USD 791 billion are at various stages across the Emirates.
  • Business & Finance – The UAE offers businesses a robust enabling environment: stable political and macroeconomic conditions, a future-oriented government, good general infrastructure and ICT infrastructure. The country is ranked the 14th best nation worldwide for doing business in 2021. The UAE are in the top ranks of several other global indices, such as the World Economic Forum’s (WEF) Global Competitiveness Index (GCI), the World Happiness Report (WHR) and 33rd in the Global Innovation Index in 2021. The UAE has an attractive tax system for companies and wealthy individuals, making it a preferred destination for companies seeking tax avoidance. The NGO Tax Justice Network places them in 2021 in the ten most significant tax havens.
  • Tourism & Hospitality – The hospitality industry of the Emirati is the most successful among the Gulf nations and has long enjoyed status as the leading tourist nation of the GCC. The country is also the most significant tourist force in the Arab world. Tourism employed more than 604,300 people in 2018 and contributed AED 164.7 billion to the country’s GDP. It is expected to continue expanding, with a revenue increase of 12,4% of the country’s GDP by 2027. It is projected to contribute about AED 280.6 billion (EUR 73.7 billion – USD 76.5 billion) to the UAE’s GDP by 2028. The country’s major tourist attraction includes the famous Burj Khalifa in Dubai, the tallest tower in the world; The World archipelago and Palm Jumeirah also in Dubai; Sheikh Zayed Mosque and Yas Marina Circuit in Abu Dhabi; Al Hajar Mountains in Fujairah. The uniqueness of the country’s natural desert life also facilitates the country’s tourist industry. According to MasterCard Global Destination Cities Index, Dubai is the 5th most popular tourism destination in the world. 15.93 million international overnight tourists visited Dubai in 2018. Dubai holds up to 66% share of the UAE’s tourism economy, with Abu Dhabi having 16% and Sharjah 10%.

Labour Contracts Law in the UAE

General requirements

  • Under the new Law, all contracts must be fixed term for a maximum of three years, with renewals included in the total years of service
  • Existing open-ended contracts must be transferred to fixed terms by February 2023
  • A minimum of 30 days’ notice remains from the previous Labour Law, with a new maximum of 90 days
  • Employers must issue employees with the standard MOHRE job offer letter
  • Employees must be registered with MOHRE and the appropriate local authorities once the contract is signed
  • MOHRE must permit employers to change the terms of a contract unless operating in a Free Trade Zone
  • UAE nationals and citizens of the other Gulf Cooperation Council nations (Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia) must be registered with the General Pension and Social Security Authority (GPSSA) within one month of starting work
  • There is no social security provision for expatriates. Under the Dubai Health Insurance Law, the employer is responsible for ensuring all employees have health insurance that equals or exceeds the minimum benefits required by the Health Authority. Requirements vary in other Emirates

Employers hiring non-Emirati or GCC citizens face other requirements, including:

  • Obtain the company’s ‘eSignature’ card from MOHRE before applying for a work permit for the employee
  • Employers must sponsor the prospective employee, satisfying rules on such as educational and professional qualifications; legal presence in the UAE; that the relevant employment sector does not have suitable Emirati candidates
  • Register the job offer letter with MOHRE before applying for the employee’s visa
  • Quotas apply to the number of non-Emiratis employed, according to MOHRE’s limits and depending on the company’s legal structure, type of operation and location.
  • MOHRE requires a bank guarantee of AED 3,000 for each sponsored employee.

Tax and Labour Authorities in the UAE

Tax Authorities

The Federal Tax Authority (FTA) is responsible for managing, collecting, and implementing federal taxes (e.g. VAT) and related penalties, distributing taxes revenues, and applying tax laws.

The Tax Procedure Law and Related Cabinet Decisions govern general tax compliance obligations, tax audit procedures, how to appeal assessments or decisions, the disclosure of errors, administrative penalties, and fees for services provided by the FTA.

Most companies established or operating in the UAE (except foreign oil companies engaged in upstream petroleum activities and branches of foreign banks) are currently not required to register and file CIT returns in the Emirates.

Labour Authorities

The Ministry of Human Resources & Emiratisation (MOHRE) is responsible for fulfilling the following essential duties: proposing federal laws that regulate labour and labour affairs and supervise their implementation; managing the job market; proposing labour policies well-suited to the UAE; and organising labour relationships, and in fulfilling its duties the Ministry seeks to establish stability in the market, increase productivity, and create jobs.

The organisational structure of the MOHRE comprises two major divisions: the human resources division, which includes the labour affairs department, the inspection affairs department and the assistive labourer’s department, while the second division is the Emiratisation Division, which provides for the national workforce development department, the federal workforce employment department, the assistive services affairs department, plus two other departments that are directly linked to the office of the Minister: the Communications & International Relations Department and the Strategy & Policies Affairs Department


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