doing business in united arab emirates.docx

8/11/2019 Doing Business in United Arab Emirates.docx

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Doing Business in

United Arab Emirates

International Sellings & Business Culture

Turku University of Applied Sciences (TUAS)

Alberto Arestizabal Gil


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Index:1. Introduction3

2. General overview of the country3

3. Why establishing a company in UAE?.........................................................................4

4. Culture4

a. Religion

b. Schedules

c. Meetings and Making business

d. Traditions and Manners

e. Society and Relationships

f. Family

g. Popular sports

5. Economy..8

6. Money issues............................................................................................................10

a. Getting Creditb. Protecting Investors

c. Paying taxes

7. International relations..............................................................................................13

a. Government

b. Trading across borders

c. Visa issues

8. Creating your Business.............................................................................................16a. Annual Requirements for Businesses

b. Legal structures for business

c. The following steps are required in establishing a company in UAE

9. Models......................................................................................................................18

a. The Geert Hofstede s analysis

b. Cultural differences high context-theory by Edward Hall

c. Time conception in accordance to Trompenaars model

10.References................................................................................................................22


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1.Introduction

As a federation of seven separate Islamic entities, the UAE has historically been a

divided and sought after territory. Years of European involvement culminated in

several friendship treaties with the British Empire, particularly that in 1853 whichcreated the TrucialSheikdoms. After several disputes over territory and borders with

Saudi Arabia and Oman, the UK ended their treaty and opened the door for formal

confederation into the UAE. In the early 1970s nine Sheikdoms attempted to come

together but in the end only the current seven agreed to join together in what is now

known as the United Arab Emirates. Since the discovery of oil in the 60s, the UAE has

used its oil wealth to fuel a construction boom previously unknown in the Middle East.

Emirati society is a unique blend of cultures and people. Traditionally focused on

maritime activities such as fishing and pearling, the discovery of oil in the mid 20th

century drastically changed the UAEs economy making it one of the wealthiest nationsin the Muslim world. With a large foreign expatriate population, it is the most socially

liberal country in the Middle East. Religious and historical influences combined with a

progressive outlook and extensive economic opportunities make the UAE a most

intriguing and unique place to do business. Understanding this distinct culture is

paramount for anyone wishing to successfully do business in the Emirates.

2.General overview of the country (Data)

Official nameUnited Arab Emirates

Population4,798,491

Official LanguageArabic

CurrencyEmirati Dirham (AED)

Capital cityAbu Dhabi

GDP (Billions)$301.9

GDP per Capita -- $59,717

The Middle East, especially the United Arab Emirates (UAE) is an interesting market

and economically beneficial production site for foreign companies. It possesses a

resource rich diversified economy, which has proved a heaven for the investors theworld over.


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3.Why establishing a company in UAE?

UAE has easy access to the 1.5 billion consumer markets situated in Africa, West Asia, CIS

countries, and East Europe as well as the areas surrounding the Red Sea and the Gulf. UAEpossesses 10% of worlds proven crude oil reserves, which will last for more than 100 years.

UAE is one of the safest places for business in the world. UAE free trade zones are home to

more than 3000 companies with an estimated trade of around US$ 8 billion. Dubai Internet

City has gained the support of the Oracle, IBM, Cisco, Nokia, Ericsson, Hewlett-Packard and

Nortel. Dubai Media City would act as a bridge to the future, linking the GCC countries and to

the other nations of the world.

4.Culture

a. Religion

Religion has played an important and influential role in shaping the society and culture

of the UAE. Islam is the official and majority religion and pervades almost every aspect

of life. Laws, education, food, clothes, daily routines and even conversations are all

strongly influenced by Islam. The Islamic faith places great emphasis on behaviors such

as generosity, respect and modesty which most Emiratis will display. Understanding

Islam and the influence it has on everyday life and Emirati business culture is the first

step to conducting successful business in the UAE.

b. Schedules

The working week traditionally starts on Saturday and ends on Wednesday. Thursday

and Friday are the official days of rest, though in some cases, people will work

Thursday and take off Saturday instead. Office hours tend to be 09:00-13:00 and

16:30-20:00 though today work often goes even later as a result of the immense

construction boom. Attitudes to time in the UAE are much more relaxed than in manyWestern cultures. People and relationships are more important than schedules and

The investment incentives promise you a prosperous future with advantages of zero personal

and corporate taxes. Other competitive advantages include no foreign exchange controls, no

trade barriers, modern infrastructure, 100% repatriation of capital and profits, and Freedom from

foreign exchange controls. UAE free trade zones are potential competitors world around. Over a

small period of 17 years the number of free trade zones in UAE has reached to 13, with more

new in developmental stage.


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punctuality. It is not uncommon, therefore, for your Emirati counterparts to arrive late

but foreigners are expected to arrive on time. Dontschedule business meetings during

prayer times or any of the major Islamic holidays such as Ramadan or Eid. These are

extremely important periods for the majority of native Emiratis who are Muslims.

Business is usually put on hold during these occasions as it is a time for reflection and

celebration.

c. Meetings and Making business

Meetings should be scheduled in advance with extra time allocated in case it should

go on longer or start later than anticipated. Often meetings are cancelled at the last

minute, so it is important to be flexible and come prepared with either a business

card or letter to let them know you were there. People in the UAE prefer to do business in

person. Relationships and mutual trust are paramount for any successful businessinteraction and can only be developed through face-to-face meetings. It is important

to spend time with your Emirati business counterparts and ensure future meetings

take place to continue cultivating the relationship. Initial business meetings are often a

way to become acquainted with your prospective counterparts. They are generally

long in duration and discussions are conducted at a leisurely pace over tea and coffee.

Time should be allocated for such business meetings, as they are an essential part of

Emirati business culture. Business cards are common but not essential to Emirati

business culture. If you do intend to use business cards whilst in the UAE, ensure that

the information is printed in both English and Arabic. Dont expect a one-on-one

meeting to only include yourself and the other person. Often there will be otherpeople present in the office or meeting room waiting their turn to meet with that

person. When you arrive, it is polite to greet the person, take a seat and accept

any coffee served until it is your turn. Dontassume that the person who asks the most

questions in meetings holds the most responsibility. In the UAE, this person is

considered to be the least respected or least important. The decision maker is usually a

silent observer and will only speak when discussions come to a close.

d. Traditions and Manners

The Emirates are a considerably modern state in relation to the rest of the Middle

East. As such, many traditional attitudes and business practices are evolving

towards a more Westernized approach. Nevertheless, it is still important to be aware

and respectful of some of the differences that might exist. When first meeting a group

of people, it is important that you shake hands and greet the most senior person first.

Usually the oldest person in the room has the most seniority, but you might find there

is another person who has stepped in to make the decisions. Always try to find out

titles and status of the people you are meeting beforehand so as to show the right

amount of respect. The customary greeting is As-salam alaikum, (peace be upon you)to which the reply is Wa alaikum as-salam, (and upon you be peace). When entering


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a meeting, general introductions will begin with a handshake. You should greet each of

your Emirati counterparts individually. In line with Muslim customs, avoid shaking

hands with a woman unless they extend their hand first. Do dress conservatively.

While the UAE is more westernized than many other Middle Eastern countries and

therefore home to many Western style clothes, it is still important to dress modestly.

As a sign of respect, men should wear a conservative suit and women should ensuretheir clothing covers their legs and arms.

e. Society and Relationships

Hospitality is an essential part of Emirati culture and applies to both social and

professional contexts. Guests will be received with enormous generosity. In the home

this usually comes in the form of a feast of traditional Emirati food, especially duringthe holidays, while in a business context, meetings are almost always accompanied by

traditional Arab coffee and pastries. The emphasis placed on hospitality is closely

connected to the importance of relationships. Foreigners should show their gratitude

and dedicate time to cultivating relationships with their Emirati counterparts. There is

a strong vertical hierarchy in most Emirati companies. Many are owned and run by one

powerful person who makes all of the decisions. This person must be treated with

respect and deference, particularly if you hope to have a successful business

relationship. Age, money and family connections are all key determining factors of a

personsstatus. Who you are is usually more important than what you have achieved.

It is not uncommon to therefore find many members of one family working for thesame company. Status is important and must be recognized by using the correct title

such as Shaikh (chief), Mohandas (engineer) and Ustadh (professor). If you are unsure

of someones title, find out beforehand or ask the person who introduced you. It is

important to have connections to someone in the UAE who can introduce you before

attempting to do business there on your own. Emirati people prefer to do business

with those they know, so having someone to introduce you will be of immense benefit

to your business relationship. Family and friends come before anything else. As a

result, it is not uncommon for an Emirati to reschedule or cancel something to

accommodate their needs or wishes. Take the time to get to know your business

counterparts on a person level so that you can develop a friendship with that personand therefore be in a better position of priority for business dealings. Do address your

Emirati counterparts with the appropriate titles followed by his or her first name. If

unsure, it is best to get the names and correct form of address of those you will be

doing business with beforehand. Do accept an invitation to a meal or social event.

Relationships are an integral part of doing business in the Emirates. Spending time

with your Emirati counterparts is the best way to build trust and mutual

understanding.


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f. Family

Family and tribal connections form the basis of Emirati social structure. The family and

tribe are highly influential and play a role in shaping a persons values and behavior. It

serves to support its members both financially and emotionally and as such, the familycomes before anything else and its honor is protected by doing whatever necessary.

Loyalty between family and tribe members carries over into business where it is not

uncommon for companies to be run by and employ several members of one family or

tribe. Dont ask about a persons wife or daughters. It is polite to enquire about a

personsfamily or health, but never ask specifically about any female members. Family

life which involves female members is kept extremely private.

g. Popular sports

Being a country filled with desert, the past sports played in theUnited Arab Emirates

are still practiced today, which include camel and horse racing. The UAE has come a

long way since those days and with nationalities from all over the world, working and

living in the UAE, more and more sports become popular amongst UAE residence.

HorseRiding

Horse racing is more popular than camel racing these days and individuals interested in

learning can take lessons and find the necessary equipment easily accessible. Horse

racing facilities can be found in the Equestrian Clubs found in the major cities of theUAE. Dubai also hosts the annual Dubai World Cuphorse race, which is the richest

horse race in the world.

CamelRacing

Camel racing takes place in the morning on the weekends of the winter season

(October to March) and is a unique sports, which is an integral part of the United Arab

Emirates (UAE) heritage. The racing takes place at special tracks around the country

and the atmosphere is electric, especially during public holidays when major races are

held for considerable prize money.

Football

Football (soccer) is the most popular sport in the world and is undoubtedly the

favourite sport in the United Arab Emirates. There are many stadiums in each of the

seven emirates, and the largest one is the Zayed Sports City, which also is the biggest

sports complex in the Middle East.

Cricket

With the UAE's major population coming from the Indian sub-continent, cricket is a

very popular sport and the emirate of Sharjah is most well known for the Sharjah

Cricket Stadium, which has annual matches played on its grounds for the cricket worldcup.
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Golf

The sport of Golf is becoming more and more popular amongst UAE residence as the

UAE has over a dozen golf courses, and three of these courses are PGA championship

golf courses. These golf courses are spread out throughout the UAE and are governed

by the UAE Golf Association, and a number of them are found in major hotels. Dubai

hosts the annualDubai Desert Classic,which is a European Tour event held in Marchand features some of the world's best golfers competing for over US$1 Million.

Tennis

Similar to Golf, tennis' popularity in the UAE is continously increasing and you will find

tennis courts in hotels and private clubs throughout the UAE. Dubai hosts the

annualDubai Tennis Championships,which is an ATP and WTA event, which attracts

the top-seeded players how compete at the Dubai Aviation Club in February.

Rugby

With the growing european population in the UAE, rugby fans can participate andwatch matches throughout the year. In April, the Irish Village (Dubai) holds the Six

Nations Rugby Tournament, while in November and December, the world-class Dubai

Rugby Sevens is held.

5.Economy and Business opportunities

With 11 state-of-the-art ports, 6 airports and satellite links with 230 countries, the

UAE has become one of the leading entreport centers of the world, rivaling theemerging tigers of South East Asia, having long since consolidated its position among

the top oil producing nations, the visionary leadership of the UAE is concentrating its

efforts on industrial development in the country.

A fast intercontinental road network connects the UAE to Oman, Qatar, Bahrain,

Saudi Arabia, Iran, Kuwait and beyond to Europe. By sea, feeder operators provide

regular scheduled sailings from the UAE terminals to the Indian subcontinent, Yemen,

South and East Africa. Dubai International Airport offers 300 flights daily to and from

some 100 destinations.

Despite having abundant oil reserves, the country has always made efforts to broadenits economic base and reduce its exposure to volatile oil price fluctuations. Since

inception, UAE has undergone a continuous and sustained process of transformation

from small poor principalities to a modern state with a high standard of living. The

sound and effective economic policies have reduced its dependence on oil and natural

gas revenues. Recognizing the private sectors potential, the business environment in

the country encourages the local as well as foreign investors. The government

provides all industrial facilities, and has enacted several liberal commercial laws and

regulations to meet international obligations and protection for investors.
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The economy of the UAE is doing well and it has swelled by more than six times over

the past 26 years to become the fourth biggest economy in the Arab world. The

recent years has witnessed the emergence of pioneer industries in view of the

generous advantage and incentives granted to the investors along with the simplicity

of procedures for practicing business in UAE. During the last decade, government has

increased its investment in the local market from $3.47 billion to $4.93 billion,whereas, the investment in the business sector reached to $5.41 billion from $2.89

billion.

In general, establishing a business presence in UAE is relatively easier and

straightforward. The foreigners can participate in most of the available business

activities in UAE. The Companies Law recognizes seven kinds of legal structures for

formation under its provision with equity participation to foreigners in all except

General Partnership. The Law further sets forth the general rule that participation offoreigners should never be more than 49 percent in any company. Despite the

The country offers lucrative investment incentives and opportunities to local as well as

international investors that are not generally available internationally. Significant

among these are absence of corporate and income tax, no personal income taxes, no

foreign exchange controls, 100% repatriation of capital and profits.

The free trade zones with a variety of incentives are also playing an important role in

attracting investment. The share of free zones in non-oil exports increased to 57% in

2000 from 22% in 1999 and the net exports from these zones have reached to US $ 1.4

billion in 2000. By 2002, these zones were home of more than 3000 companies with an

estimated trade of around US$ 8 billion. The most important attraction of these free

zones is that a foreign investor can establish a legal activity fully owned by him. Other

incentives are 100% repatriation of capital and profits, no corporate taxes for 15 years,

which is renewable for further 15 years and no personal income taxes. Presently, there

are 13 free trade zones in UAE and some new are at developmental stage. Although all

the free zones offer more or less same incentives, but each zone has several

distinguishing features giving investors multiple choices of selection in view of their

activity to be established.

The industrial growth and investment policies of the government ensure that UAE will be

in the forefront of global economy. Significant among these are: government s allotment

of $13.4 billion towards the development of the non-oil sector, much of which will be

spent on telecommunications and information technology; Dubai Internet City is a great

move towards e-commerce and the vision of UAEs future internet economy; and Dubai

Media City would act as a bridge to the future, linking the GCC countries and to the other

nations of the world. The mega projects that will open new avenues for investment are:

Dolphin Project of $10 billion to pipe gas from Qatar to the UAE, Oman and Pakistan;

Taweelah A2 Power Plant project (Abu Dhabi); and a proposed project of $ 3.3 billion

Saadiyat Island Project - comprising a free zone, offshore stock exchange and

commodities.


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limitations of shares available to foreign investors, it is still believed by some to be the

easiest solution to carry out business in the UAE with management of the company in

foreigners hand.

6.Money issues

a. Banks

A total of 51 banks with over 768 branches, including 28 locally incorporated foreign

banks, have substantially increased aggregate assets, total assets and unclassified

assets. Significant growth has also come about in domestic credit and investments,

foreign assets, cash and deposits.

The UAE Central Bank

Established in 1980, the UAE Central bank is the main regulatory and supervisory body

in the banking industry. It has the power to implement banking policy with regard to

directing monetary credits taking into account the UAEs general policy.

The UAEsbanking and monetary system has made significant progress in recent years

due to the Central Banks increasingly strict control of financial institutions. In

particular, 1998 was a year of impressive growth in the banking sector, attributable to

some extent to adherence to the guidelines laid down by the Central Bank. In the last

ten years, the Central Bank has played an important role in supervising the banking

industry and has contributed in a measurable way to improving the quality of servicesand performance of a number of banks.

The Central Bank commitment to creating a stable economic framework ensures that

prosperity reaches all the residents in the country. Its relentless efforts are largely Oil

and Gas responsible for the emergence of UAE banks as forces to reckon with in the

Gulf Region.

Entrepreneurs the worlds over are looking for favorable business climate to establish or

expand their business ventures, then United Arab Emirates may be the one place where they

can sure to find an open economy, offering great incentives to meet your requirements. The

Middle East, especially the United Arab Emirates (UAE) is an interesting market and

economically beneficial production site for foreign companies. It possesses a resource rich

diversified economy, which has proved a heaven for the investors the world over.


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b. Accounting

Books of Account

The commercial transactions law (federal Law No. 18 of 1993) provides that a businessenterprise must keep such commercial books as the nature and scope of its business

requires this. The books of account are to give a true and fair view of the state of

affairs of the company.

Method of Accounting

UAE companies are required to maintain their books of account on an accrual basis.

Financial Statements

The following businesses must have their accounts audited annually:

Banks (local banks and branches of foreign banks)

Insurance companies and agencies

Public and private shareholding companies

Limited liability companies

Branches of foreign companies

Partnerships limited by shares

Other companies whose articles require annual audits

For public shareholding companies, the board of directors is responsible for preparingannual accounts and reports on the activities of the companies during the financial

year.

A companys accounts and report on activities must be signed by the chairman and

presented by the board of directors to the general meeting. The general meeting must

be held within four months after the end of the companys financial year.

A companys financial year must be specified in its articles of association.

Accounting Principles

The fundamental accounting concepts include going concern, consistency, prudence,

matching and the historical convention. Accounting practices and principles are not

codified in the UAE. Companies generally follow the International Financial Reporting

Standards (IFRS) and best industry practices for financial reporting.

Financial Reporting

Federal Commercial Companies Law No. 8 of 1984, together with certain ministerial

decisions, requires that public and private shareholding companies, limited liability

companies and branches of foreign companies file annual audited financial statementswith the Ministry of Economy and Commerce. In certain Emirates, limited liability


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companies and branches of foreign companies may be required to file audited

accounts to renew their trade licenses.Within three months of their year-end, banks

must file with the Central Bank their audited accounts, together with certain other

forms and returns as specified by the Central Bank. Insurance companies and agencies

must file their audited accounts with the Commissioner of Insurance at the Ministry of

Economy and Commerce within four months from the end of their financial year.The local authorities prescribe that all companies must present their financial

statements in accordance with the International Financial Reporting Standards (IFRS).

Accounting Profession

The accounting profession is well represented in the UAE, with most of the large

international accounting firms being present in the major centers. The registration

of accountants and auditors is governed by Federal Law No. 22 of 1995. The audits

required by statute may be undertaken only by auditors who are registered in the

Federal Register of Accountants and Auditors. The Accountants & Auditors Associationwas established to cope with the overall economic development in the UAE;

particularly in the field of commerce and industry which is manifested in the issuance

of all economic legislations. The main objective of the association is to undertake the

necessary measures for developing and consolidating the rules and standards for the

practice of the profession of accounting and auditing in the country in general.

c. Taxation

Taxation of Corporates

Each Emirate has its own decrees on corporate taxation.

With the exception of banks and oil companies no corporate income tax is payable

by businesses in the UAE. Oil companies pay up to 55% tax on UAE sourced taxable

income whereas banks pay 20% tax on taxable income. The taxable income of banks

is as per the audited financial statements whereas that of oil companies is as per the

concession agreement. Oil companies also pay royalties on production.

Taxation of Individuals

Individual Income tax is not levied in the UAE.

Withholding Taxes

Withholding taxes are not levied in the UAE.

Municipal Taxes


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Municipal taxes are imposed on hotel services at rates ranging from 5% to 10%.

Tax Treaties

In order to increase economic development of the country by encouraging cross

border transactions, the Government of the UAE has entered into Tax treaties with

several countries including Canada, China, Egypt, France, Germany, India, Pakistan,

Poland, Turkey and New Zealand. This would enable the foreign entities to reduce the

tax incidence on the UAE sourced income. UAE has entered into double taxation

avoidance agreements (DTAAs) with 47 countries and is in negotiations with at least 15

more countries.

7.International relations

a. Government

The politics of the United Arab Emirates take place in a framework of

afederal,presidential,elective monarchy. The UAE is a federation of sevenabsolute

monarchies: the emirates ofAbu Dhabi,Ajman,Fujairah,Sharjah,Dubai,Ras al-

Khaimah andUmm al-Qaiwain.ThePresident of the United Arab Emirates is itshead ofstate, and thePrime Minister of the United Arab Emirates is itshead of

government,including foreign affairs, security and defense, nationality and

immigration issues, education, public health, currency, postal, telephone and other

communications services, air traffic control, licensing of aircraft, labor relations,

banking,delimitation of territorial waters and extradition of criminals. All

responsibilities not granted to the national government are reserved to the emirates.

The UAE government comprises three branches: theexecutive,legislature,

andjudiciary. The executive branch consists of the President, Vice President, PrimeMinister, Federal Supreme Council, and a Council of Ministers (the cabinet). The

Federal Supreme Council is composed of the emirs of the seven emirates. It elects the

president, vice president, members of the Council of Ministers, and judges of the

Federal Supreme Court. The Supreme Council also formulates government policy,

proposes and ratifies national laws, and ratifies treaties.

Although elected by the Supreme Council, thepresident andprime minister are

essentially hereditary. The emir of Abu Dhabi holds the presidency, and the emir of

Dubai is prime minister. All but one prime minister served concurrently as vice

president. The political influences and financial obligations of the emirates are
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reflected by their respective positions in the federal government. While each emirate

still retains autonomy over its own territory, a percentage of its revenue is allocated to

the UAEs central budget.

Sheikh Zayed bin Sultan Al Nahyan was the UAE's president from the nation's foundinguntil his death on November 2, 2004. On the following day the Federal Supreme

Council elected his son,Sheikh Khalifa bin Zayed Al Nahyan,to the post. Abu Dhabi's

crown prince,Mohammed bin Zayed Al Nahyan,is theheir apparent.

The legislature is theFederal National Council (FNC), which consists of 40 members

drawn from all the emirates. Half are appointed by the rulers of the constituent

emirates, and the other half are indirectly elected to serve two-year terms. The first

indirect elections took place in 2006, and the goal is a wholly elected council. The

council carries out the countrys main consultative duties and has both a legislativeand supervisory role provided by the constitution. The council scrutinizes and amends

proposed legislation, but cannot prevent it from becoming law. The main tasks of the

FNC are:

Discussing constitutional amendments and draft laws, which may be approved,

amended or rejected

Reviewing the annual draft budget of the federation

Debating international treaties and conventions

Influencing the Governments work through the channels of discussion, question

and answer sessions, recommendations and following up on complaints

A constitutionallyindependent judiciary includes the Federal Supreme

Court. However,Dubai andRas al-Khaimah do not belong to the national judiciary.

All emirates have their own secular andIslamic law for civil, criminal, and high

courts.

In parallel to the economic developments of the UAE, the country's leaders have also

initiated political reforms in order to further develop the political institutions. The

political modernization process was envisaged in three stages: first, conduct elections

to elect half the FNC members through an Electoral College; second expand the

powers of the FNC and increase the number of FNC members, which would require

extensive constitutional studies and possible modifications, at the end of which the

political institution would be a more enabled body; and finally, an open election for

half the council.

The purpose of the elections was to expand political participation and develop a

culture of government reform. The limited scope of participation was conditioned by

three reasons: (1) the country not having an electoral tradition, (2) the prevailing
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political tension and instability in the region meaning that there was no scope for

error, and (3) elections in the region having proved to potentially be divisive affairs,

based on sectarian and religious issues, which the UAE wanted to avoid.

In December 2008, the Supreme Council approved constitutional amendments both to

empower the FNC and to enhance government transparency and accountability.

United Arab Emirates Government

The United Arab Emirates (UAE) eGovernment is the extension of the UAE Federal

Government in its electronic form. The UAE eGovernment enables convenient access

to government information and services through innovative and customer-friendly

delivery channels and streamlines the processes for quality and timely government

service delivery. The UAE eGovernment engages modern tools in Information and

Communication Technology to actively connect with its wide base of users from withinthe UAE and beyond. The setting up of the UAE eGovernment is a major step towards

modernisation and upgradation of government functioning as it brings about a cost-

effective, eco-friendly, transparent and participative government.

b. Business Hours

The official weekend is on Thursdays and Fridays. Some multinationals close on Fridays

and Saturdays, to overlap with companies doing business outside of the Arab world.

However, most of the smaller private companies only close on Friday, although

Thursday may be a half-day.Government offices open at 7.30 a.m. and close at 2.30

p.m. Private offices tend to keep longer hours, many coming back to work in the

evening after an extended mid-day break whilst others are open from 8 a.m. to 6 p.m.

Shop hours are similar in their opening times, but remain open until 9-10 pm.

Department stores, boutiques, the souks and many food shops remain open on a

Friday, apart from Prayer Times (11.30-1.30), while larger shops re-open on a Friday

afternoon around 4pm.During Ramadan most work is accomplished in the early hours

of the morning or much later in the evening after the days fast is broken (at sunset).

c. Visa issues

The laws governing immigration requirements are mainly contained in Federal Law No.

6 of 1973 regarding the Entry and Residence of Expatriates as amended by Federal Law

No. 13 of 1996, the immigration Law. The general rule regarding foreign visitors to the

UAE is that all visitors, except transit passengers who do not leave the airport, citizens

of the GCC countries (Qatar, Kuwait, Saudi Arabia, Bahrain and Oman) and British
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citizens, need to obtain a visa in order to enter the UAE. In order to apply for any visa

or permit, it is necessary to obtain the sponsorship of either a UAE resident (who

maybe a foreigner) or other legal entities in Dubai such as companies or hotels. If the

visa or permit is being arranged by a hotel or local sponsor, it is usually deposited at

the airport for collection by the visitor on arrival. There are several types of visas andpermits one may apply for. The type that a person will need will primarily depend on

the individuals purpose of entry into the UAE. Each permit or visa h as its own

requirements and procedures. However, there are general conditions which all

applicants must satisfy in order to obtain a visa or permit, as listed below:

The applicant must hold a valid passport or document allowing him to enter

the country and return to his country of residence

The official authorities have approved his entry for the purpose sought

The applicant has a foreign or local sponsor who is resident in the UAE

The applicant is not banned from entering the UAE

The applicant has not previously been deported from the UAE, unless special

permission has been obtained for his entry.

8.Creating your Business

a. Annual Requirements for Businesses

All companies must renew their registration with the Ministry of Economy,

Municipality or Economic Department and the Chamber of Commerce annually.

Registration fees are levied and vary according to the type of entity being registered

and the government authority concerned. Companies engaged in the oil, gas and

petrochemical sector and banks are the only entities required to file tax returns.However, the following businesses must have their accounts audited annually:

Banks (local banks and branches of foreign banks)

Insurance companies and agencies

Public and private shareholding companies

Limited liability companies


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Branches of foreign companies


Other companies whose articles require annual audits

b. Legal structures for business

Foreigners of any nationalities can actively participate in various available business

activities in the UAE. Under the Federal Law No.8, business organizations may take any

one of the seven mentioned forms:

Limited Liability companies

Public shareholding companies

Private shareholding companies


General partnerships

Limited partnerships

Shareholding companies

The company which does take any of these forms is considered as an illegal company

and the person running it will severally liable for the obligations arising from these kind

of contracts. An exception applies only to the companies that are operating in a Free

Trade Zone. Dubai is favored for its liberal approach to business and commerce as the

liberal regulations and laws attract millions. Each business entity big or small must be

registered and licensed with the Federal Ministry of Economy and Commerce of the

country. Moreover, there is a law set that the participation of the UAE nationals should

never be less than 51 percent in any of the commercial enterprises.

Private Shareholding Companies:This company must have at least three shareholdersand the minimum capital which one has to invest in Dh 2 million. The shares of the

company may not be offered to the public. The incorporating documents of these

companies must preclude public offering of shares.

Limited Partnership: This kind of partnership may comprise of one or more general

partners who are severally and jointly liable to all its debts. A limited partner may not

participate in the management and his name may not appear in the name of

partnership. Moreover, all the general partners must be UAE nationals.

Joint Ventures: If we talk about joint ventures, these are formed by the agreementbetween two or more legal entities or natural persons. Moreover, the terms and


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objectives of these ventures are governed by the joint venture contract. It may be

carried out in private name of one of the UAE national partners.

c. The following steps are required in establishing a company in UAE

A business must be registered with the municipality or the relevant Economic

Department and the Chamber of Commerce of each Emirate in which activities of the

business are conducted, and with the ministry of Economy and Commerce. In addition,

the following businesses require approval from the specified federal ministries and

agencies:

Banks, financial institutions and exchange companies must obtain approval

from the Central Bank

Insurance Companies and related agencies must obtain approval from the

Commissioner of Insurance at the Ministry of Economy and Commerce

Manufacturing businesses must be approved by the Ministry of Finance and

Industry

Medicinal products must be approved by the Ministry of Health

Printing, Publishing & Broadcasting activities must be approved by the

Ministry of Information & Culture

Educational activities are governed by the Ministry of Education

Special procedures apply in each Emirate regarding registration of businesses engaged

in oil and gas production and related industries. The requirements for registering a

company, including the time required fees payable, number of shareholders and

minimum capital depend on the particular type of business entity being established.

9.Models

a. The Geert Hofstede s analysis

The Geert Hofstede analysis for the United Arab Emirates is almost identical to other

Arab countries their Muslim faith plays a large role in the peoples lives. Large power

distance and uncertainty avoidance are the predominant characteristics for this region.

This indicates that it is expected and accepted that leaders separate themselves from

the group and issue complete and specific directives.


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The Geert Hofstede analysis for the Arab World, that includes the countries of Egypt,

Iraq, Kuwait, Lebanon, Libya, Saudi Arabia, and the United Arab Emirates,

demonstrates the Muslim faith plays a significant role in the peoples lives.

Large Power Distance (PDI) (80) and Uncertainty Avoidance (UAI) (68) are predominantHofstede Dimension characteristics for the countries in this region. These societies are

more likely to follow a caste system that does not allow significant upward mobility of

its citizens. They are also highly rule-oriented with laws, rules, regulations, and

controls in order to reduce the amount of uncertainty, while inequalities of power and

wealth have been allowed to grow within the society.

When these two Dimensions are combined, it creates a situation where leaders have

virtually ultimate power and authority, and the rules, laws and regulations developed

by those in power reinforce their own leadership and control. It is not unusual for newleadership to arise from armed insurrectionthe ultimate power, rather than from

diplomatic or democratic change.

The high Power Distance (PDI) ranking is indicative of a high level of inequality of

power and wealth within the society. These populations have an expectation and

acceptance that leaders will separate themselves from the group and this condition is

not necessarily subverted upon the population, but rather accepted by the society as

their cultural heritage.

The high Uncertainty Avoidance Index (UAI) ranking of 68, indicates the societys low

level of tolerance for uncertainty. In an effort to minimize or reduce this level of

uncertainty, strict rules, laws, policies, and regulations are adopted and implemented.

The ultimate goal of these populations is to control everything in order to eliminate or

avoid the unexpected. As a result of this high Uncertainty Avoidance characteristic, the

society does not readily accept change and is very risk adverse.

The Masculinity index (MAS), the third highest Hofstede Dimension is 52, only slightly

higher than the 50.2 average for all the countries included in the Hofstede MAS

Dimension. This would indicate that whilewomen in the Arab World are limited in

their rights, it may be due more to Muslim religion rather than a cultural paradigm.

The lowest Hofstede Dimension for the Arab World is the Individualism (IDV) ranking

at 38, compared to a world average ranking of 64. This translates into a Collectivist

society as compared to Individualist culture and is manifested in a close long-term

commitment to the member 'group', that being a family, extended family, or extended

relationships. Loyalty in a collectivist culture is paramount, and over-rides most other

societal rules.

The predominant religion for these countries is Islam, the practice of the Muslim faith.
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The combination of these two high scores (UAI) and (PDI) create societies that are

highly rule-oriented with laws, rules, regulations, and controls in order to reduce the

amount of uncertainty, while inequalities of power and wealth have been allowed to

grow within the society. These cultures are more likely to follow a caste system that

does not allow significant upward mobility of its citizens.When these two Dimensions are combined, it creates a situation where leaders have

virtually ultimate power and authority, and the rules, laws and regulations developed

by those in power, reinforce their own leadership and control. It is not unusual for new

leadership to arise from armed insurrectionthe ultimate power, rather than from

diplomatic or democratic change.

b. Cultural differences high and low-context theory by Edward Hall

The high- versus low-context dimension of culture relates to norms of communication.

In low-context countries, communication relies more heavily on the literal meaning of

the words used. Meanings of written and spoken communication are more explicit.

To people from high-context cultures, the bluntness and directness of low-context

communication styles can seem insulting or aggressive. In high-context cultures, much

more of the context surrounding the written or spoken communication is involved in

conveying the message. Factors such as the social status of the communicators and

the nature of the relationship between them are key. The meaning of everything said

in high-context communication has to be interpreted in the context of the social

relationship between the individuals. Interpersonal space is also related to the high-

context versus low-context dimension of national cultures. In low-context cultures,

people tend to be uncomfortable standing closer than three feet from each other

when conversing. In high-context cultures, people tend to stand relatively close when

conversing. They perceive a distance of three feet between communicators as

something that interferes with their communication, and they will tend to step closer

in order to be more comfortable. People from UAE have definitely a high-context

culture.

c. Time conception in accordance to Trompenaars model

While similar to Hofstede's findings in many ways, the dimensions of culture identified

by Fons Trompenaars provide additional insights into cultural differences.

Trompenaars found that cultures also differed on universalism versus particularism,

neutral versus affective, and achievement versus ascription dimensions.

Universalism versus particularism. Universalism is the degree to which people

believe that various ideas and practices can be effective in all circumstances.


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People who are high in universalism believe they can develop rules and standards

that can be reasonably applied to everyone in every situation. They tend to use

contracts, formal systems, and procedures to convey what they expect from

others. People who are low in universalism (i.e., high in particularism) develop

their expectations of others based on their personal relationships with them andtheir trust in them rather than on rules. When negotiating deals, people from

highly particularistic cultures will want to develop a relationship with the other

party before having substantive discussions toward making an agreement. People

from highly universalistic cultures are prepared to proceed with substantive

discussions much more quickly, but then expect to document their agreement with

an enforceable contract. People from UAE are particularism.

Affective versus neutral. In highly affective cultures, people tend to openlyexpress their feelings. In highly neutral cultures, emotions are not expressed as

openly and naturally. People from highly affective cultures are more likely to

smile, talk loudly when excited, and greet each other enthusiastically. People from

highly neutral cultures experience the same emotions, but are less inclined to

express them, and they express them more subtly. Implications for behavior in the

workplace include how demonstrative people are when showing appreciation and

affection for each other and when celebrating successes. UAE has an affective

cuture.

Achievement versus ascription. In highly achievement-oriented cultures, social

status is largely derived from a person's achievements. In highly ascription-

oriented cultures, social status is largely derived from personal attributes such as

age, experience, social connections, or gender. In organizations, a person's status

is reflected in his or her privileges such as access to resources and perks,

deferential treatment, and input in decision making. UAE is a country with a highly

ascription.


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10. References

- http://www.wright.edu.

- eeBizGuides.

- Doing Business in UAE 2011: Making a Difference for Entrepreneurs.

- Doing Business in the UAE | UAE Social and Business Culture. Comunicaid.

- Doing Business in UAE. PKF Accountants & business advisers.

- Strategic Planning for Doing Business in the United Arab Emirates. Russi J. Patel,

FCA.
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