The United Arab Emirates (UAE) is one of the six Gulf Cooperation Council countries, the others being The Kingdom of Saudi Arabia, Kuwait, Bahrain, Qatar and the Sultanate of Oman. The UAE is situated on the northern (Arabian Gulf) and eastern (Gulf of Oman) coasts of the Arabian Peninsula and comprises seven emirates – Abu Dhabi (the capital and Federal Government seat), Dubai, Sharjah, Ajman, Ras Al Khaimah, Umm Al Quwain and Fujeirah.
Whilst the Federal Government governs the country as a whole, the rulers in each emirate are at liberty to pass laws applicable in their respective emirates.
The official language of the UAE is Arabic and all dealings with the Federal and local government departments are conducted in Arabic. However, given the multiplicity of nationalities and hence languages in the UAE, English has developed as the common business language.
The UAE economy is a one of the most vibrant economies in the world. High oil prices, sound and resilient economic policies and impressive performances from the corporate sector, the business attractions of the numerous free zones and the increasingly enterprising Government investment programmes have elevated the UAE's Gross Domestic Product (GDP) to new highs.
Whilst the oil and gas and Government Services sectors are still significant contributors to GDP, the UAE economy has proved to be relatively less dependent on the oil sector when compared with other GCC countries. The manufacturing sector is a major driving force behind the diversification of sources of national income. The other major sectors are wholesale and retail trading, IT, real estate, hospitality, tourism and leisure.
The currency of the UAE is the Dirham (AED), which is pegged to the US dollar at a rate of approximately AED3.67 to $1.
The UAE is actively promoted as a link between east and west and foreign direct investment is heavily encouraged. Foreign companies usually conduct business either as a limited liability company with a UAE national shareholding or as a branch of a foreign company. There are numerous free zones that cater to particular business segments and they allow 100% foreign ownership and also guarantee a tax-free status for periods of up to 50 years.
At present, only banks and oil companies are subject to taxation. Otherwise there are no income, capital gains, inheritance, corporate or wealth taxes. Similarly, other than some municipality taxes on hotel and restaurant services and on property rental contracts, there are no sales related taxes.
The UAE Central Bank, established in Abu Dhabi, regulates the banking and monetary system. The are approximately 50 banks in the UAE with over 300 branches and strict control by the Central Bank has resulted in a growing financial sector exhibiting the key facets of competition and transparency typical of larger economies.
The Dubai International Financial Centre (DIFC) has been established as an on-shore financial free zone focusing on several sectors of financial activity: Banking Services (Investment Banking, Corporate Banking & Private Banking); Capital Markets (Equity, Debt Instruments, Derivatives and Commodity Trading); Asset Management and Fund Registration; Insurance and Reinsurance; Islamic Finance; Business Processing Operations and Ancillary Services.
The Dubai Financial Services Authority (DFSA) regulates financial services in the DIFC to international standards.
Formal stock exchanges are established in Abu Dhabi and Dubai with linked trading floors. The Emirates Securities and Commodities Authority regulate these exchanges.
NASDAQ Dubai, previously the Dubai International Financial Exchange (DIFX) provides both investors and issuers with a larger and more liquid securities market than currently exists elsewhere in the region. NASDAQ Dubai allows Governments and companies globally to access regional investment opportunities. Companies outside the region can seek to have their shares dual-listed on the exchange in order to benefit from the large pool of capital accessible in the region.
The Dubai Multi Commodities Centre (DMCC) has been established to integrate the refining, manufacturing and trading of gold, as well as introduce the trading of other precious metals such as platinum, palladium and silver. DMCC’s aim is to facilitate the development and expansion of the local and regional precious metals market. Facilities will include high tech, secure vault facilities, assaying facilities, settlement, package delivery, shipment facilities, a purpose-built Jewellery and Gemplex to facilitate the manufacture of precious metal jewellery and a commercial tower to house wholesale, trading and banking operations.
The Dubai Gold and Commodities Exchange (DGCX) is the first international commodities derivatives market in the Middle East region and, therefore, the first in the critical time zone between the markets of Europe and the Far East. As an international commodities derivatives exchange, the DGCX will offer a range of commodities, with electronic trading accessible from anywhere in the world.