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Every year a new set of reforms is introduced in every society, and 2023 also looks set to introduce new laws involving the United Arab Emirates (UAE).
So far, about five new laws will be implemented next year, including the company’s emiratization goal and plastic bans in more areas.
Let’s go through the laws and see what’s new for those seeking to immigrate to the United Arab Emirates.
1. Compulsory work insurance
Beginning January 2023, employees working in the private sector and the federal government must purchase unemployment insurance
A few exemptions from coverage include investors and business owners who own and manage their own businesses, domestic workers, casual employees, youth under 18 and retirees who receive a pension and join a new employer.
According to the details, workers with a basic salary of Dh16,000 or less will be required to pay a monthly insurance premium of Dh5, or Dh60 per year, while compensation for this category will not exceed Dh10,000 per month.
For those whose basic salary exceeds Dh16,000, they are required to pay Dh10 per month, which is Dh120 per year, while such compensation shall not exceed Dh20,000 per month.
Introduced flexibility, employees can choose to pay premiums on a monthly, quarterly, semi-annual or annual basis, and can coordinate with insurance companies to obtain additional benefits.
The plan will be offered by Dubai Insurance, which is representative of an insurance pool of nine companies.
Employees can subscribe in a number of ways, including through the Insurance Associates website (www.iloe.ae) and smart app, bank ATMs and self-service kiosk machines, business service centres, money changers, du, Etisalat and SMS.
In terms of timelines, workers must file a claim within 30 days of the date they lost their job. The insurance company has two weeks after receiving the claim to transfer the compensation to the insured’s account; the compensation will be paid for 3 months or until the employee finds a job, whichever is earlier.
2. Corporate tax
The UAE government will impose corporate tax from June 2023, with companies posting a profit of AED 375,000 per year subject to a 9% tax.
The tax would be taxed on profits rather than the company’s total turnover, and would not apply to residents’ wages.
Corporate tax will apply to all businesses and individuals conducting business in the UAE under a business license and free zone businesses (the UAE CT regime will continue to honor the CT incentive requirements currently offered to free zone businesses that comply with all regulatory requirements and do not operate in the UAE mainland business.)
In addition, duties will only be imposed on foreign entities and individuals when they conduct trade or business in the UAE on a continuous or regular basis.
Banking businesses and businesses engaged in real estate management, construction, development, agency and brokerage activities must also pay the tax.
duty free
Businesses engaged in the extraction of natural resources are exempt from tax, as these businesses are still subject to the prevailing Emirate corporate tax.
In addition, dividends and capital gains received by UAE businesses from their qualifying equity interests will be exempt from taxation. Likewise, qualifying intra-group transactions and restructurings will not be taxed, provided the necessary conditions are met.
Corporation tax does not apply to personal income, wages and other employment income, whether earned from the public or private sector
It does not levy interest and other income earned by individuals on bank deposits or savings plans.
In addition, income earned by foreign investors from dividends, capital gains, interest, royalties and other investment returns is also exempt.
Investments in real estate by individuals in their personal capacity, as well as dividends, capital gains and other income earned by individuals in their personal capacity in stocks or other securities, are also not taxed.
3. Emiratization goals
Under the reform, companies with more than 50 employees must achieve a 2% emiratization rate for skilled jobs to avoid penalties. Emiratis means employing Emiratis in companies.
From January 2023, non-compliant companies will face financial penalties, with a monthly fine of Dh6,000 per UAE national not appointed.
A tweet by “Nafis” confirmed that private sector companies must increase their emiratization targets by 2% every year.
Nafis is a federal program aimed at enhancing the competitiveness and empowering of the UAE’s human resources.
The reforms were introduced in such a way that if an Emirati citizen employed by a private company resigned, the company would have to recruit an Emirati to achieve the Emiratisization goal.
Companies that successfully meet emiratization targets will also receive major rewards, as the UAE said in May it would cut some worker licensing fees for private sector companies that voluntarily exceed emiratization targets.
4. Personal Status Law
The new Personal Status Law for all non-Muslim foreigners will come into force on February 1, 2023, and these regulations will apply to non-Muslim foreigners residing in the country unless one insists on applying the laws of his/her country.
Non-Muslim foreigners may agree to implement other legislation in force in the UAE on family or personal status other than the provisions of this Decree.
The new law also covers the conditions of marriage and the procedure for concluding and recording marriages in competent courts. In addition to this, it also provides for divorce procedures that can be initiated jointly or unilaterally.
Procedures for resolving financial claims after divorce and joint custody arrangements for children are also arranged under the Act.
Finally, the law regulates the procedures for succession and wills (testaments) and proof of parentage.
It must be kept in mind that Abu Dhabi has enacted a Law on the Personal Status of Non-Muslim Foreigners (No. 14 of 2021), which provides a flexible and advanced judicial mechanism for resolving personal status disputes among non-Muslims.
5. Plastic ban
Ajman, on the west coast of the United Arab Emirates, will join Umm Al Quwain in banning single-use plastics from January 2023.
The Umm Al Quwain Executive Council has stated that all bags must be biodegradable, multipurpose or made of paper or woven cloth.
From next year, outlets may charge shoppers an extra 25 fils for each plastic bag they use, following the same model as Abu Dhabi, Dubai and Sharjah.
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