With 2023 already in full swing, we take a look at the new laws and rules that have come into effect and those which we can expect to start later this year.
2022 was a historic year for big reforms in law, business and the economy in the UAE, a country which undoubtedly is entering the post-covid era stronger than ever before in terms of economic competitiveness, work/life balance, investment opportunities, and long-term residency options. In 2023 further groundbreaking announcements and decrees are very likely to happen, let's take a look at what we can expect so far.
Unemployment Insurance
Emiratis and expats employed in the private sector and federal government departments will get a form of social security if they suddenly lose their jobs. The unemployment insurance scheme will offer financial support of up to three months if an employee is terminated.
The subscription to the unemployment insurance scheme will start on January 1, 2023, and the ministry has also called on UAE nationals and residents working in the federal government and private sector to subscribe to the scheme.
The subscription fees depend on the employee’s basic salary. Those with a basic salary of Dh16,000 or less have to pay a subscription fee of Dh5 per month (Dh60 annually) and are eligible for monthly cash compensation up to Dh10,000.
The second category of people, whose basic salary is higher than Dh16,000, must pay Dh10 per month (Dh120 annually) and is entitled to maximum monthly cash compensation of Dh20,000.
The insurance fees can be paid monthly, quarterly, once every six months, or annually. The insurance compensation is calculated at 60 percent of the employee’s basic salary in the last six months before unemployment.
Emiratisation in the Private Sector
The Emirati Human Resources Competitiveness Council, ‘Nafis’ implements national initiatives aimed at increasing Emiratisation in the private sector. The council supports citizens in the private sector by increasing their competitiveness and providing this sector with Emirati skills.The council aims to get 75,000 citizens into the private sector over the next five years. It also offers many initiatives to empower Emirati cadres and motivate private companies to attract Emirati talent.
Companies with more than 50 employees must achieve an Emiratisation rate of 2 percent for skilled jobs to avoid penalties, and non-compliant companies will face financial penalties, which will be collected starting from January 2023. A monthly fine of Dh 6,000 will be imposed for every UAE national that has not been appointed, and the penalty should be paid in a single installment.
However, if an Emirati resigns from a private company, the firm must get an Emirati replacement to meet the Emiratisation target. Companies that successfully achieve the targets will receive significant incentives, including discounts of up to 80 percent on MoHRE fees.
Family Business Law
The new family business law looks set to strengthen the corporate sector and diversify the UAE economy by attracting investment in key sectors and contributing more to the country's gross domestic product (GDP) in coming years, experts say.
The new law, which becomes effective this week, will follow best international practices and aim at enhancing corporate governance structure in the country. It will help double family-owned businesses’ contribution to the nation's GDP to $320 billion in 2032 by preparing them for the future economy.
The new law applies to all family-owned companies that exist in the country, and the owners who own the majority of the shares in the family business who decide to register it in the unified register as a family company in accordance with the provisions of the law, according to the Ministry of Economy.
"Upon its coming to force in January 2023, the new law will provide the legal framework required to ensure the growth of family businesses, help diversify their activities, and facilitate their continuity and longevity through generations," Abdullah bin Ahmed Al Saleh, Undersecretary of the Ministry of Economy, said at a recent media briefing.
Corporate Tax
In a groundbreaking announcement made on the 31st January 2022, the UAE federal government will introduce a corporation tax on the profit of businesses. The new tax will be a standard rate of 9% beginning on the 1st June 2023, the final legislation has yet to be issued and the details are subject to finalisation. To support small businesses and startups there will be zero taxation of profits up to AED 375,000 and corporate tax incentives offered to free zone businesses that do not conduct business onshore are unaffected. No corporate tax will apply on personal income from employment, real estate and other investments, or on any other income earned by individuals that do not arise from a business or other form of commercial activity licensed or otherwise permitted to be undertaken in the UAE.