5 new UAE regulations that will go into force in 2023 include corporation tax, job loss insurance, and emiratization fines.
As we gear up to step into the Year 2023, several new laws will come into effect this year. These include Emiratisation targets for companies, the introduction of corporate tax, mandatory insurance against job loss, imposition of the plastic ban across more emirates, and personal status law for non-Muslims.
The specifics of the laws that will take effect in 2023 are listed below:
1. Requirement of job insurance as of January 1st, 2023
- Employees in the federal government and the commercial sector are required to purchase unemployment insurance.
- Domestic workers, temporary workers, minors under the age of 18, retirees who get a pension and have joined a new company, investors, and business owners who run their companies themselves, as well as domestic investors and business owners.
- Employees whose base income is Dh16,000 or less must pay a monthly insurance fee of Dh5, or Dh60 per year.
- Compensation for this category cannot be more than Dh10,000 per month.
- While those whose basic salaries are greater than Dh16,000 must pay Dh10 per month or Dh120 annually
- The maximum monthly salary for this category is Dh20,000.
- Employees can pay the premium on a quarterly, semi-annual, or annual basis.
- The employee and the insurance provider could work together to sign up for extra benefits.
- The website (www.iloe.ae) and smart application of the insurance pool, bank ATMs and kiosk machines, business servicentersres, money exchange firms, du, Etisalat, and SMS are all places where employees can sign up.
- The Dubai Insurance Company, a member of the insurance pool of nine organizations, will deliver the program.
2. Corporate tax will be implemented on June 1, 2023.
- Businesses reporting an annual profit of Dh375,000 must pay a 9% tax.
- The tax will be assessed on the company’s profit rather than its overall revenue.
- It won’t be applied to residents’ salaries.
- Individuals who have a freelance permit, operate as self-sponsored businesses and bring in more money than the threshold must pay corporate tax.
- Additionally, it won’t apply to any personal income derived from savings accounts, investments, dividends, or gains from currency exchange.
- According to the terms set forth in the presidential decision, real estate revenue obtained from economic activity (such as leasing, selling, transferring, etc.) may be subject to corporate tax basis. However, if income is derived from real estate investments where the investment manager engages in commercial operations, it can be considered exempt income.
- If a non-resident company has a permanent establishment in the UAE, they are also liable for corporation taxes on state-sourced income (from the sale of goods, the rendering of services, etc.) earned there. The money earned by non-residents from operating ships and planes in international space is exempt from corporate tax. On revenue received from an investment manager for real estate or other types of property, a non-resident is not subject to corporate tax.
- Qualifying Any free zone resident who satisfies the requirements outlined in the UAE Corporate Tax Law’s Executive Regulations shall be exempt. Activities involved in extracting natural resources are likewise exempt, however, they are still subject to any current emirate-level taxes. The corporate tax is not applied to the operations of public benefit organizations, pension funds, investment funds, or government agencies (except commercial activities).
3. Emiratization objective
- Companies with more than 50 employees are required to attain a 2% Emiratization Rate for Skilled Jobs in order to avoid Penalties
- Financial penalties will be imposed-compliant plant businesses starting in January 2023.
- Each UAE national who is not appointed will be subject to a monthly fine of Dh6,000. Additionally, the fine will be paid in one lump sum.
- Private businesses must find an Emirati replacement if an employee who was hired from the UAE leaves in order to reach the Emiratisation goal.
- Companies that successfully meet their Emiratization goals will be given significant incentives, such as up to 80% off MoHRE fees.
4. Governing Personal Status
- On February 1, 2023, a new personal status law will take effect for all foreigners who are not Muslims.
- Unless a person complies with the application of his country’s legislation, the requirements will apply to non-Muslim foreigners who are residents of the country.
- In place of the terms of this Decree-Law, non-Muslim foreigners may agree to implement other family or personal status laws in effect in the UAE.
- The new law includes the requirements for marriage as well as the processes for negotiating and formalizing the union before the appropriate courts.
- Additionally, it outlines the divorce processes that can be started either jointly or unorganized.
- It organizes the processes for resolving financial disputes following divorce and setting up shared custody for the kids.
- The legal system organizes the processes for testaments (wills), inheritance, and paternity determinations.
5. Plastic Ban
- Single-use plastics will no longer be permitted in Ajman and Umm Al Quwain starting in January 2023.
- Beginning the next year, retailers will have to add 25 fils to each plastic bag that customers use.
- Retailers in Abu Dhabi, Dubai, and Sharjah already charge customers 25 fils for each bag in an effort to cut down on the nation’s use of plastic and single-use bags.