What is the UAE law about taxes? Are there any sectors subjected to taxes? If yes which sectors? The National Tax of UAE is nearly having no existent in the country; rather the Federal government provides an authority to every Emirate to establish their own taxes. No tax is levied on the personal income or personal capital gains, Federal Corporate taxes are also almost negligible, the only sectors such as oil, gas and petrochemical companies, and residential and commercial tenants are levied to pay corporate income tax and property tax respectively. No VAT is levied on the services however service tax is chargeable on accessing restaurants and hotel services (Taxes in United Arab Emirates).
Companies doing business in or seeking to establish business in the UAE have benefits. State five benefits.
Various benefits of doing business in UAE are as follows:
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UAE economy is very diverse economy which provides various business options through accessing such economic opportunities.
It is the central point of various trade and commerce centers which provides a vast exposure to the international market.
The country has very low taxes.
Effective Technical support through modernization.
Favorable economic, political, business and legal environment (Benefits of doing Business in UAE).
What is the difference between the following business entities established in the UAE?
Representative and Branch offices
Public & Private Joint Stock Companies
Representative and Branch Offices:
Representative offices are allowed for the limited marketing of goods and services having the foreign patents while the Branch Offices are permitted to establish the foreign business in UAE so as to generate some specific corporate dealings with their patent entities.
Public & Private Joint Stock Companies:
The capital of public joint stock companies is wholly divided into common stock having equal vale while private joint stock companies cannot trade their stock publicly (James R. Hagerty, 2008).
Why is the private sector in GCC heavily dependent on migrant workers? States 2 reasons
Private sector in GCC heavily dependent on migrants because of following reasons:
Public sectors are mostly occupied by the resident citizen and to stay in the country of UAE, foreigners should be employed as per the law of the country. Thus most of the private sector jobs are occupied by the foreigners and migrants.
Due to Working Visa law of the country, the migrants accepted to work at low wages so that they have right to stay within the country and thus private sector in GCC countries employ migrants at low wages (Baldwin-Edwards, 2012).
State 3 UAE labour laws.
As per the Federal Law No. 8 of 1980 amended by Federal Law Nos21 of 1981, 15 of 1985, and law of 1986, following are the part of UAE Labor Laws:
As per the UAE Labor Law, two types of employment contracts are permissible: Limited employment Contracts having specific period of completion and Unlimited Employment Contract which complete the employment tenure on the wish of either party.
The probation period according to Labor law cannot be more than 6 months and during such period employer or employee can terminate the employment contract.
The working hours prescribed for an adult employee is eight hours per day or forty-eight hours per week (Labour Law in UAE).
It is expected more GCC women will join work force in the future. What kind of challenges will companies face?
The prospective challenges faced by the companies due the women work force are as follows:
Talent Management: One of the biggest challenges for the companies due to women work force is the management of talented pool of employees. They need to implement a comprehensive approach for the recruitment, selection, training and development and the retention of the employees as per the Islamic norms. They have to improve the soft and technical skills of women.
Difficulty in Accessing the Credit: The female headed business organizations are not likely to get easy loans and credit from the market due to the lack of marketability skills of women.
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Lack of Full Time Workers: Women in GCC work force are unable to provide their services on the full time basis.
Resistance towards Change: Women employees are more resisted towards the organizational changes (Ramez Shehadi).
Flexible employment has been credited with contributing to three main macroeconomics benefits in the GCC. What are they?
Flexible employment helps in the contribution of three key macroeconomics advantages in the GCC:
Increasing the workerââ‚¬â„¢s participation in management: Flexible employment helps in the involvement of more and more workers in the employment sector.
Decrease the rate of unemployment: Flexible employment includes offering best incentives to the employees which leads to motivating the inactive people to join the workforce and thus reduces structural unemployment.
Increase in the general business agility: It helps in maintaining the agility of the business by offering them various tools to respond towards economic cycles impeccably (Haddad, 2010).
When was the principle of corporate governance introduced in the UAE and for what reasons? State 2 reasons.
Initially, The Corporate Governance was regulated under the UAE Commercial Law 1984 which binds national companies only. In 2007, SCA expand the regulation of corporate governance to the joint stock companies established in UAE or any other company which is listed in the security market of UAE. Amendment made by the Ministerial Resolution No. 518 of 2009 which established new Code for corporate rule and discipline standards that comes into action on 30 November 2009. The reasons for introduction of the corporate governance in the country are as follows:
The global Financial Crisis in 2000, awakened the government to obligate strict governance rules in the companies of the country.
To ensure the greater efficiency and mentoring in both the capital markets of UAE (Zawawi, 2011).
There is physiological resistance in GCC to the issue of corporate governance for a number of reasons. State two reasons.
The physiological reason behind the resistance of GCC towards the corporate governance issue is as follows:
The little incentive against the change: The resistance towards the corporate governance of GCC was the extreme pressure on the traditional business families of Gulf region that they were not exactly motivated by the regulators to implement the structures of corporate governance.
Absence of the effective governance model: One of the reasons behind the resistance of GCC towards the corporate governance is the absence of appropriate governance model at the level of government deprive various private business organizations to implement it (Making Good Governance Good Business in the Gulf, 2010 ).
What are the benefits GCC companies can derive from good corporate governance?
The benefits of good corporate governance to GCC companies are as follows:
Best utilization of capital through reduction in overall cost of capital.
Effective management of external market pressures which leads to sustainable development.
Proper balancing in the financial statements results in deviation of the shareholderââ‚¬â„¢s interest.
Assurance of the sustainability of the company.
Effective resolving and management of governance issues in the company.
Accomplishment of augmented operational outcomes.
Increase the profitability and marketability of the company which leads to enhance its brand image and brand equity (Nadgrodkiewicz, 2009).
How communication technologies change the GCC? State 2 benefits.
Communications Technology is essentially the emerging sector in the GCC and is revolutionizing the society into knowledge powered society. Large organizations are also comprehensive approach towards its usage on strategic as well as operational aspects of the business. The revolution has brought in for the society with several driving benefits -
(a) High speed internet connections, mobile computing and web presence across GCC.
(b) Increased use of contemporary technologies such as data storage, wireless and network security (Murtaza, 2008).
How much internet users do GCC countries have? Which country has the highest internet usage?
The GCC countries have overall around 4 million internet users and approximately 2.5 million of desktop users by making the internet penetration as well as PC penetration of 10% and 8% respectively. These are the collective figures and individually it has been determined that the UAE and Bahrain have the highest internet usage, with female population top in internet use in GCC. The market expects a steady growth in internet penetration to approximately 15-20% in the next couple of years (GCC Information Society).
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UAE follows the International financial Reporting standards (IFRS). What does IFRS mean?
IFRS, International Financial Reporting Standards has brought into implementation by the central bank of the UAE with effect from the year 2001. The IFRS has been adopted owing to the wide use of International Accounting Standards (IAS) globally for the purpose of maintaining accounts to banks and other financial institutions across the world. IFRS are basically established set of standards based on rules for performing specific treatments while financial reporting. This is beneficial due to increasing growth if international business (What is IFRS?).
According to gulf news article why do GCC countries need to modify IFRS to an Islamic format?
GCC Countries are ought to modify the format of IFRS with that to an Islamic format in order to comply and strictly adhere to different views of Islamic Financial Accounting. This is due to the fact that several historical reasons and religious differences are associated with Islamic format that calls for different requirements for accounting in comparison to that of Western accounting systems. And therefore this has been implemented with several exclusions and supplementations (DORE, 2007).
According to Khaleej times, Gulf countries to speed up development of the accountancy industry and transparency. What is a way of increasing transparency in the financial report?
Among all of the GCC countries, UAE has been emerged as a financial center to meet the transparency rankings of other established markets across the globe. And therefore, Emirates Securities and Commodities Authority conducted in-depth examination of companiesââ‚¬â„¢ financial positions to achieve higher transparency. For achievement of transparency in such a volatile market, there is a need for globally accepted accounting standards for better disclosure of financial statements for the purpose of comparison across markets and industries globally, eventually allowing investors to take educated decisions (John, 2009).