AGCC Customs Exemption

According to the AGCC Unified Economic Agreement drawn up on 8 June 1981, products originating in any AGCC state are exempted from customs duty (and other charges having an equivalent effect) in any other AGCC state.

However, to qualify as national products, the value added ensuing from their production in member states must not be less than 40% of their final value and the factory must be licensed by the Ministry of Finance and Industry. In addition, the share of the member state citizens in the ownership of the producing plant must not be less than 51% unless the ownership is 100% AGCC. Every item for which exemption is claimed must be accompanied by a certificate of origin duly authenticated by the appropriate government agency.


Tenders

In Dubai, government projects and orders are generally put out to tender. The required qualifications, specialisations and other terms and conditions for participation vary according to the project and the authority concerned. Certain tenders are offered internationally but where local tenders are involved only those companies licensed and registered with the department concerned are eligible to bid. In order to qualify to participate in a tender one or more of the following may apply:

* The tenderer shall be a firm wholly owned by UAE nationals. In the case of a partnership, at least 51% of the equity must be owned by UAE nationals. A foreign party may only tender if it has a UAE representative or agent with the necessary documents.

* The tenderer should hold a valid licence from the Economic Development Department;
* The tenderer must be a member of the Dubai Chamber of Commerce and Industry.


Taxation

There is no corporate tax in Dubai. The only exceptions to this are oil producing companies and branches of foreign banks. Likewise, there are no personal taxes. Direct taxation is against the traditions of the UAE and it is highly unlikely that it will be introduced in the near future.


Trade Regulations and Practices

Imports into Dubai can only be undertaken by those importers who have the appropriate trade licence. Import duties have been largely standardised at 4%, but there are many exemptions, including food, building materials, medical products and any item destined for the Jebel Ali and Airport Free Zones. Food products must carry dates of manufacture and expiry and meat for the local market must have a certificate to prove compliance with Islamic law.

Trade practices in Dubai are in line with normal international standards. All correspondence should be in Arabic or English. As a sophisticated market, full technical specifications should be provided with CIF Dubai prices and Middle East references. Payments are normally effected by letter of credit.

The UAE is a member of the World Trade Organisation.

Exchange Control

There are no exchange controls in the UAE and its currency, the UAE dirham, is freely convertible. The dirham is linked to the US dollar, the currency by which oil prices are measured. The exchange rate has remained at Dh 3.675 = US$ 1 since 1977.


Banking and Finance

The regulatory authority since 1980 has been the UAE Central Bank. Some 47 commercial banks operate, with a total of around 370 branches, of which about 27 are foreign banks with a combined total of more than 200 branches. Federal law restricts foreign banks to no more than eight branches each.

Federal law requires that every commercial bank must have a paid-up capital of at least Dh 40 million. There are few investment or merchant banks at present. For medium-term or long-term industrial finance, local companies can approach the Emirates Industrial Bank, set up by the UAE government with an initial capital of Dh 500 million. Its main objective is to help develop the private sector.

Bill discounting can be arranged with the commercial banks, either foreign or locally owned. Leasing and hire purchase are available from local finance companies specialiin this business. Factoring is not practised in the UAE.

Import and export financing can be arranged through the commercial banks. Margins are often required by the banks. Such margins and the facilities offered by the banks will mainly depend on their relationships with their customers.