Emiratisation fines, job loss insurance, corporate tax: 5 new UAE laws that will come into effect in 2023

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2022 has been a year of labour reforms and a new visa regime. As we gear up to step into New Year, there are a number of new laws that will also come into effect from next 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.

Below are the details of laws that will come into effect in 2023:

1. Mandatory job insurance

Purchasing insurance against job loss mandatory for employees working in the private sector and federal government departments

Investors and business owners who own and manage their business themselves, domestic workers, employees on a temporary basis, juveniles under the age of 18 and retirees who receive the pension and have joined a new employer exempted

Workers with a basic salary of Dh16,000 or less will need to pay a monthly insurance premium of Dh5, i.e. Dh60 annually

Compensation for this category must not exceed a monthly amount of Dh10,000

While those with a basic salary exceeding Dh16,000 will need to pay Dh10 per month, i.e. Dh120 annually

Compensation for this category must not exceed Dh20,000 monthly.

Employees can choose to pay the premium on a monthly, quarterly, half-yearly or annual basis

Worker may coordinate with the insurance company to subscribe to additional benefits

Workers can subscribe through the insurance pool's website (www.iloe.ae) and smart application, bank ATMs and kiosk machines, business service centres, money exchange companies, du, Etisalat and SMS.

The scheme will be offered by the Dubai Insurance Company, which is the representative of the insurance pool consisting of nine companies.

2. Corporate tax

Firms posting Dh375,000 profit per annum to pay 9% tax

The tax will be levied on the profit, not on the total turnover, of the company

It will not be applicable to the salary of the residents

Individuals holding the freelance permit, under the self-sponsorship and earning income in excess of the threshold will be subject to corporate tax.

It will also not be applicable to the personal income earned from bank deposits, savings programmes and investments, dividends, or foreign exchange gains.

If real estate income is derived from economic activity (Leasing, selling, transferring, etc.) it may be subject to corporate tax basis as conditions are stipulated in the executive decision in this regard. However if income is earned from real estate investment where commercial activities are performed by the investment manager, it may qualify as exempt income.

Non-residents are also subject to corporate tax if they have a permanent establishment in UAE as well as on state-sourced income (I.e., from the sale of goods, provision of services etc.) in the country. Non-residents’ income from operating aircraft, and ships in international space is not subject to corporate tax. A non-resident is not subject to corporate tax on income earned through an investment manager on real estate or any other investment.

Qualifying Free zone person which fulfils all conditions specified in the Executive Regulations of the UAE Corporate Tax Law will be exempt. Natural resource extraction activities are also exempted, however, they’re subject to existing emirate-level taxation. Government entities' activities (Excluding commercial activities), pension funds, investment funds and public benefit organisations are exempt from the corporate tax.

3. Emiratisation target

It’s mandatory for companies with more than 50 employees to achieve an Emiratisation rate of 2% for skilled jobs to avoid penalties

Non-compliant companies will face financial penalties, which will be collected starting from January 2023.

A monthly fine of Dh6,000 will be imposed for every UAE national that has not been appointed. And the fine will be paid in a single instalment.

If a UAE citizen hired by a private company resigns, the firm will have to get an Emirati replacement to meet the Emiratisation target.

Companies that successfully achieve Emiratisation targets will receive major incentives, including discounts of up to 80 per cent on MoHRE fees.

4. Personal status law

New personal status law on all non-Muslim foreigners will come into effect from February 1, 2023

The provisions will apply to non-Muslim foreigners residing in the country unless someone adheres to the application of his country’s law.

Non-Muslim foreigners may agree to implement other legislation on family or personal status in force in the UAE instead of the provisions of this Decree-Law.

The new law covers the marriage conditions and the procedures of contracting and documenting the marriage before the competent courts.

It also specifies the procedures of divorce that can be initiated jointly or unilaterally.

It organises the procedures for settling the financial claims after divorce and the arrangement of joint custody for the children.

The law organises the procedures for inheritance and testaments (wills) and proofs of paternity.