Fujairah, UAE: 20% Salary Hike Announced for Government Employees

Khaleej Times, 6 February 2025: Fujairah has announced a 20% salary increase for government employees from 1 February 2025.

Furthermore, 72% of UAE nationals expect a salary increase in 2025.

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UAE: AI In Courts

Arab Times, 5 February 2025: AI could soon play a key role in the UAE’s judicial system, with trials already underway to test its effectiveness in case analysis.

A top government official has revealed that AI is being used to assist in cases where outcomes are clear-cut and require no human discretion.

Beyond case rulings, AI is also streamlining legal processes by translating, summarising, and analysing large volumes of documents.

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UAE: Advances with $790M VAT Refunds and Digital Expansion

Arabian Business, 26 January 2025: The UAE has made significant progress in its tax refund initiatives, granting $790 million in VAT refunds to nationals constructing new homes and unveiling VAT waivers for tourists.

The Federal Tax Authority (FTA) has highlighted the success of its digital VAT refund systems, which have been enhanced through ongoing digitalisation efforts.

Since the inception of the VAT-refund service for UAE nationals building new residences, 34,900 applications have been approved, amounting to AED2.9 billion ($790 million).

This marks a notable increase from the previous year’s figures, with a 27.52% rise in approved applications and a 32% increase in refund value.

In 2024 alone, 7,520 applications were approved, totaling AED704.38 million ($192 million).

The growth trajectory is evident when compared to previous years, with applications rising from 270 in 2018 to 8,250 in 2023.

The FTA has also expanded the digital VAT-refund scheme for tourists, with the number of registered retail outlets growing to 17,847 by the end of 2024.

This expansion includes the addition of 1,490 new retailers in 2024, contributing to a total of 3,008 outlets over two years.

The FTA is committed to enhancing the tourist experience by increasing the number of self-service kiosks for tax refunds, which now total 97 across major shopping malls, hotels, and airport terminals.

These kiosks process transactions in under two minutes, reflecting an 18.3% increase from the previous year.

The authority has emphasised its dedication to advancing digital systems in line with global best practices and the UAE’s digital transformation strategy.

The FTA plans to continue launching projects in 2025 to further streamline tax services, reduce bureaucracy, and enhance customer satisfaction.

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UAE: To Impose Penalty for Unpaid Corporate Tax

Arabian Gulf Business Insight, 26 January 2025: The Federal Tax Authority (FTA) has announced that companies failing to pay corporate tax will face a significant penalty, amounting to 14% per annum.

This penalty will be applied to the outstanding tax amount and will be calculated from the day after the payment deadline, accruing monthly on the same date.

To avoid these penalties, tax payments must be completed no later than nine months following the end of the relevant tax period.

Starting 1 January 2025, the UAE will increase the corporate tax rate for multinationals to 15% of profit.

This higher rate will affect companies operating in multiple jurisdictions with consolidated annual revenues of €750 million ($793 million) or more in at least two of the four preceding financial years.

This domestic minimum top-up tax amendment follows the introduction of a 9% corporate tax by the Gulf state a year earlier.

In December 2024, the Finance Ministry has stated that this strategic step reflects the UAE’s commitment to implementing the Organisation for Economic Co-operation and Development’s two-pillar solution, aimed at establishing a fair and transparent tax system aligned with global standards.

In a regional context, Bahrain has announced in September 2024 that it would also implement a Domestic Minimum Top-up Tax (DMTT) starting 1 January 2025 next year for large multinational enterprises (MNEs).

Similarly, Kuwait has declared an upcoming corporate tax rate of 15% for large MNEs, effective from the beginning of 2025.

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UAE: SCA Unveils New Rules for Security and Commodity Tokens

In a significant move towards embracing technological advancements in the financial sector, the UAE Securities & Commodities Authority (SCA) has announced a new regulatory framework for security tokens and commodity token contracts.

The decision, issued by the Chairman of the Authority’s Board of Directors, marks a pivotal step in integrating Distributed Ledger Technology (DLT) into the UAE’s financial markets.

The new regulation acknowledges the transformative potential of Distributed Ledger Technology, which has redefined the issuance, trading, and investment landscape in financial markets.

Security tokens and commodity tokens, as highlighted in the regulation, represent a fusion of traditional securities and commodity contracts with cutting-edge technology, offering investors more flexible and efficient tools.

Security tokens, digital assets created using DLT, represent financial rights or tangible assets.

These include equity tokens, which signify ownership in companies, and bond tokens, representing tradeable debts.

Commodity tokens, on the other hand, are digital assets based on the value of physical commodities like gold and oil, facilitating digital trading while minimising traditional trading costs and risks.

The regulation outlines detailed provisions for the offering, issuance, promotion, and registration of security and commodity token contracts within the UAE.

It emphasises the importance of compliance with existing securities and commodity contract regulations, ensuring a seamless integration of these innovative financial instruments into the current legal framework.

Key aspects of the regulation include the requirement for security and commodity token contracts to be recorded and managed through a distributed ledger.

This ledger must meet stringent technical and organisational standards to ensure integrity and protect against unauthorised modifications.

The regulation also stipulates that these tokens can only be traded and settled through licensed markets or alternative trading systems.

The SCA has placed a strong emphasis on investor protection and market integrity.

Obligors, or entities responsible for issuing these tokens, are required to provide comprehensive information to token owners, including details about the distributed ledger’s operation, associated risks, and disaster recovery measures.

The regulation also holds obligors accountable for any damages resulting from inaccurate or misleading information.

In cases of regulatory violations, the SCA is empowered to impose administrative measures, including suspending offerings and cancelling subscriptions.

The Authority also reserves the right to publish the names of violators, ensuring transparency and accountability in the market.

This regulatory development underscores the UAE’s commitment to fostering innovation in its financial markets while maintaining robust regulatory oversight.

By embracing Distributed Ledger Technology and establishing a clear framework for security and commodity tokens, the UAE is positioning itself as a leader in the adoption of digital financial instruments.

The decision will be published in the Official Gazette and will come into effect 30 days from the date of publication, signaling a new era for the UAE’s financial markets.

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UAE: Family Law Reforms

Khaleej Times, 10 January 2025: The UAE’s newly introduced family law represents a significant modernisation of the legal framework, aimed at enhancing the protection of children and families.

Set to take effect in April 2025, this legislation brings about substantial changes in child custody arrangements, financial rights, and educational guardianship.

One of the most notable amendments is the extension of custody age to 18 for both boys and girls, reflecting a stronger focus on the welfare of children while respecting their growing independence.

Previously, custody was granted to mothers until boys turned 11 and girls turned 13.

Now, children at the age of 15 can choose which parent they wish to live with, provided the court deems their choice to be in their best interests.

In cases involving children with severe medical or psychological conditions, custody will remain with the mother unless the court finds an alternative arrangement more suitable.

The law also expands rights for non-Muslim mothers, allowing them to retain custody of their children from Muslim fathers beyond the age of five, subject to court approval.

This marks a significant departure from the previous law, which automatically transferred custody at this age.

The legislation introduces measures to expedite family-related disputes, with educational guardianship primarily remaining with the mother but now addressable by the Urgent Matters Court for more efficient resolution.

Parents now have one year, instead of six months, to file custody claims, with courts able to grant further extensions for valid reasons.

This adjustment ensures that technicalities do not override the best interests of the child.

Equal travel rights for parents are also established, allowing either parent to travel alone with their child for up to 60 days per year, with extensions possible in special circumstances.

The law broadens the definition of family support to include non-cash assistance, such as benefits or in-kind contributions, allowing families to meet their specific needs more effectively.

Wives can now claim backdated maintenance for up to six months and request increases in mandated amounts, with monthly alimony payments given precedence over most other debts.

Stricter controls have been introduced regarding the handling of children’s identification documents, with severe legal consequences for misuse.

Criminal penalties are established for custodians who violate travel provisions or fail to deliver documents to the rightful guardian, highlighting the UAE’s commitment to safeguarding children and protecting family rights.

This new family law reflects the UAE’s dedication to fostering stronger family bonds and ensuring the best interests of all its members, in line with the country’s progressive vision for a modern society.

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UAE: Government Issues Federal Decree-Law to Reorganise Civil Defence Authority

The UAE Government has issued a Federal Decree-Law to reorganise the Civil Defence Authority, aiming to enhance the country’s readiness to respond to emergencies and disasters while ensuring the highest standards of public safety and protection.

This Decree marks a significant step in modernising the national civil protection framework.

The reorganisation focuses on improving coordination between local and federal entities working in civil defence, developing advanced alert and evacuation systems, providing care for affected individuals, and forming specialised teams for relief efforts.

The Decree establishes a new entity named the “Civil Defence Authority”, part of the National Emergency, Crisis, and Disasters Management Authority.

This new body replaces the Civil Defence Department previously operating under the Ministry of Interior.

The Civil Defence Authority is tasked with strategic responsibilities to enhance civil protection and ensure comprehensive readiness to address risks and disasters.

These responsibilities include developing policies, strategies, and regulations related to civil defence in coordination with relevant entities, studying potential risks and incidents, and preparing plans to manage them efficiently.

The Authority is also responsible for creating hazards prevention programmes and establishing safety standards, securing buildings and facilities against fire hazards, and deploying rapid response teams to incident sites to extinguish fires effectively.

The Authority’s duties extend to establishing and equipping specialised risk management centres and public alert systems to warn residents of potential hazards.

It also prepares evacuation plans for residents when necessary and ensures residential and institutional buildings are adequately equipped.

Medical and social care is provided for affected individuals in collaboration with relevant entities.

To further bolster national preparedness, the Authority is tasked with procuring and maintaining equipment essential for civil defence operations.

It also coordinates essential services—medical, social, engineering, administrative, and educational—to ensure continuity during times of disasters.

Additionally, the Authority organises efforts and collaborates with entities that have internal security systems, such as oil companies and airports, to provide support as required.

The Civil Defence Authority is committed to forming specialised teams to carry out response and relief operations in affected areas.

It organises joint training programs for civil defence personnel and volunteers and implements awareness campaigns to educate residents on the necessary actions during emergencies.

The Authority’s responsibilities also include monitoring radiological, chemical, and biological hazards and taking the necessary measures to address them in coordination with relevant authorities.

Furthermore, it enhances cooperation among UAE emirates to establish support centres that improve civil defence services at national and international levels.

The Civil Defence Authority prioritises coordination with entities that maintain internal security and safety systems, such as oil companies and airports, to ensure effective support and assistance when required.

This includes organising methods for providing aid and fostering efficient collaboration during emergencies.

The Civil Defence Authority is tasked with forming specialised teams for response and relief operations in disaster-affected areas.

It organises training programmes and joint simulation exercises for civil defence personnel and volunteers to enhance their readiness for various emergency scenarios.

Additionally, the Authority oversees awareness campaigns to educate residents about necessary precautions and procedures during emergencies.

The Authority requires entities to refrain from issuing any licences for properties or facilities unless they first obtain a certificate verifying compliance with safety and prevention standards.

The Decree establishes a dedicated committee to review compensation claims related to damages caused by civil defence operations, with a grievance mechanism in place.

It also enforces strict penalties, including imprisonment of up to six months or fines of up to AED250,000 for violations of the law or disruptions to civil defence activities.

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