United Arab Emirates Archives - Page 25 of 64

UAE: New Law to Promote Fair Competition and Monopolistic Practices

18/07/202418/07/2024
by Hannah Gutang

Khaleej Times, 11 July 2024: The UAE has introduced a new law prohibiting companies from offering or applying very low prices for production, transfer and marketing with a monopolistic approach to drive other companies out of competition.

The new law defines competition as the act of conducting economic activities based on market mechanisms, but not such mechanisms that harmed trade, development and consumer interests.

It is aimed at ensuring fair competition and prohibiting monopolistic approaches for all companies, as well as protecting consumers’ rights in the country and also regulates mergers and acquisitions in the local market.

The ministry has monitored and communicated with local authorities for inspections to ensure fair competitive practices in the country and the authority could also act in case of receiving a complaint.

This was announced during a media briefing while revealing details of Federal Decree-Law No. 36/2023 on competition regulation, which promoted and protected competition, combated monopolistic practices, and countered harmful economic concentration of consumers in the UAE.

The fines and penalties for the companies are under review and will be released once the Cabinet approves them.

The new law aims to combat monopolistic practices by ensuring a stimulating environment for enterprises, contributing to improving effectiveness, competitiveness and protecting consumer interests.

This new law also aims to promote the market economy and economic activities in line with the principle of economic freedom, and ensure that economic concentration is monitored.

Its provisions speak to all conditions that may undermine, limit, prevent or restrict competition.

Ensuring consumer protection from anti-competitive practices in the context of operationalisation of new market mechanisms, as well as the promotion of economic efficiency, marketing and research and development, are also key goals.

The new law clarifies that economic concentration refers to the dominance of a small number of firms within a particular industry.

It defines economic concentration as any act resulting in the complete or partial transfer (merger or acquisition) of ownership, usufruct rights, property rights, equity, shares or obligations from one establishment to another.

This empowers the acquiring establishment or group of establishments to directly or indirectly control the acquired establishment or group of establishments.

The law takes into consideration the annual sales value of the enterprises concerned and not only the total share of such enterprises involved in the economic concentration process.

Two conditions must be satisfied to successfully complete the process of economic concentration.

The first condition indicates that the total value of annual sales of such establishments in the relevant market, for the last fiscal year, must exceed the amount determined by the Cabinet, upon the minister’s proposal.

The second condition states that the total share of such establishments must exceed the percentage of the total transactions in the relevant market during the last fiscal year, as determined by the Cabinet.

Federal Decree-Law No. 36/2023 establishes the regulations for submitting the application for economic concentration, the documents to be attached, and its examination mechanisms.

The ministry has stated that companies can submit their views on the Application for Economic Concentration project and also provide any data or information that would help study the request, in line with global best practices in the field of competition.

The ministry has also elaborated that efforts are currently underway to develop a more agile and sustainable competitive system, including the launch of more pioneering legislation, initiatives, and programmes to make the UAE a global hub for the new economy within the next decade.

The law assigns new responsibilities to the Competition Regulation Committee as well, such as proposing the general policy for protecting competition and scrutinising issues related to the application of the provisions of this law and making recommendations.

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News developments

Sharjah: Decree Reorganising Business Women Council Issued

18/07/202425/07/2024
by Hannah Gutang

Albayan, 12 July 2024: The Ruler of Sharjah has issued a decree regarding the reorganisation of the Sharjah Businesswomen Council.

According to the decree, the Council has a legal personality and full capacity to carry out the necessary legal actions to achieve its goals and exercise its powers.

It has financial, administrative and technical independence, and it is considered one of the institutions affiliated with the President.

The decree states that the name of the Council will be adopted in English as “Sharjah Business Women Council” and known for short as “SBWC”.

The Council’s headquarters and main office will be in the city of Sharjah, and it is permissible, by a decision of the President, to establish branches and offices in the rest of the cities and regions of the emirate.

The decree states that the Council aims to strengthen the position of the Sharjah Business Women Council locally and globally.

It will do this by providing a sustainable and enabling environment for businesswomen and entrepreneurs, changing the trends and general culture of women towards different business sectors, encouraging the principle of competitiveness among businesswomen, and working to encourage women to practice economic work and overcome the difficulties they face.

According to the decree, in order to achieve its objectives, the Council shall draw up public policy and develop strategic plans.

It will strengthen strategic partnerships with women decision-makers and institutions that have similar goals, both locally and globally.

The Council will also coordinate with relevant government agencies and encourage investment activities. Additionally, it will work to enhance women’s skills and capabilities in the field of entrepreneurship.

The Council is also tasked with proposing plans and designing programmes to support women’s status and participation in various economic sectors.

It will establish investment portfolios with financial institutions.

The Council will provide business development opportunities through consultations, trade missions, conferences and exhibitions.

It can conclude contracts, agreements, memorandums of understanding and partnerships after approval by the President.

The Council will grant facilities and benefits to its female members in cooperation and coordination with government agencies and competent authorities.

It will also carry out any other tasks assigned by the President.

For the full story, click here.

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News developments

UAE: Council Approves Technical Education Policy

12/07/202412/07/2024
by Hannah Gutang

Al-Bayan, 25 June 2024: The Federal National Council’s Education, Culture, Youth, Sports and Media Affairs Committee has endorsed the government’s policy report on technical education and vocational training.

The committee has reviewed research compiled by the Council Secretariat and consulted relevant authorities.

Their aim was to understand the existing challenges, potential solutions, and overarching strategy for technical and vocational education.

Based on these studies and stakeholder meetings, the committee proposed a set of recommendations.

The discussions focused on two critical aspects: they examined the legislative framework regulating technical and vocational education and training programs.

Additionally, they looked at the policies and strategic plans guiding the nationwide implementation of such programs across the UAE.

For the full story, click here.

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News developments

DIFC: Proposed Changes to Real Property Law and Regulations

12/07/202412/07/2024
by Hannah Gutang

The DIFC has announced a consultation on proposed changes to the DIFC Real Property Law (DIFC Law No. 10/2018) and the DIFC Real Property Regulations 2020.

The consultation is of interest to those purchasing or intending to purchase Off Plan Lots within the DIFC, those purchasing a property with a Mortgage, or entering into Leases of property within the DIFC.

Key proposed changes include increasing the period to Register an Off Plan Sale in the Off Plan Register from 30 days to 60 days. The could also be a clarification of the timeline of when an Off Plan Sales Agreement can be terminated by a Prospective Owner should a Developer fail to provide a Disclosure Statement after the parties have entered into an Off Plan Sales Agreement.

Article 156(4) of DIFC Law No. 10/2018 currently requires a Developer to lodge for Registration each Off Plan Sale in the Off Plan Register no later than 30 days after the entering into of an Off Plan Sales Agreement with the Prospective Owner. Any type of reservation form or similar (which is often used at the launch of Off Plan Sales to secure interest in a Lot) where a sum of AED 5,000 or more is received by a Developer is caught within the definition of an Off Plan Sales Agreement. Therefore, the current 30-day period for Registration runs from the effective date of such a form or agreement. However, in practice it may take longer than 30 days for a Prospective Owner to sign the final Sale and Purchase Agreement, once received from the Developer which is why there has been a proposal to extend the time period for registration of an Off Plan Sale to 60 days to cater for this.

Article 160(1) of DIFC Law No. 10/2018 requires Developers to provides Prospective Owners with a Disclosure Statement before the parties enter into an Off Plan Sales Agreement. This generally outlines details of the Off Plan Development including community amenities, service charge details and finishes of Lots. Article 160(6) of DIFC Law No. 10/2018 permits a Prospective Owner to terminate an Off Plan Sales Agreement at any time prior to the date of handover of the Lot being purchased, if a Developer has failed to provide a Disclosure Statement. .However, the DIFCA believes the period within which this right of termination can be actioned is currently too long, and could potentially lead to Prospective Owners terminating the agreement at the last minute for reasons which were unrelated to the receipt of a Disclosure Statement. The DIFCA still feels it is important for these Disclosure Statements, to be provided but also believe it is necessary to strike the correct balance between the rights of Prospective Owners and Developers and the need to avoid unequitable results created by an arbitrary termination of Off Plan Sales Agreements.

If a Developer does provide a Prospective Owner with a Disclosure Statement after the parties have entered into an Off Plan Sales Agreement, a Prospective Owner will have a period of 60 days to review this from the date of receipt. During this period of 60 days and for a further 20 days after that period, Prospective Owners can elect to terminate an Off Plan Sales Agreement if they decide that the Disclosure Statement does not accurately reflect the Off Plan Development. Article 160(6) of DIFC Law No. 10/2018 has been clarified to make it clear that such termination is only effective if exercised “within 20 days of the expiry of the 60-day review period.

Another proposed change is to introducing a Mortgage Registration Fee in the DIFC based on the Mortgage amount, in line with the fee that applies onshore in Dubai and charging a standard lodgement fee of $100 for all Mortgage Instruments which are being Registered in the DIFC (and $273 for Islamic Mortgages) . At present under onshore Dubai laws, a fee of 0.25% of the mortgage amount is levied by the Dubai Land Department to register a mortgage .

The DIFCA has proposed to introduce a Mortgage Registration Fee to the DIFC Real Property Regulations to match the onshore 0.25% of the mortgage amount. It is also proposed that the lodgement fee for both Islamic and non-Islamic Mortgage Instruments would be charged to a flat rate of $100. The DIFCA is not proposing to add a period within which a Mortgage must be registered as it will be in the interest of the Mortgagee to Register the Mortgage if they wish to protect its interest on the Register.

In addition, an increase in the period to Register a Lease with the RORP has also been from 20 days to 30 days has also been proposed (see Article 49(1) and 49(3) of DIFC Law No. 10/2018 in order to ensure that Lessors have sufficient time to Register the Lease and pay the Lease Registration fee. Article 49(1) of DIFC Law No. 10/2018 requires a Lessor to lodge for Registration a Lease registrable under Article 48(3) of DIFC Law No. 10/2018, within 20 days of the date on which the Lease was entered into by the Lessor and the Lessee. However, feedback has been received from Lessors and Lessees that 20 days is often too short a timeline to Register a Lease especially in cases where the Registered Owners that are overseas which is why this extension has been proposed.

The removal of the requirement for parties to Instruments to have an address for service of notices in the UAE, and there to be a statement a person’s address as shown in any Instrument in which that person first lodges for Registration is treated as the person’s address for service by the RORP has been proposals. Email would also be added as a valid mode of service of notices under Article 169 of DIFC Law No. 10/2018.

Article 169(3) of DIFC Law No. 10/2018 sets out the modes of service which are permissible under DIFC Law No. 10/2018. However, the DIFCA now believes it is not necessary for parties to Instruments to provide a UAE address for service, given the number of foreign purchasers there area in the DIFC which is why it has been proposed to remove the requirement for parties to Instruments to have an address for service of notices in the UAE. It has also been proposed that Article 169(2) of DIFC Law No. 10/2018 should be deleted and Article 127(1) of DIFC Law No. 10/2018 should be expanded to include that an address for service on the first Instrument Registered by a person is the valid address for service of notices until an application is made to amend the Register. This would ensure that parties to Instruments were aware that the insertion of a different address in a second or subsequent Instrument did not constitute a change in the valid address for service Registered with the RORP.

There has also been a proposed alteration to the definition of Prescribed fee DIFC Law No. 10/2018. DIFCA believes this definition was always supposed to mean the lodging fee for an Instrument with the RORP and that the current definition has created some anomalies in DIFC Law No. 10/2018. Therefore, they propose to amend the definition to mean only the lodging fee for an Instrument.

The consultation ends on 2 August 2024.

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News developments

Lexis Middle East Gulf Tax – Summer 2024 Edition

08/07/202408/07/2024
by Tanya Jain

Welcome to the latest edition of Lexis Middle East Gulf Tax Magazine, your comprehensive guide to the evolving tax landscape in the Gulf Cooperation Council (GCC) region. As businesses navigate through dynamic tax regulations and new compliance requirements, staying informed is crucial. This edition brings you expert insights, practical advice, and updates on significant tax developments affecting various sectors across the GCC.

In this issue, we delve into the attractive tax incentives for companies establishing Regional Headquarters in Saudi Arabia, with insights from Sadia Nazir of KPMG. We also explore the recent changes in the taxation of foreign banks in Dubai, expertly explained by Charles Collett of PwC. As the UAE prepares for the implementation of E-Invoicing in 2026, we highlight the key takeaways businesses need to consider to ensure readiness and efficiency.

Gulf Tax Magazine remains committed to providing valuable knowledge and expert perspectives to help you navigate the complexities of the GCC tax environment. We hope you find this issue insightful and beneficial for your tax planning and compliance efforts.

FEATURE: OVER AT HQ

In this feature, Sadia Nazir from KPMG Saudi Arabia explores the tax incentives available for companies establishing a Regional Headquarters (RHQ) in Saudi Arabia. Nazir delves into the specifics of these incentives, offering insights into how businesses can benefit from setting up their RHQs in this strategic location.

FEATURE: TAXING: NEW ERA FOR BANKS

Charles Collett of PwC provides an in-depth analysis of the recent changes in the taxation of foreign banks in Dubai. Collett explains how these changes impact foreign financial institutions and what steps they need to take to comply with the new tax regulations.

TAX NEWS ROUND-UP

This round-up covers recent key developments in tax treaties and regulatory changes across the region, providing readers with a comprehensive overview of the latest updates.

WHAT’S CHANGED?

With the implementation of E-Invoicing set for July 2026, UAE businesses must evaluate their readiness in terms of people, processes, and systems. This section highlights the importance of automating invoicing processes to enhance efficiency and ensure a smooth transition to the new system.

PRACTICAL FOCUS: ON REAL ESTATE

Brian Conn and Ashish Athavale of BDO discuss the application of VAT on real estate in GCC countries. As the real estate market continues to boom, this article examines how VAT impacts investors and the overall market dynamics.

TAX PROFESSIONAL PROFILE:

Head of Tax Operations – MEA, Amedeo Aragona, discusses his proactive approach to tax audits. Aragona shares strategies for mitigating risk and avoiding costs through careful audit preparation and execution.

ANY QUESTIONS?

Mohamed El Baghdady of Habib Al Mulla examines the recent changes to UAE guidance on the VAT treatment of board members’ services, providing clarity on whether VAT is applicable and under what conditions.

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Lexis Middle East Gulf Tax_Summer 2024

Have you read the Lexis® Middle East Gulf Tax – Spring and Summer 2023 editions? Click the links below to access them.

Lexis Middle East Gulf Tax | Autumn 2023

Lexis Middle East Gulf Tax |Spring 2023

Lexis Middle East Gulf Tax | Winter 2023

News developments

UAE: Securities Authority Launches Private Debt and Sukuk Placement Regulation Project

05/07/202405/07/2024
by Hannah Gutang

Al-Etihad, 3 July 2024: The Securities and Commodities Authority has launched the Regulation of Private Placement of Debt Instruments, Sukuk and Securitised Financial Instruments project, one of the transformational projects within the performance agreements for federal government entities for 2023-2024.

These are qualitative projects that will move the nation towards the future, improve its competitiveness, and have a significant impact on sectors within short timeframes.

The Chairman of the Authority’s Board of Directors issued a resolution to regulate the transformational project, aligning with the UAE’s vision to become a global hub for the new economy within the next decade, as outlined in the ‘We The UAE 2031’ initiative, which demands concerted efforts.

The Securities and Commodities Authority’s CEO has stated that the project reflects the Authority’s commitment to enhancing the role of local financial markets as a key driver of the economy.

The new regulation aims to diversify investment opportunities and instruments for investors by regulating private placements.

This will incentivise issuers to list on local capital markets instead of abroad, thereby enhancing the attractiveness of the national economy.

The Authority aims to prepare financial markets to create a new platform for professional investor trading, as well as attract new segments of investors or issuing companies, contributing to increasing the market capitalisation of local capital markets in the country.

For the full story, click here.

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News developments

UAE: Central Bank Reveals New Sandbox Conditions Regulations

28/06/202428/06/2024
by Hannah Gutang

Middle East Economy, 25 June 2024: The Central Bank of the UAE (CBUAE) has issued the new ‘Sandbox Conditions Regulation’ aimed at attracting startups and global fintech businesses to the UAE financial sector.

The regulation outlines specific criteria and conditions that participants must meet in order to test innovative financial business models, products, and services within a regulatory sandbox environment.

A key objective of this regulation is to facilitate the testing of innovative financial solutions to support the competitiveness of the UAE financial sector.

It also aims to create an attractive environment that promotes creativity and innovation within a well-defined regulatory framework.

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Additionally, the regulation aims to improve the competitiveness of the UAE’s financial sector, thereby promoting economic growth within the nation.

The regulation provides details on the conditions and criteria that participants like startups, fintechs and established businesses must fulfill.

It allows them to be exempted from the requirement of obtaining a full license, enabling them to test their innovations for a specified duration.

However, they must comply with the stated regulatory obligations during this period.

Importantly, applicants must present a technologically innovative financial product, service, solution or business model that can benefit consumers and the wider industry.

They must also demonstrate a clear intention to deploy the proposed service broadly across the UAE after successfully exiting the regulatory sandbox.

A key aspect of the regulation is that it enables the CBUAE to proactively assess and respond to fintech innovations as part of its supervisory role.

It also guides participants on structuring their businesses in a compliant manner within the sandbox environment.

The CBUAE Governor stated that the Sandbox Conditions Regulation highlights the UAE’s commitment to enabling innovation and building a knowledge-based economy.

The aim is to encourage innovators to contribute positively while ensuring consumer protection and serving the interests of all stakeholders.

The Sandbox Conditions Regulation has been published in the Official Gazette and has come into force with immediate effect.

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News developments

Dubai: Decree On Emirates International Accreditation Centre Issued

28/06/202428/06/2024
by Hannah Gutang

Al-Bayan, 21 June 2024: Dubai has issued Dubai Decree No. 39/2024 regarding the formation of the Board of Directors of the Dubai Women Establishment.

This decree shall take effect immediately upon its issuance and will be published in the Official Gazette.

It was noted that the diverse experiences and professional backgrounds of the Board of Directors members will enhance the Establishment’s efforts to empower women and increase their participation across various sectors, including the economy, creativity, sustainability, entrepreneurship, and supporting their societal roles.

This aligns with the goals and priorities outlined in the organisation’s strategic plan.

The organisation aims to establish Dubai as a globally recognised model for women-friendly cities, in line with the visionary and proactive leadership.

For the full story, click here.

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News developments

UAE (Ajman): To Launch Building Classification Tool Starting 1 July 2024

28/06/202428/06/2024
by Hannah Gutang

Khaleej Times, 24 June 2024: The Land and Real Estate Regulation Department will launch the building classification process in Ajman, starting 1 July 2024.

The process will include examining buildings and real estate facilities’ compliance with standards and regulations, and will continue over a period of three months.

The Director General of the Department, has affirmed that the criteria to classify buildings, according to international standards and specifications, are ready.

An integrated electronic programme has been developed to classify the buildings and display results directly, and transparently, after the field visits.

This classification will ensure quality of services, and facilitate investors regarding their investment decisions and options related to renting or purchasing any property in the emirate of Ajman.

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News developments

Survey: The expansion of localisation within the GCC region

24/06/202428/06/2024
by Tanya Jain

Vialto Partners and LexisNexis 2024 Survey

In recent years there has been a noticeable trend in the GCC region regarding the implementation of localisation policies. These policies have had a profound impact on various aspects of the workforce, including recruitment, training, and internal promotions.

Analysis

One prominent example is the expansion of Emiratisation in relation to United Arab Emirates (UAE) 2021 Vision Strategy, which saw the UAE authorities introduce further mandatory requirements for Mainland companies in 2022 and 2023 respectively, to enhance initiatives targeted at employing local talent. Similarly, we also saw the Kingdom of Saudi Arabia (KSA) implement rigorous Saudisation rules and regulations, aimed at specific industries and professions to promote the employment of Saudi nationals. In respect to these developments, Vialto Partners and LexisNexis joined forces in early 2024 to conduct a comprehensive corporate survey on the challenges and impact of localisation policies on businesses operating within the GCC region.

Key Findings

Seventy-eight percent (78%) of businesses who participated in the survey were able to meet their localisation quotas and found the changes implemented by the authorities to be positive, as it led to more opportunities for GCC employees within their organisations.

Twenty-two percent (22%) of businesses faced difficulties meeting localisation quotas as they found the requirements to be challenging, impractical and unrealistic, which was also exacerbated by a lack of local specialised talent.

Eighty-nine percent (89%) of businesses found that localisation policies contributed to their organisations creating internal programmes and employing staff internally to accommodate and meet the demands of localisation policies. Despite this, seventy-eight percent (78%) of businesses found that meeting localisation policies contributed to an increase in labour and operational costs.

Twenty-two percent (22%) of businesses found that localisation policies did not lead to new opportunities for GCC nationals within their organisations and they did not experience an increase in labour or operational costs.

Sixty-one percent (61%) of businesses found that they already had global policies for assignments in place for international staff. Whereas thirty-nine percent (39%) of businesses did not have any global policies in place for international staff, and eleven percent (11%) did not have any internal programmes for training and development.

Fifty-three percent (53%) of businesses changed their policies on opportunities for international staff to meet the demand of localisation quotas. In contrast, forty-seven percent (47%) of businesses reported that they had already implemented diversity and inclusion initiatives (which was not aimed at a specific nationality or origin) prior to the implementation of localisation rules.

Overall, employers found localisation policies to be challenging yet reasonable within the GCC region, as it encouraged businesses to work closely with local authorities and communities to attract and retain local talent.

Key Trends

Some employers were successful with meeting, or even surpassing localisation quotas by implementing a comprehensive plan which included targeting roles to be filled by a local employee versus a foreign national, as well as employing skilled professions who were experts with managing localisation policies. As a result, the actions from these employers showed the importance for businesses to adapt and tailor their operational objectives to align with localisation initiatives, through meticulous and strategic planning.

Some employers found meeting localisation quotas to be difficult and unattainable, as it limited their ability to employ foreign skilled workers, in lieu of local talent who did not possess the necessary skill set to meet their business needs. For example, organisations which participated in the survey noted that due to the restrictions imposed by localisation policies in KSA and Kuwait, they were restricted from recruiting talent internationally, which in turn, created a skilled worker shortage and prevented these companies from being able to compete in local economies. As a result, some companies were unable to meet the requirements to bid for government contracts and projects.

Some employers found the rules and regulations published by GCC authorities on localisation policies to be fluid, unclear and difficult to ascertain, as the rules were constantly changing. This was also accompanied by tight deadlines for implementation, thus businesses felt under pressure to meet these regulatory provisions, as they did not want to be penalised financially or risk reputational damages. As such, businesses wanted to avoid administrative penalties such as:
- The inability to renew or hire new employees due to a suspension from using their company’s portal.
- The downgrade of the company’s registration category, leading to increased government hiring fees, limited work permit quotas and loss of revenue.

Practical Considerations

There are initiatives which GCC authorities have introduced to help businesses target and retain local talent, whilst also incentivising them. For example, the UAE authorities implemented the Nafis programme to encourage Emirati nationals to apply for jobs in the private sector through a wide range of incentives such as:

The introduction of on-the-job training and apprenticeship programmes, targeted at Emirati nationals who have recently graduated from school, university or returning to work after a prolonged break.

The introduction of a child allowance scheme which offers financial support to Emirati nationals in the private sector who have children and earn a salary below AED 50,000 per month. Through this initiative, Emirati nationals can return to work and claim a monthly allowance of AED 600 per child.

The introduction of an Emirati salary support scheme which has been designed to provide support to Emirati nationals seeking employment in the private sector through training programmes, as well as a top-up contribution scheme for those already employed in the private sector. Through this initiative, eligible Emirati nationals will receive additional financial support to bridge the gap between their current salary and their relevant target salary. To qualify for this top-up contribution, eligible Emirati nationals must be employed full-time in the private sector, earning a monthly salary of up to AED 30,000. It is also important to note that eligible Emirati nationals must not hold any shares in their respective establishments and their salaries must be paid through the Wage Protection System or any other official payment method. Furthermore, they must not receive any salary from any government entity, and they must have an active pension contribution with either the Abu Dhabi Pension Fund (ADPFBF) or the General Pension & Social Security Authority (GPSSA), with pension contributions being paid for the last two months.

Similarly, in KSA, the Ministry of Labor and Social Development (MLSD) has taken significant steps to boost the employment of Saudi nationals in the private sector through strategic initiatives aimed at empowering women to return to the workforce, train Saudi nationals so they can compete in the local market and overall create more job opportunities for Saudi nationals. Some of the initiatives include:

The introduction of the ‘Skills Accelerator’ programme which provides training vouchers to Saudi nationals working in the private sector so that they can further enhance their skills and raise their productivity in the workplace.

The introduction of the ‘Parallel Training’ programme in collaboration with renowned organisations such as Saudi universities, academies, and training establishments. This initiative was designed to provide practical training to Saudi women, equipping them with the essential skills to advance their career in the private sector.

The mandatory disclosure of training data to all establishments employing fifty or more employees. At the end of each calendar year, these establishments are required to disclose data and training activities, such as the number of training hours and related information, as well as the number of trainees who have completed training in categories such as employees, students, graduates, and job seekers. The disclosed training duration should not be less than eight units per trainee per year. Additionally, these establishments must disclose their training plans, data, and reports on training activities, the number of trainees, and the total budget allocated for the following year. The Ministry affirms that this resolution will contribute to an accurate analytical assessment of training indicators in the labor market.

With Saudisation and foreign investment at the forefront of Vision 2030, we have seen the authorities implement unique strategies to incentivise companies to remain in KSA. Most notably through the introduction of the Regional Headquarters (RHQ) programme which was designed to encourage companies to set up their regional operations in KSA and and in return these companies would gain an array of benefits such as:

Be exempt from Saudisation requirements for a period of ten years.

Be exempt from corporate Income and Withholding Taxes for a period of thirty years.

Be awarded unlimited work visa quotas for their RHQ employees.

The expansion of localisation in KSA and UAE has paved the way for other GCC countries to take similar measures and implement comparable initiatives. For example, in Qatar, the Qatar Cabinet recently approved a draft law on the nationalisation of jobs in the private sector, which aligns with the Ministry of Labour’s strategy to boost the number of Qatari nationals employed in the private sector. The proposal has been referred to the Shura Council for their approval and if approved, we can anticipate the implementation of quotas, along with the creation of jobs and training opportunities specifically aimed to benefit the employment of Qatari nationals in the private sector.

Businesses who participate in government programmes and comply with localisation rules and regulations could enhance their company profile and experience benefits such as:

Move to the highest category on their company license.

Be considered for government tenders.

Be a beacon for promoting a diverse and inclusive workforce, whilst also building close relationships with communities.

Diversify their recruitment pool and target a wider range of individuals, which does not solely rely on school and university graduates, but also individuals who have taken a career break and are now ready to rejoin the workforce.

Recruitment planning will be important for businesses looking to attract and retain local talent. HR and Global Mobility teams may need to set out the benefits to stakeholders for diversifying their workforce, as well as working with relevant business units to implement a strategy in terms of where local talent is sourced, and how talent can be nurtured to ensure long term retention.

Conclusion

The expansion of localisation policies within the GCC region has sparked significant transformations in the workforce dynamics, recruitment strategies, and operational frameworks of businesses. The findings underscore a mixed landscape, where the majority of businesses have been able to meet localisation quotas, albeit with increased operational costs. Yet, the overwhelming sentiment is one of positivity, with localisation initiatives driving internal programmes and fostering greater opportunities for GCC employees. Navigating these policies hasn’t been without hurdles; employers have had to adapt swiftly to evolving regulations, often facing uncertainties and tight deadlines, while some have encountered difficulties in balancing the recruitment of local talent with the need for specialised skills.

Despite these challenges, there’s a clear recognition among businesses of the necessity to align with localisation objectives. Successful organisations have demonstrated the importance of strategic planning, tailoring their approaches to meet quotas while maximising the potential of local talent. Conversely, those struggling to meet quotas have highlighted the impact on competitiveness and access to government contracts.

The UAE authorities, for example, have introduced supportive initiatives to aid businesses in targeting and retaining local talent, offering incentives such as training programmes and financial support. Participation in these programmes position businesses as advocates for diversity and inclusion, fostering closer ties with communities and expanding their recruitment pools.

As the GCC region continues to evolve, the journey towards effective localisation remains ongoing. It’s a journey marked by collaboration between businesses and authorities. In this evolving landscape, adaptability, strategic planning, and a commitment to fostering local talent will remain essential for businesses to thrive.

It is also crucial for businesses to stay alert and keep up to date with the latest rules and regulations regarding localisation. In this way, businesses can proactively prepare for the future, whilst also effectively navigating the ever-changing landscape of localisation.

Written by:

Anir Chatterji, Partner, EMEA Immigration – anir.chatterji@vialto.com
Rekha Simpson, Director, Middle East Immigration – rekha.simpson@vialto.com
Ali Ibrahim, Director, KSA and Bahrain Immigration – ali.a.ibrahim@vialto.com
Nasrine Abdi, Manager, Middle East Immigration – nasrine.abdi@vialto.com

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