The answer depends on the reason for the employee’s inability to work. If the employee is unable to return to work in the UAE because of the UAE government’s order preventing the return of UAE residents, the first question will be whether the employees are able to continue working remotely from abroad?

If the nature of their role means that they have to be physically present on site, then remote working options may not be available. Nevertheless, it would be potentially important to show that the company has taken steps to consider remote working options in advance of taking any other action including stopping salary payments. Alternate options therefore to consider are:

1. reducing working hours;
2. redeploying staff;
3. reducing salary; or
4. requiring employees take any remaining annual leave entitlements in advance – this may also extend to annual leave entitlements for the subsequent working year (2021).

The general position is that if an employee can work remotely, then this period would be paid. If an employee cannot work remotely and cannot gain entry to the UAE, then employers may place them on unpaid leave. For specific legal advice on this subject, we recommend you consult an employment lawyer in the UAE.

Unpaid leave or other changes to employment arrangements which result in a reduction or suspension of salary payments to an employee may raise issues with the UAE Ministry of Human Resources and Emiratisation (MOHRE) Wage Protection Scheme (WPS). In particular, failure to pay employees who have agreed to unpaid leave may trigger a WPS block resulting in penalties and an inability for the company to continue to employ staff.

From our recent discussions with the Ministry of Human Resources and Emiratisation (MOHRE), submitting a copy of the agreement in Arabic between the employer and the employee for the implementation of unpaid leave may prevent or lift a WPS block. In the current climate, it is likely that the MOHRE will be sympathetic to companies who have negotiated unpaid leave with employees in accordance with the prevailing interpretation of the UAE Labour Law and be willing to lift or not impose a WPS block.

PRO Partner Group are keeping all clients updated as we receive further information in relation to the WPS.

In relation to unpaid leave arrangements, the advice from leading law firms is that there is no legal mechanism for unpaid leave. Therefore, an employer cannot unilaterally impose unpaid leave on an employee but they can request and seek the agreement of an employee to move to an unpaid leave arrangement. Companies are recommended to seek an agreement with an employee on a voluntary basis and ensure that there is no undue pressure or influence in the process of reaching an agreement. Furthermore, any agreement reached between an employer and an employee should be clearly documented and be unambiguous in its terms. In particular, we recommend that the agreement clearly sets out:

1. the reasons for the request for unpaid leave;
2. when unpaid leave will take effect;
3. circumstances when unpaid leave will not apply;
4. when the employee will return to normal paid employment; and
5. expectations for the employee and employer during the period of unpaid leave.

The question here is referring to ‘limited employment contracts’ as opposed to ‘unlimited employment contracts’. If employees are under ‘limited employment contracts’ then such contract will terminate at the end of the term unless terminated earlier by either party or renewed by both parties. If the company wishes to continue the employment arrangement with the employees outside of the UAE, an option may be to renew their existing employment contract which can be done online and remotely. However, at present there is no mechanism to renew the UAE residency visa while the individual is outside the UAE. Therefore, when employees are able to return to the UAE, they may be unable to use their UAE residency visa (depending on the expiry date of the visa) and rather may need to enter on another category of visa such as a tourist visa.

To address the uncertainty surrounding the effects of COVID-19 on the domestic employment market, the MOHRE has issued Ministerial Resolution No. 279 of 2020 on Employment Stability in the Private Sector (the “Resolution”).

The Resolution details steps that businesses/employers can take to modify existing employment arrangements in the interests of preserving business viability.

Key points from the Resolution;

1. The Resolution applies to all establishments registered with MOHRE and to all non-national workers (expats);
2. The options available to businesses affected by the precautionary measures imposed to control the spread of COVID-19 and who wish to reorganised their employee arrangements on a mutually agreed basis are itemised;
3. Employers are able to register surplus labour to the Virtual Labour Market; and
4. The process needed to temporarily or permanently reduce salaries for employees is clarified.

It should be noted that any temporary reduction of salary adopted in accordance with the Resolution will only be valid for the duration expressed in the written agreement between the employer and employee or the validity period of the Resolution, whichever is earlier.

Measures to implement aspects of the Resolution have not yet been put in place. PRO Partner Group will continue to monitor the situation and provide clients with any updates as and when they become available.

We recommend that you create a business plan to understand your company requirements and you will need to answer key questions that will guide you on the ideal location for the business (e.g. Freezone or Mainland, Abu Dhabi or Dubai) and the type of business structure best suited for your business. Key questions include: Will your company be trading / selling goods or providing services? Is your activity or product regulated by a government authority? Who is your target market and where are your clients based? Where will you likely be located? Do you wish to deal with government or semi government organisations? How many staff will you require? What is your timeline? All these questions are essential to understanding how to help you.

Depending on your business activity, one of the following licences from the 3 main categories would be required: Professional, Commercial or Industrial licences. Dependant on the type of licence required, the type of entity can be determined, these include; Limited Liability Company (LLC), Foreign/Local Branch, Sole Establishment or Civil Partnership.

There a 7 Emirates making up the UAE; Abu Dhabi, Dubai, Sharjah, Ras Al Khamiah, Fujairah, Ajman & Umm Al Quwain. To determine which emirate is best to set up in, you should consider the following:

• - Where are your clients based?
• - Are you dealing with private or government entities?
• - Where do you want to live?
• - What are the rental costs?
  
  

Depending on your business activities and prospective clients will go a long way to decide which DED licence is required. Deciphering what your business activities &/or prospective clients will be is extremely important to decide which emirate to set up in, for example, to obtain an ADNOC/SPC approval, an Abu Dhabi Mainland trade licence is mandatory.

Mainland Company:

A mainland establishment is an onshore setup, licensed by the Department of Economic Development (DED). An onshore establishment is permitted to conduct business in the local market as well as outside the UAE, without any restrictions.

Free Zone Company:

A Free Zone business is incorporated within a designated jurisdiction of a certain emirate where the company is only allowed to conduct business inside the same Free Zone or outside of the UAE. For commercial trade licences and trading of physical goods, the Free Zone company cannot conduct local mainland UAE business directly. For Freezone companies to trade with the UAE mainland they must do so through a mainland distributor or agent and by must pay 5% import duty on local invoices. A Free Zone business cannot work legally outside of its designated jurisdiction.

There are multiple ways that a foreign party can own 100% of a business. The numerous Free Zones throughout the Emirates allow for 100% ownership of businesses of varying sizes and across multiple industry sectors. However, it is important to note that there are restrictions in terms of who you may contract with when operating from a Free Zone entity. Throughout Mainland UAE it is possible for Foreign Nationals or Companies to wholly own businesses which provide professional and consultancy services – this can be done as an individual through a 100% owned Establishment, or as a Company as a 100% owned Foreign Branch. It is not permitted to trade goods within UAE mainland, using a 100% Foreign-owned company.

If the work that you are undertaking in a CICPA zone requires vehicles for transport or work (e.g. excavation diggers, cranes, trucks, buses – including boats and marine vehicles) then you must obtain a CICPA pass for those vehicles.

The CICPA pass is obtained for a vehicle in the same way that a CICPA pass is obtained for an individual person, the following basic steps:

1. You must obtain a Letter of Authorisation (LOA) from ADNOC
2. Within this LOA it must be stated what vehicle types are needed to carry out the work in the CICPA area, how many vehicles and for what duration
3. Once the LOA has been granted it will stipulate how many staff and what vehicles you may apply for to obtain CICPA passes
4. To obtain a CICPA pass for a vehicle, the vehicle must be owned by the company with the LOA
5. If the company with the LOA leases their vehicles from a 3rd party, then this 3rd party must apply for an LOA themselves for CICPA passes for their vehicles
6. In order for a company to obtain CICPA passes, they must be an Abu Dhabi based company with SPC (Supreme Petroleum Council) approval
7. Once the 3rd party has obtained a LOA for their vehicles, then the vehicles may apply for CICPA passes to enter with the CICPA zones with the first company
8. PRO Partner Group can assist you with the registration of vehicles and obtaining CICPA passes for individuals and equipment

The costs will vary depending on where you choose to establish your license. Setting up your business in a Free Zone offers key advantages such as; 100% foreign ownership, zero personal and corporate tax as well as zero import duties, complete repatriation of profits, confidentiality and control of your assets plus more.

As per UAE governed law, mainland establishments are required to have a local sponsor who will own 51% of the company’s shares and the foreign partner will own the remaining 49%. The most common form of a mainland business is a Limited Liability Company (LLC) which requires a minimum of 2 shareholders whose liability is limited to the share capital of the company shares. Just like Free Zone companies, the cost of setting up a mainland business depends upon various factors, including; business activity, number of employees and commercial space.

As per UAE law, if you wish to set up onshore, you will require a local partner. PRO Partner Group can act as a corporate nominee shareholder in the case of setting up as an LLC, or a corporate national service agent (NSA) in the case of Foreign Branch or Establishment. As a corporate partner or agent we provide full security and effective ownership and management rights to the foreign party.

A commercial lease agreement is a requirement to incorporate and operate a trade license under the Dubai Department of Economic Development (DED) as well as an Ejari (Dubai) or Tawtheeq (Abu Dhabi) – the municipality lease agreement. This is normally required as part of the company set up process in order to obtain your DED Trade licence (there are some licences that allow companies to set up without a lease). Specific regulations regarding minimum size, location, and suitability apply - for example in Dubai the minimum office size is of approximately 200 sq. ft. for Office Spaces, Business Centres, and Shops and 500sq.ft. for a warehouse, In Abu Dhabi the requirement in 14 sqm. The office must have an external door, correct signage is will be inspected by DED before the trade licence is issued.

A freezone is a defined and isolated land or setting, with a special tax, customs and imports regime, that is different from a mainland area. The main advantage of owning a freezone company is that as an expatriate, you can own the business 100% without having to give out any of its shares.

The average fees for setting up a Freezone licence in UAE, using a flexidesk virtual office with 1 or 2 staff visas is around AED 40,000 all in. The costs will vary from Freezone to Freezone and depending on where you choose to establish your license and your staff and office requirements. Freezone companies are lower cost than setting up a mainland company in the early stages, however will more staff the office costs in a Freezone will make this type of licence more expensive in the long run. Setting up your business in a Free Zone offers key advantages such as; 100% foreign ownership, zero personal and corporate tax as well as no import duties.

The time taken to incorporate a Company in UAE depends greatly on the complexity of the business to be incorporated. A simple Free Zone Enterprise (FZE) may be incorporated in a matter of days, whereas it can take several months for an Industrial facility to obtain all the permits required to operate safely and legally. On average we say to allow 30 days from start to finish assuming all documents are prepared and the authorised signatories are available.

The commercial space requirements depending on the size of the business, the location and activity. A simple Free Zone Enterprise (FZE) service or consultancy company may be incorporated in a matter of days using a flexidesk or virtual office space at low cost, whereas in an Industrial or Logistics Freezone the company will need to rent industrial pace in order to obtain all the permits required to operate safely and legally – and the formation it can take several months pending approvals of the commercial space.

No, a Freezone company can only work with companies in the same Freezone jurisdiction that has issued the licence and with companies overseas. Strictly speaking the freezone company cannot conduct business with UAE mainland companies, although in practice this is a grey area and particularly for services companies these can often be provided if the UAE counterparty is happy to deal with the freezone company. The Freezone company, in some jurisdictions can now apply for a Dual Licence into the mainland to facilitate working with mainland companies.

A commercial lease agreement is a requirement to incorporate and operate a trade license in all Freezones, however must freezones offer a flexidesk arrangement for a limited number of visas – for example a low cost flexidesk / virtual office can be leased as part of the initiate freezone company formation and this will normally allow for up to 2 visas. Once the company looks to take on more than 2 staff they will need to rent a larger physical office in that Freezone. The Freezone will then normally increase the office rent requirements by about 10sqm per extra person hired on the licence.

In specific Freezones, this is not an issue. However, a NOC must be provided by your current sponsor/ employer. However, in some Freezones, it is a mandatory requirement to obtain a visa directly from that Freezone authority.

Yes, you will be working as an independent supplier; therefore, if you have an agreement with a particular company, you are permitted to conduct business from their office.

This is not currently required; however it is highly advisable to keep accounts.

You cannot use a trading name; the permit is issued to you as an individual in your name. The Freelancer licence is a ‘permit’ for the individual, it is not a separate company with its own identity, and is not a limited liability structure.

No, you cannot hire employees on a freelance permit, but you can sponsor your dependents.

Yes, you can apply for an employment visa once the freelancer permit and establishment card are issued. Certain entities require medical insurance to be able to process visas.

There are options of flexi-desks and workstations located in the Free Zone’s permitted for use by freelance permit holders; some locations also offer meeting facilities.

Only individuals with the appropriate credentials or certificates relating to the allowed activities are permitted to apply for the permit. To apply, you must have the following:

• Resume
• Passport Copy
• Visa Copy (if you have one)
• Bank Reference Letter (this can be from either your local or international bank)
• Sponsor/Employer NOC (if you currently have a work permit and a residency visa)
• Portfolio – PDF or online link (for media related activities)
• Credentials and Certificates (for related educational activities)
• Other documentation may be required dependent on the Free Zone

• Permit Application and Issuance: 7 to 14 business days (once all documents have been approved and required document signed)
• Visa Application: 14 to 21 business days (after permit issuance)

If you are a UAE Citizen or hold a residence visa you eligible to apply for an Emirates ID at one of the Federal Authority for Identity and Citizenship (FAIC) customer centres located throughout the UAE or online through the FAIC website. For first time applications you will be required to attend the FAIC in order to submit your biometrics and have your photograph taken as part of the process. Once the application is processed and the relevant fees have been paid it takes approximately 5-7 working days for the card to be issued. The card can be collected from your local Emirates Post office where ;;you will be required to present your passport and EID application form.

1. Passport copy - must have more than 6 months validity and at least 2 blank pages
2. Photo - head and shoulders, no eyeglasses, white background, high resolution and colour
3. Attested education certificate - if required for job title - must be attested in the country of issuance for use in the UAE and further attested in the UAE at MOFA
4. Tourist visa copy/entry stamp if applicant is inside the UAE
5. Previous visa/EID/cancellation docs if the applicant has previously held a visa in the UAE
6. Nationals of Iran, Iraq, Afghanistan and Pakistan will also need to provide a copy of their national ID card
7. DHA/HAAD approved health insurance - required in order for the visa to be completed and stamped in the passport

Typically, if all documentation is in place and valid, then an inside country visa application will take approximately 15 - 20 working days. If the visa application is started from outside the country and the applicant enters the UAE on the employment visa then processing once inside the country takes approximately 10 - 15 working days. * These time frames do not factor in delays from the government departments.

In order for a male to sponsor his immediate family (wife and children) they will need to have a valid employment visa with a suitable designation and a minimum salary of AED4,000 per month. A female can sponsor her immediate family (husband and children) if she has a valid employment visa and the designation is either engineer, teacher, doctor, nurse or any other profession related to the medical sector. She is required to have a minimum monthly salary of AED 10,000 per month.

There are also certain documents that will be required in order to process the family visas, including attested marriage and birth certificates, a notarised tenancy contract and a salary certificate. We can assist with family visa applications and would be happy to discuss the full process and document requirements upon request.

Domestic staff visas are all processed through the Tadbeer service centres in UAE, you can opt to do the processing yourself or employ an PRO Company like PRO Partner Group to help. It is possible to directly sponsor the domestic worker under your own visa or you can contract a domestic worker under the sponsorship of Tadbeer or a Domestic Staff Agency Company.

If you wish to directly sponsor the domestic worker yourself then there is a requirement from UAE Immigration that your household has an income of AED25,000 or over to have a domestic worker’s visa application approved. You will also have to show a corresponding Lease – Ejari (Dubai) or Tawtheeq (Abu Dhabi), to evidence that you have enough space to accommodate the domestic worker.

Under a Mainland UAE visa you have both Labour and Immigration files - the Labour file gives mainland UAE visa holders a full onshore work permit.

Under a Freezone visa you will have only an Immigration file and a work ID/pass from the free zone, you do not obtain a Labour file and therefore you do not have a full onshore work permit. Under a free zone visa you should only work within that particular free zone, you cannot work in the mainland.

Both types of visa give you a full Emirates Resident ID Card. The mainland visa typically lasts for 2 years whilst most Freezone visas are for 3 years before they will need to be renewed.

A mainland Investor Visa is a 3 year visa, but again does not provide you with a UAE Onshore labour file.

Yes, whilst it is not a mandatory requirement for new companies without staff, it is strongly advised that you look to open a local company bank account as soon as possible. It is beneficial not only for local business transactions but also once a company does have staff they will be required to be paid through the WPS banking system. Failure to do so will result in a block against the company. There are many local Banks to choose from most of which offer competitive commercial rates.

It is mandatory to register for VAT in the UAE if the company turnover is AED 375,000 or more. A company can apply voluntarily if the turnover reaches AED 175,000. The Federal Tax Authority has an online portal for VAT registration. For more information visit https://www.tax.gov.ae/registering-for-vat.aspx

We recommend that you create a business plan to understand your company requirements. For example: What are your company’s activities going to be? Who is your target market? Where will you likely be located? How many staff will you require? What is your timeline? All these questions are essential to understanding how to help you.

Mainland Company

A mainland establishment is an onshore setup, licensed by the Ministry of Commerce and Industry (MOCI). An onshore establishment is allowed permitted to conduct business in the local market as well as outside Oman without any restrictions.

Freezone Company

A Free Zone business is incorporated within a designated jurisdiction of a certain Freezone where the company is only allowed to conduct business inside the same Freezone or outside of Oman. Oman free zone companies are allowed to trade within Oman mainland without a local agent, however customs duty of 5% applies in these cases.

Dependent on the activities and shareholding composition, foreign companies can be incorporated in the following most common legal forms:

• Sole Proprietorship (owned by one person, available to Omanis, GCC and US nationals)
• Limited Liability Company or LLC (owned by two or more individuals or corporates)
• Branch of a Foreign Company (100% owned by a foreign company, Government project required)
• Representative Office (100% owned by a foreign company, no commercial business allowed)

Once the new company is registered with the Ministry of Commerce and Industry and Commercial Registration is issued, a physical space has to be rented and lease agreement obtained in order to apply for company’s Municipality (Trade) Licence.

The same rule applies for Oman Free Zones with the requirement to rent space within the Free Zone where the new company will be incorporated.

The size of your office will broadly dictate the number of staff you can have and some activities will need specific office types and locations.

A new company in Oman cannot be registered against the virtual office.

Generally, it takes from 1 to 3 weeks, depending on the jurisdiction, legal structure, shareholding and any additional third-party approvals if required.

GCC companies that are 100% owned by GCC nationals, or GCC nationals themselves, may establish a company without a local partner for approved activities. Pursuant to a free trade agreement (FTA) concluded between the US and Oman, US persons may form an entity in Oman without a local partner, provided that all the shareholders are US persons.

Yes, but it is only permitted for the business owners.

Yes, whilst it is not a mandatory requirement for new companies without staff, it is strongly advised that you look to open a local Oman company bank account as soon as possible. It is beneficial not only for local business transactions but also once a company does have staff they will be required to be paid through the WPS banking system. Failure to do so will result in a block against the company. There are many local Omani Banks to choose from most of which offer competitive commercial rates.

What are the taxes payable in Oman?

Income tax – 15% (3% for certain small tax payers) and Withholding tax – 10% (maybe reduced or eliminated by a applicable double taxation agreement). Tax exemptions are available only for industrial (manufacturing) activities.

Income tax – 15% (3% for certain small tax payers) and Withholding tax – 10% (maybe reduced or eliminated by any applicable double tax agreement). Tax exemptions are available only for industrial (manufacturing) activities.

Omanisation is a policy enacted by the Government of Oman aimed at replacing expatriate workers with trained Omani Personnel. Specific quotas are set by the country within certain industries determining the percentage of Omani to foreign workers required. This is something to be taken into consideration when hiring staff under the new entity.

If you are aiming to set up an Oman Mainland LLC then you will need to have an individual Omani national or a 100% Omani owned company as a partner or sponsor in order to register the business.

Under the Oman’s Commercial Companies UAE Law, with an LLC structure, 30% (some activities require 51%) of the shares need to be owned by your local Omani individual or corporate partner, this however does not relate to proportion of profits. An agreement with your local partner can stipulate that the majority of the profits and management control is retained by the Foreign Party owning 70% (or 49%).