The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses. The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption. The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
Executive Summary
The Government of the United Arab Emirates (UAE) continues to pursue economic diversification and regulatory reforms to promote private sector development, reduce dependence on hydrocarbon revenues, and build a knowledge economy buttressed by advanced technology and clean energy.
The UAE serves as a major trade and investment hub for the Middle East and North Africa, as well as increasingly for South Asia, Central Asia, and Sub-Saharan Africa. Multinational companies cite the UAE’s political and economic stability, excellent infrastructure, developed capital markets, and perceived absence of systemic corruption as factors contributing to the UAE’s attractiveness to foreign investors. The UAE seeks to attract foreign direct investment (FDI) and talent by i) not charging personal income taxes or restricting the repatriation of capital; ii) allowing relatively free movement into the country of labor and maintaining low barriers to entry (effective tariffs are five percent for most goods); and iii) offering FDI incentives.
In January 2024, the UAE Federal Cabinet established five economic priorities for 2024: increasing private sector employment opportunities for Emiratis; expanding housing for Emiratis; strengthening the education sector; growing the non-oil GDP; and improving sustainability. In July 2023, the UAE established a new federal Ministry of Investment to streamline and align investment policies of individual emirates under a unified investment strategy and to enhance the competitiveness of related policies and procedures. The Financial Action Task Force’s (FATF) removal of the UAE from its grey list in February 2024, after two years of the UAE strengthening its anti-money laundering and countering the financing of terrorism (AML/CFT) legal and regulatory framework, marked an important milestone in the UAE’s drive to further improve its attractiveness as an investment destination.
The UAE continued to attract high net worth individuals, with approximately 4,500 moving to the country in 2023, according to media reports. Driven by this influx, and particularly by demand from Indian, British, and Russian nationals, Dubai’s property market remained strong in 2023. During 2023, a growing number of wealth managers and family offices based in China, Hong Kong, and Singapore established offices in Dubai, according to the Dubai Financial Services Authority (DFSA).
Over the past several years, the UAE federal government and the country’s seven constituent emirates have passed numerous initiatives, laws, and regulations to attract more foreign investment. Recent measures include visa reforms to attract and retain expatriate professionals, a drive to create new international economic partnerships, major investments in critical industries, and new policies to encourage Emirati entrepreneurship and labor force participation.
In September 2023, the UAE introduced an optional savings program for private sector and free zone employees to contribute up to 25 percent of their income to an investment account and receive employer contributions of between 5.83 percent and 8.33 percent. In 2022, the UAE formally changed its work week for government employees and most corporate staff to Monday to Thursday with a half-day on Friday, more closely aligning with markets outside the region. The UAE’s landmark 2021 Data Protection Law, which developed the legal frameworks around data privacy, investment, regulation and legal protection of industrial property, copyrights, trademarks, and residency went into effect. However, the government has yet to issue regulations. Together, these economic development reforms offer both challenges and opportunities for foreign investors. While U.S. companies broadly consider these reforms to be positive, investors should carefully consider the implications on their particular operations.
The UAE’s Corporate Income Tax Law on business profits entered into force on June 1, 2023. The Federal Decree Law No. 47 of 2022 imposed a standard rate of nine percent on taxable profits exceeding $102,000. Marking the first imposition of corporate taxes in the country’s history, the law represented a significant change to the UAE tax landscape. It affects all businesses, including free zone entities, but exempts state-owned companies, extractive industries, pension funds, and investment funds.
In September 2023, the UAE issued Federal Decree Law No. 36 on the Regulation of Competition (the New Competition Law), to replace Federal Decree Law No. 4 of 2012. The New Competition Law extended its jurisdiction to include practices taking place overseas that affect the UAE market and expanded its definition to include the digital economy. The new law removed previous sectoral exemptions and clarified that government entities can only be exempted from the law by explicit government decisions. The New Competition Law broadened the interpretation of anti-competitive conduct and introduced new tests for mandatory merger controls based on the increased level of concentration in a given market.
The UAE announced a national policy in October 2021 of net zero greenhouse gas emissions by 2050. To achieve this goal, the UAE announced planned investment of $163 billion in renewable energy and the establishment of a $30 billion climate finance fund. These steps were taken in conjunction with hosting the 28th UN Climate Change Conference of the Parties (COP28), which took place in Dubai in November-December 2023.
To access the ICS, visit the U.S. Department of State Investment Climate Statements website.