How to Sell to the United Arab Emirates? Tips & Information

Overview of the UAE

How to Sell to the United Arab Emirates. The late Sheikh Khalifa bin Zayed oversaw the transformation of the UAE from an oil export-dependent state into a regional and international finance and tourism player with best-in-class infrastructure and transportation networks and promoted the growth of a business-friendly environment. The United Arab Emirates operates an open economy and seeks to create job opportunities for both local and foreign nationals by improving education and increasing private-sector employment.

The UAE has a population of 10.03 million, and 88% of the total population is made up of immigrants (source cia.gov). In 1981, the Gulf Cooperation Council (GGC) was formed. It comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

UAE’s Business culture

Quotes should be in US dollars CIF.

The UAE’s currency is the AED (the Emirati Dirham). Since 1980, the AED has been pegged to the US$ at a rate of AED3.671=US$1. The authorities believe this promotes stability and confidence in the currency. Interest rates in the UAE tend to parallel those in the U.S.

English is the language of choice when negotiations are conducted. If companies wish to do business with the government, it can be advantageous to have business cards in both English and Arabic.

The Arab custom of small talk is vital for building trust and must not be hurried or dispensed with. In introductory business conversations, talk often centers on the health and well-being of the other person but never about wives and female relatives.

Refreshments (e.g., coffee, tea) should always be accepted. Coffee is offered to guests in order of their position

Refrain from expressing extreme views, which may be seen as a sign of inflexibility. Your host will rarely initiate business discussions. You will usually be expected to commence with a proposal and keep descriptions short and to the point.

As with many countries, getting a ‘yes’ means that your point is understood, but it does not necessarily confirm agreement.

The dress code for men is business suits. Women should dress conservatively and avoid wearing short skirts or revealing blouses. The head does not need to be covered.

The exchange of small corporate items such as pens and brochures is standard practice.

Setting up in the UAE

In most sectors, foreign firms seeking to establish themselves within the UAE market must have a local sponsor or agent and are limited to a minority ownership position. Finding the right local agent/distributor can be a critical first step for success.

Banking and Finance

The UAE banking and finance sector is highly developed, with local and international banks providing a full range of services. The UAE Central Bank licenses all institutions.

Banks in the UAE are divided into four broad categories: commercial, merchant or investment, Islamic, and industrial.

The Dubai International Financial Centre (DIFC) was established in 2004 as an economic ‘free zone’ with its own world-class legal and regulatory framework. The DIFC offers a zero tax rate and full foreign ownership.

Tariffs and Regulations

Tariff

Generally, imported products into the UAE carry a 5% duty. However, some luxury goods such as tobacco can incur a 50% to 70% levy. Some essential product categories, such as agricultural products and pharmaceuticals, are exempt.

Tariffs and duty rates are constantly revised and are subject to change without notice. It is recommended to reconfirm rates before selling to the United Arab Emirates (UAE)

Several UAE ‘free zones’ have been established, where customs duties are not payable, such as Dubai International Financial Centre (DIFC) or Jebel Ali Port. Goods may only be imported by an entity registered in the UAE.

Non-tariff barriers – How to Sell to the United Arab Emirates

How to Sell to the United Arab Emirates Fact – Only UAE companies with the appropriate trade license can import products into the country.

ImportCountryls exist for a number of products including alcoholic beverages, pork and pork products, medicinal substances, printed matter such as magazines and videos, photographic material, firearms and fireworks.

The entry of many kinds of products has been banned by local values, religious beliefs, and morals. The following items are prohibited:

Pornographic Materials
Goods made in Israel

Special permission is required for the import of:

Alcohol
Drugs
Firearms
Ammunition and Explosives
Agricultural Pesticides
Industrial Alcohol-Denatured
Methyl Alcohol
Methylated and Medicated Spirits.

Product certification, labeling and packaging

Label requirements vary by product category. Special label requirements will apply to food, beverages, agrochemicals, pharmaceuticals, and cosmetics and may need to be approved by regulatory bodies.

The UAE adheres to the GSO’s (Gulf Standardization Organization) framework for the packaging and labeling requirements. GSO’s labeling requirements state that all food imported into the UAE must have its information in Arabic, either as part of the packaging or as an affixed label, detailing the following:

Product and brand names
Lot identification/lot number
Production and expiry dates
Country of origin
Manufacturer name
Instruction for storage and use
Manufacturer address
Net content weight in metric units
List of ingredients and additives in descending order of proportion
All fats and oils used as ingredients
Product barcode
Name of the food, packer, distributor or importer

UAE health authorities require Islamic Slaughter Certification for all shipments of food products containing meat and poultry.

Products should be labeled in metric units or show a metric equivalent.

Methods of quoting and payment

Quotes should be in US dollars CIF or CIFC (Incoterms) and may be requested in the form of Proforma invoices to facilitate the opening of letters of credit.

How to Sell to the United Arab Emirates – Documentary & Clearance Requirements

Documentation required:

So, the consignee/agent should obtain a delivery order from the Shipping Agent and submit original standard trade documentation as per the following:

1. A Commercial Invoice from the exporter addressed to the importer with details about the quantity, goods description, and total value of each imported item.

2. Certificate of Origin, stating:

The country of origCountryroval by the Chamber of Commerce in the country of origCountryDetailed Packing List including:

Weight.
Method of packing
HS code for each item.

4. Import Permit from the competent agencies in case of importing restricted goods or duty-exempted goods.

5. Bill of Entry or Airway Bill with the following:

It may be made out To Order.
The appropriate tariff number should be shown. This should ensure the correct freight rate is applied to the items shipped.
Original copies must be furnished (two original copies minimum).
The original bill is for whether ladings have to be endorsed by the shipper. If they are not supported, a complete set (usually three) of originals need to be surrendered to the line.

For all food products, the following certificates are required in addition to the above:

The original health certificate issued by the appropriate government agency in the exporting country attests to the product’s fitness for human consumption.
Original Halal slaughter certificate for meat and poultry products.

Public health requirements

Livestock are inspected upon arrival.
Agricultural pesticides may only be imported by a registered importer holding a valid import license.
Imports of pharmaceutical products are subject to specific transport regulations.
Food containing cyclamates is prohibited from entering Abu Dhabi, and although there is no legislation banning such food from entering Dubai, it is not accepted.

Customs process:

Only UAE companies with the appropriate trade license can import products into the country. Therefore it is your responsibility to have all customs documents in complete order. Products can get delayed if any of the documents are not correctly completed.

Duties, Taxes & Fees for formal entry clearance:

There are two possible destination zones in the UAE. These zones are called UAE Customs Zones or UAE Free Trade Zones. The main difference for each zone is:

Products that are sent to the UAE’s Customs Zones are subject to duty under the GCC’s (Gulf Cooperation Council) Common Customs Law.
Products sent to the UAE’s Free Trade Zones are exempt from duty. Goods being imported into Free Trade Zones are exempt from duties. Also, re-exports from UAE Free Trade Zones to third market destinations beyond the GCC Customs Zones are exempted from any duty.

UAE Free Trade Zones

How to sell to the United Arab Emirates – Did you know that the UAE is home to approximately 46 Free Trade Zones (www.uaefreezones.me)?

The free zones in the UAE are located in Dubai, Sharjah, Abu Dhabi, Ajman, Fujairah, Um Al Quwain, and Ras Al Khaimah. These free zones are classified as mainland, airport, and sea port free zones. Each free zone focuses on specific operations, such as industrial, healthcare, finance, media, research, maritime, logistics, and IT services, and caters to investors looking to start a business in the UAE.

Goods that go from a Free Trade Zone for sale in the UAE and/or re-export to GCC Countries are subject to a customs import tariff as per the GCC Common Customs Law, which sets the framework for the UAE’s Import Regulations.

Intra GCC (Gulf Cooperation Council) Tariffs

Where customs import tariffs have already been paid for goods in one GCC country, and the goods are being moved to a different GCC country, then the following is required:

A Statistical Export Declaration must have been cleared from the exporting GCC country for inward movements of such goods.
A copy of the declaration must also be submitted to the Customs Office of the importing country and musCountry with the “Makasa Stamp” (set-off mechanism) on it to avoid the repeated payment of Customs Duty at the destination Country.
The “Import to Local from GCC” needs to be cleared for such a transaction.

Business Risks

Companies are advised to spend time investigating the UAE market, obtain professional advice where appropriate,, and thoroughly investigate the issues involved in entering the market and establishing business relationships.

Companies wishing to operate in the UAE should commit to the highest level of corporate behavior and familiarise themselves with the laws of their country and the countries pertaining to bribery of foreign officials.

Intellectual Property Protection

The UAE has good national intellectual property rights, such as patents, copyrights, and trademarks. Moreover, recognition of worldwide international property rights is primarily ensured by the UAE’s membership in various international conventions:

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
Patent Cooperation Treaty (PCT)
Madrid Convention
World Trade Organization (WTO).

Confidentiality and the protection of trade secrets do not currently have their own laws, but general contract law may still protect them. Accordingly, you should seek legal advice to protect your intellectual property in the UAE.

The Ministry of Economy handles intellectual property registration, and the system can be complex.

Dispute resolution – How to Sell to the United Arab Emirates

Parties generally choose arbitration as the initial method of dispute resolution. The UAE has established several arbitration centers to facilitate this.

In the UAE, dispute resolution can take place using local courts. Cases in these courts can be lengthy, and the subsequent enforcement of a judgment can be a difficult process. Parties must appoint a qualified local advocate for these cases, and the proceedings will take place in Arabic. Although court fees are relatively low-cost, the system is not ideal for complex cases.

The DIFC (Dubai International Financial Centre) Courts are another alternative. They follow English common law principles, and international judges administer them in English. Although the courts primarily serve the DIFC, parties can invoke jurisdiction for commercial and civil disputes related to conflicts outside the DIFC.

How to Sell to the United Arab Emirates Web Resources

How to Sell to the United Arab Emirates – About the Author

So, Aidan Conaty is the founder of TCI China & Goodada. Aidan has a background in supply chain consultancy and is a qualified accountant.

Trading with the UAE? Here is useful Tips & Information