Out-Law Guide | 04 Dec 2012 | 11:48 am | 9 min. read
The UAE has been quick to recognise the importance of the protection of intellectual property to its continued development as a dominant trading hub in the Middle East. To this end, the UAE has developed an intellectual property regime that offers international standards of protection to intellectual property right owners through an extensive set of intellectual property laws, and its accession to a number of key international treaties.
Moreover, local authorities and customs officials are aware of the importance of brand protection and actively take enforcement actions against counterfeiters, and other types of intellectual property infringement, in the region.
Private enforcement in the Courts is also possible, but can be challenging as the Courts continue to develop their familiarity with a relatively new set of laws.
Generally speaking, companies operating (or looking to establish themselves) in the UAE can do so with confidence that the UAE is a territory in which international intellectual property rights are understood and will be protected.
The UAE has established registration regimes to recognise and protect various forms of intellectual property.
Patent Office in Riyadh, Saudi Arabia;
Unregistered intellectual property rights and related rights
UAE law also recognises the following rights, which subsist without the need for registration:
The UAE is a signatory to a range of key international treaties on the recognition and enforcement of intellectual
property rights, including:
The UAE's location at the crossroads between East and West means counterfeiting and infringement can be a problem due to the vast amount of goods and trade passing through the region.
Several avenues are available for enforcing intellectual property rights against violators, including administrative and judicial actions.
Federal government authorities, as well as local government authorities in several of the Emirates, have jurisdiction to enforce intellectual property laws and have trained personnel ready to carry out raids of shops and warehouses, seize goods and levy fines on offending parties.
Customs authorities also have the right to seize and destroy illegal goods.
Owners of intellectual property may wish to file a claim in Court to demand compensation for damages suffered.
The Courts can also order:
Enforcement in the Courts can be difficult. There are no specialist intellectual property Courts in the UAE, and judges, especially in the lower Courts, may not have the expertise to deal adequately with particularly technical issues.
Despite these reservations, however, there are examples of international companies enforcing their rights in the UAE Courts.
Criminal sanctions can include imprisonment for up to five years and/or fines for certain infringing activities.
Police departments in each Emirate have Commercial Crimes Departments who will carry out raids, and are equipped with laboratories to examine counterfeit goods and provide reports on the similarities and differences between genuine and counterfeit products.
Real Estate has played a very significant part in the growth of the UAE generally, and Dubai and Abu Dhabi in particular.
There is no express provision in Federal Law permitting ownership of property by non-UAE/GCC Nationals or foreign owned corporations (Foreign Investors). The Constitution provides that real estate falls within Federal jurisdiction, however, where the Federation does not legislate, the individual Emirates may do so. On that basis, a number of the
Emirates have issued local laws in relation to real estate in their particular Emirate.
UAE Federal Law does contain basic provisions dealing with land ownership, leasing, co-ownership of floors and apartments and the creation and operation of owners' associations.
To keep pace with the development of the UAE, and in view of the significance of the real estate sector to the economy, the laws governing property have had to, and are continuing to, evolve rapidly.
Real Estate & commercial operations
The importance of real estate in the UAE is underlined by the fact that a commercial licence will not be issued until a property is acquired, or a lease is executed, and the applicant can prove that it will carry on its business activities from suitable premises (from commercial premises and not from residential premises, for example).
In principle it is not possible to use the office space of an existing company unless there is a link in the ownership between the existing company and the new company being set up (for example, having the same local sponsor).
From 2002 onwards, Foreign Investors in Dubai began to purchase property and acquire long-term lease interests within areas designated as allowing property ownership by Foreign Investors ("Designated Areas"). At this time there were no property laws in place to give these purchasers title to their properties. These purchasers relied on contractual commitments from developers and an assurance from the Dubai Government that property laws, allowing
Foreign Investors ownership rights in the Designated Areas (including certain Free Zones), would be introduced.
Since 2006 a number of significant laws which regulate property ownership, registration and property related transactions in the various Emirates have been introduced.
Initially these laws were introduced in Dubai, but Abu Dhabi and the other Emirates quickly followed suit with their own property laws and regulations.
Corporation & income tax
The UAE is a generally tax-free jurisdiction, with no corporate tax except for the following:
However, the UAE government is currently conducting an impact study into the imposition of a corporate income tax.
Subject to these exceptions, companies exclusively formed and operating in the UAE are not subject to any corporate or income taxes in the UAE. However, when forming a corporate vehicle for a foreign company, potential taxation in the country of origin of repatriated profits or dividends should be considered, and taxation advice in those countries of origin should be sought.
There is similarly no withholding tax regime.
Value added tax
There is currently no value added tax. However, at the GCC level, discussions are taking place in connection with the imposition of value added tax across the GCC.
Indirect taxes & fees
Although individuals living, and companies carrying on business, in the UAE are not directly taxed on their earnings and profits, they nevertheless pay hidden or “indirect taxes” and fees.
The main indirect taxes are as follows:
In Dubai, in addition to the fixed fees payable to various different government departments, there is also a fee payable every year calculated as 5% of the value of the rent paid for the offices or facilities from which the company is to carry out its activities. This fee is collected by the Department of Economic Development when issuing or renewing Commercial Licences, but is actually levied by the Dubai Municipality.
In Abu Dhabi the fees payable by companies are calculated on a different basis, mainly depending on the type and number of economic activities to be undertaken.
It is possible that the other Emirates will implement a similar system in the future.
January 2003, the UAE, along with 5 other Gulf countries, formed the Gulf Cooperation Council Customs Union
(Saudi Arabia, Kuwait, Bahrain, Qatar, Oman and UAE) with the intention of unifying applicable customs duties. The GCC Customs Union established a standard duty at the rate of 5% (CIF) on almost all products. As an exception to this 5% customs duty, some products, such as alcohol, tobacco and pork, pay higher customs duties. There is also provision for customs duty exemptions.
Given the status of the Custom Union, once a product has entered any of the Union countries, it will in principle be capable of moving freely to the other countries. This freedom is, however, subject to possible protective duties or taxes, which may be levied by other GCC countries from time to time to protect local production of specific goods.
Likewise, there are special regimes applying to products from other Arab Countries in consideration of multilateral or bilateral treaties existing prior to the signature of the Customs Union Agreement.
Finally, it should be noted that products imported and stored within the UAE Free Zones are exempt from customs duties. Products imported and stored in the UAE Free Zones will, however, pay customs duties when they exit the Free Zone to enter the UAE market (through an importer in the UAE) or any other country.
On 22 February 2006, the UAE ratified the United Nations ("UN") Convention against Corruption (the "UN Convention").
Article 15 of the UN Convention provides that it is a requirement for signatory states to adopt legislation in respect of acts of bribery involving public officals.
The UAE Framework
The UAE does not have one composite piece of legislation relating to corruption and bribery. Instead, the UAE's historic approach to this issue has been piecemeal, and therefore bribery related provisions are contained in a variety of Federal and Emirate level laws, and Government Departmental rules.
The main sources of UAE legislation include:
Whilst not as self contained as the UK Bribery Act (or equivalent European legislation) or the US Foreign Corrupt Practice Act (FCPA), the UAE does have an anti-bribery and corruption regime which is backed up by stiff imprisonment and fines. The provisions and prohibitions are focused specifically at any gift or advantage offered to, or
sought by, a public official in consideration for the performance or non-performance of their public duties, or acts beyond their public duties. Those provisions are reinforced by provisions preventing well connected individuals from using their influence to affect the performance or non-performance of a public officer's public duties.
In addition to compliance with the UAE framework, many foreign businesses operating in the UAE will have to comply with anti-corruption legislation in force in their home jurisdiction; for example, the UK Bribery Act and FCPA have far reaching consequences in the event of a breach, notwithstanding geographical boundaries. Both the UK Bribery Act and FCPA impose obligations on businesses and individuals to which they apply to actively police the business’ activities in the context of corruption.
Alison Hubbard, Partner
[email protected] / + 971 4 373 9693
Björn Gehle, Partner
[email protected] / +971 4 373 9642