Kuwait

Executive Summary

The Government of Kuwait launched an ambitious development plan in 2018 known as ‘Vision 2035’ which aims to transform country into an international trade hub and diversify its oil-centric economy. The goal is to increase private sector participation in Kuwait’s economy by creating a more investor-friendly environment as well as to invest in the nation’s economic infrastructure via the construction of new airports, ports, roads, industrial areas, residential developments, hospitals, a railroad, and a metro rail.  The Northern Gateway initiative, which encompasses the Five Islands or New Kuwait projects, envisions public and private sector investment in the establishment of an international economic zone that could exceed USD 400 billion over several decades. With one of the world’s largest sovereign funds with more than USD 670 billion in assets as of March 2021, minimal taxes, and low-cost labor, Kuwait provides a great opportunity for investment. However, bureaucratic red tape and the frequent changing of the government has stalled the progress of many initiatives.

Several public-private partnerships are in the pipeline in the power, water management, and renewable energy sectors. Two billion-dollar hospitals were completed in the last two years. These institutions need foreign investment to operate and train hospital staff, as well as to deliver world-class equipment and IT infrastructure.

With a view to attracting foreign investment, the government passed a foreign direct investment law in 2013 that permits up to 100 percent foreign ownership of a business if approved by the Kuwait Direct Investment Promotion Authority (KDIPA).  All other foreign businesses must abide by existing law that mandates that Kuwaitis, or other GCC nationals, own at least 51 percent of any enterprise. In approving applications from foreign investors seeking 100 percent ownership, KDIPA prioritizes local job creation, the provision of training and education to Kuwaiti citizens, technology transfer, diversification of national income sources, contribution to exports, support for small- and medium-sized enterprises, and the utilization of Kuwaiti products and services.  KDIPA has sponsored 37 foreign firms, including six U.S. companies. KDIPA also provides certain investment incentives like tax benefits, customs duties relief, and permission to recruit foreign employees.

Kuwait has also made great strides in protecting intellectual property. Kuwait’s 2019 Copyright Law addressed serious concerns about Kuwait’s intellectual property protection regime. The Office of the U.S. Trade Representative (USTR) moved Kuwait from the Priority Watch List to the Watch List in its 2020 Special 301 Report because of the new copyright legislation and an increase in intellectual property enforcement actions. The Special 301 Report identifies countries that are trading partners, but which do not adequately or effectively protect and enforce intellectual property rights (IPR). Kuwait has continued to increase enforcement actions in 2021.

Kuwait is a country of 1.4 million citizens and 3.3 million expatriates.  It possesses six percent of the world’s proven oil reserves and is a major oil exporter.  The economy is heavily dependent upon oil production and related industries, which are almost wholly owned and operated by the government. The energy sector accounts for more than half of GDP and close to 90 percent of government revenue. The fall in oil prices after OPEC+ failed to agree on production targets in 2019 and the reduction in global demand for oil upon the onset of the COVID-19 pandemic in 2020 greatly exacerbated Kuwait’s fiscal deficit. However, the rapid increases in the price of oil since spring 2021 has allowed Kuwait to significantly reduce its deficit from KD 5.4 billion (USD 17.7 billion) in March 2021 to KD 406.4 million (USD 1.3 billion ) as of January 2022. However, reduced stress on the country’s finances has dampened support for economic and business reforms that Kuwait needs to become the investment hub envisioned in New Kuwait Vision 2035. Kuwait’s ability to implement these changes will determine whether the current financial windfall will result in an economically sustainable future.

As it develops the private sector to reduce the country’s dependence on oil, the government faces two central challenges. It must improve the business climate to enable the private sector and must prepare its citizens to work in the private sector. Political tension between the government and the elected National Assembly, a slow and overly complicated bureaucracy, inconsistent legal practices, and restrictive economic policies contribute to a challenging business environment for outside investors.

More than 85 percent of all Kuwaitis with jobs work in the public sector, where they receive generous salaries and benefits. This makes public sector jobs largely preferable to careers in the private sector. Convincing young Kuwaitis that their future is in the private sector will require changing social attitudes and raising the level of local education so that Kuwaiti businesses can compete internationally in sectors other than fossil fuels.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 73 of 180 http://www.transparency.org/research/cpi/overview 
Global Innovation Index 2021 72 of 132 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2020 USD 540 million https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2019 USD amount 36,290 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

3. Legal Regime

Kuwait does not have a centralized online location where key regulatory actions are published akin to the Federal Register in the United States.  The regulatory system does not require that regulations be made available for public comment. The government frequently passes draft regulations to interested parties in the private sector, such as the Kuwait Chamber of Commerce and Industry or the Bankers Association, for comment.

Kuwait does not promote or require companies’ environmental, social, and governance (ESG) disclosure to facilitate transparency and/or help investors and consumers distinguish between high- and low-quality investments. However, ESG concepts are increasingly gaining traction in Kuwait with the Kuwait Investment Authority’s January 2022 announcement that it intended to make its investment portfolio ESG compliant.

The State Audit Bureau reviews government contracts and audits contract performance but does not publicly share the results.

Kuwait does not participate in the Extractive Industries Transparency Initiative (EITI), nor does it incorporate domestic transparency measures requiring the disclosure of payments made to other governments related to the commercial development of oil, natural gas, or mineral deposits.  However, the Kuwait economy is almost wholly dependent upon oil, the extraction of which is deemed a responsibility of the government and is subject to close National Assembly oversight.

Kuwait joined the General Agreement on Tariffs and Trade (GATT) in 1963 and became a founding member of the WTO in 1995.  However, Kuwait is not a signatory to every WTO plurilateral agreement, such as the Agreement on Government Procurement. In April 2018, Kuwait deposited its Trade Facilitation Agreement instrument of ratification with the WTO after Kuwait’s National Assembly approved the agreement the previous month.

Kuwait has been part of the GCC since its formation in 1981.  The GCC launched a common market in 2008 and a customs union in 2015.  The GCC continues to forge agreements on regional standards and coordinate trade and investment policies.  American standards and internationally recognized standards are typically accepted. For more information regarding GCC standards and policies, please refer to the following GCC website:  http://www.gcc-sg.org/en-us/Pages/default.aspx 

Kuwait has a developed civil legal system, based in part on Egyptian and French law and influenced by Islamic law.  Having evolved in a historically active trading nation, the court system in Kuwait is familiar with international commercial law.  Kuwait’s judiciary includes specialized courts, including a commercial court to adjudicate commercial law. Residents that are not Kuwaiti citizens involved in legal disputes with citizens have frequently alleged the courts show bias in favor of Kuwaiti citizens.  Holders of legal residence have been detained and deported without recourse to the courts.

Persons charged with criminal offenses, placed under investigation, or involved in unresolved financial disputes with local business partners have, in some cases, been subjected to travel bans.  Travel bans are meant to prevent an individual from leaving Kuwait until a legal matter is resolved or a debt settled. Travel bans may remain in place for a substantial period while the case is investigated, resolved, and/or prosecuted.  Failure to repay a debt can result in a prison term ranging from months to years, depending upon the amount owed.

U.S. firms are advised to consult with a Kuwaiti law firm or the local office of a foreign law firm before executing contracts with local parties.  Fees for legal representation can be very high. Contracts between local and foreign parties serve as the basis for resolving any future commercial disputes.  The process of resolving disputes in the Kuwaiti legal system can be subject to lengthy delays, sometimes years, depending on the complexity of the issue and the parties involved.  During these delays, U.S. citizens can be deprived of income streams related to their business venture and be forced to surrender assets and ownership rights before being allowed to depart the country.

To diversify the economy by attracting foreign investment and grow private sector employment, Kuwait passed a new foreign direct investment law in 2013 permitting up to 100 percent foreign ownership of a business – if approved by KDIPA. Without KDIPA approval, all businesses incorporated in Kuwait must be 51 percent-owned by Kuwaiti or GCC citizens and seek licensing through the Ministry of Commerce and Industry. In reviewing applications from foreign investors, KDIPA places emphasis on creating jobs and the provision of training and education opportunities for Kuwaiti citizens, technology transfer, diversification of national income sources, increasing exports, support for local small- and medium-sized enterprises, and the utilization of Kuwaiti products and services.  In addition to assistance in navigating the bureaucracy, available investment incentives through KDIPA include tax benefits, customs duties relief, and permission to recruit required foreign labor. Government control of land limits its availability for development.

In 2019, a set of criteria was introduced to assess applications and grant licenses to foreign investors. Decision No. 329 of 2019 enacted five main criteria for assessing licensing and granting incentives. The criteria covered the following: (i) transfer and settlement of technology, including tangible and intangible technological innovation and the enablement of knowledge creation; (ii) human capital, stressing job creation for nationals and employee development programs; (iii) market development; (iv) economic diversification; and (v) sustainable development in the areas of corporate social responsibility and environmental sustainability. Decisions on licenses and the granting of incentives are based on a “Points Scoring Mechanism” (PMS). Other recent legal measures to facilitate foreign direct investment and economic growth include Law No. 116 of 2014 regarding public-private partnerships (PPP) and a new Companies Law No. 1 of 2016.  The PPP law created the Kuwait Authority for Partnership Projects ( www.kapp.gov.kw ).

Kuwait’s open economy has generally promoted a competitive market.  In 2007, the government enacted the Protection of Competition Law No. 10 and by-laws in 2012 that facilitated the establishment of a Competition Protection Authority to safeguard free commerce, ban monopolies, investigate complaints, and supervise mergers and acquisitions.  The Competition Protection Authority presented a restructuring plan with the assistance of the World Bank to the Cabinet in 2018, which is still under review. In some previous years, U.S. investors have alleged instances of discrimination.

The Commercial Agency Law No. 13 of 2016 removed exclusivity, enabling foreign firms to have multiple agents to market their products.

In 2016, the National Assembly passed a new Public Tenders Law No. 49.  All bids on government-funded infrastructure projects (excluding military, security, and some oil sector tenders) in excess of KD 75,000 (USD 250,000) must be submitted to the Central Agency for Public Tenders.  The law requires that foreign contractors bidding on government contracts purchase at least 30 percent of their inputs locally and award at least 30 percent of the work to local contractors, where available.  The law favors local sourcing by mandating a 15 percent price preference for locally- and GCC-produced items, however this provision may be waived on a case-by-case basis.

Kuwait has had no recent cases of expropriation or nationalization involving foreign investments.  The 2013 Foreign Direct Investment (FDI) Law guarantees investors against expropriation or nationalization, except for public benefit as prescribed by law.  In such cases, investors should be compensated for the real value of their holdings at the time of expropriation. The last nationalization occurred in 1974.

Kuwait worked with the World Bank to draft bankruptcy legislation designed to assist businesses to recover from financial difficulties as an alternative to liquidation. The Council of Ministers approved new legislation to support competition and create bankruptcy protections and sent it to the National Assembly. On September 29, 2020, Kuwait’s National Assembly passed the long-awaited law. The new law restructures the legal framework for bankruptcy to focus on rehabilitating troubled companies rather than liquidation. The new law removes these penalties for good faith debtors and creates new mechanisms to allow debtors to avoid liquidation, including a preventive settlement procedure and a restructuring procedure.

4. Industrial Policies

Incentives under the 2013 FDI Law include tax benefits (15 percent corporate tax on foreign firms may be waived for up to 10 years), customs duties relief, land and real estate allocations, and permissions to recruit required foreign labor. Kuwait does not offer incentives for businesses owned by demographically underrepresented investors.

Other tax benefits exist.  For example, entities incorporated in the GCC that are 100 percent owned by GCC nationals are exempt from paying a tax on corporate profits.  Capital gains arising from trading in securities listed on Kuwait’s stock market are exempt from tax. Foreign principals selling goods through Kuwaiti distributors are not subject to tax.

Kuwait does not have personal income, property, inheritance, or sales taxes. Kuwait, alongside its GCC neighbors, agreed in 2016 to implement a 5 percent value added tax on consumption. In 2019, Kuwait announced that it would delay implementation until 2021. As of March 2022, the VAT has not been implemented nor is it being seriously discussed in the National Assembly or government.

Kuwait does not offer any incentives for clean energy investment. Conversely, heavily subsidized utilities like electricity and desalinated water incentivize unmitigated use of emissions intense resources.

The Kuwait Free Trade Zone was established at Shuwaikh port in 1999.  The Council of Ministers approved legislation that would establish a new Free Trade Zone area as part of Kuwait’s Northern Gateway megaproject.  The legislation is pending in the National Assembly. Many restrictions normally faced by foreign firms, as well as corporate taxes, would not apply within the free trade zone.  KDIPA is developing three Economic Zones (Abdali, Al-Na’ayem and Al-Wafra) that were authorized by Law No. 116 of 2013.

The government requires foreign firms to hire a percentage of Kuwaitis that varies according to sector.  The percentages are as follows:

  • banking: 75 percent
  • communications: 65 percent
  • investment and finance: 40 percent
  • petrochemicals and refining industries: 30 percent
  • insurance: 22 percent
  • real estate: 20 percent
  • air transportation, foreign exchange, cooperatives: 15 percent
  • manufacturing and agriculture: 3 percent

Employers must obtain a no-objection certificate for a work permit for foreign employees from the Public Authority for Manpower (PAM) prior to the employee’s arrival in the country.  Obtaining a no-objection certificate requires submission of the employee’s criminal history and a completion of a health screening through a Kuwaiti Embassy or Consulate. Upon arrival, the employee must obtain a work permit from PAM and complete health and security screenings before receiving final status as a resident foreign worker from the Ministry of Interior.

Kuwait requires that foreign companies store data locally, although an upcoming data privacy law may permit for some external data storage. Kuwait has strict laws governing the use and transmission of data on Kuwaiti citizens. Foreign investors are subject to a 30 percent local content requirement on construction projects and when manufacturing goods locally.  Each company may determine whether and how it chooses to store data. Most governmental agencies follow International Organization for Standardization (ISO) certificate standards, which mandate the storage of data for five years.  Banks and other financial institutions are required by the Anti-Money Laundering/Combatting the Financing of Terrorism Law 106 of 2013 to maintain transactions data for five years. Contractors are subject to performance and completion bonds.

5. Protection of Property Rights

Non-GCC citizens may own properties only under special conditions that require Cabinet approval.

Kuwait was removed from USTR’s Special 301 Watch List in 2022 for making continued and significant progress on concerns that stakeholders identified with IP enforcement and transparency. Kuwait acceded to the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1995 and the World Intellectual Property Organization (WIPO) Patent Cooperation Treaty in 2016.  The government enacted the GCC Trademark Law in 2015. In 2019, Kuwait passed the Copyright and Related Rights Law and related Implementing Regulations. In 2021, the Ministry of Commerce and Industry and the Copyright Office each created online portals for streamlining the submission of trademark and copyright violation reports, respectively.

Right holders continue to raise concerns regarding the lack of transparency of administrative and criminal enforcement proceedings.  The government did not prioritize the prosecution of criminal behavior in such cases nor reduce the undue delays in the judicial process. Kuwait does not publicly report statistics on seizures of counterfeit goods, but IPR authorities have increased public outreach and awareness building over the past year.

The following descriptions characterize the protection of IPR in Kuwait:

Legal Structure: strong; Kuwait’s 2019 Copyright Law addressed serious concerns about Kuwait’s intellectual property protection regime. IPR legislation is adequate.

Enforcement: medium; The Kuwait Ministry of Commerce and Industry has made significant progress over the past year in improving enforcement of IPR laws. The Ministry reported that it cited 327 shops in 2021 for selling counterfeits and ordered the closure of 80 of these violating businesses. The Ministry is improving its collaboration with Kuwait’s judicial authorities to increase successful prosecution of IP violations.

Infringement on rights: common; Counterfeit items are widely available and often sold in plain sight. However, increased and improved enforcement of IPR laws is having a visible impact on businesses’ ability to market counterfeit goods.

Theft: uncommon; intellectual property theft is rare, principally because Kuwait’s technology, manufacturing, and research sectors are relatively small.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/. 

Mr. Peter Mehravari
Intellectual Property Attaché for the Middle East & North Africa
U.S. Embassy Abu Dhabi
Tel: +965 97589223
Email:  Peter.Mehravari@trade.gov

Embassy list of local lawyers:  https://kw.usembassy.gov/u-s-citizen-services/attorneys/

6. Financial Sector

Foreign financial investment firms operating in Kuwait characterize the government’s attitude toward foreign portfolio investment as welcoming.  An effective regulatory system exists to encourage and facilitate portfolio investment. Existing policies and infrastructure facilitate the free flow of financial resources into the capital market.  Government bodies comply with guidelines outlined by IMF Article VIII and refrain from restricting payments and transfers on current international transactions. In November 2015, the Capital Markets Authority issued a regulation covering portfolio management, but it does not apply to foreign investors.

The privatized stock exchange, named the Boursa, currently lists 166 companies.  In February 2019, a consortium led by Kuwait National Investment Company that included the Athens Stock Exchange won a tender to acquire 44 percent of the Kuwaiti Boursa.  In December 2019, the Capital Markets Authority sold its 50 percent stake in the Kuwaiti Boursa as part of an Initial Public Offering. The offering was oversubscribed by more than 8.5 times. Kuwait’s Public Institution for Social Security owns the remaining six percent of shares. The Boursa is the only stock exchange owned by the private sector in the Middle East.

FTSE Russell upgraded the status of the Boursa to Secondary Emerging Market in 2017. On December 1, 2020, Boursa Kuwait completed the Kuwaiti capital market’s inclusion into the MSCI Emerging Markets Indexes with the successful implementation of the first tranche of index inclusion.

While the debt market is not well developed, local banks have the capacity to meet domestic demand.  Credit is allocated on market terms. Foreign investors can obtain local credit on terms that correspond to collateral provided and intended use of financing.  The private sector has access to a variety of credit instruments. The Central Bank restricts commercial banks’ use of structured and complex derivatives but permits routine hedging and trading for non-speculative purposes.  In March 2017, the government issued USD 8 billion in five- and ten-year notes but was unable to secure approval from the National Assembly for issuance of 30-year notes.

The Central Bank of Kuwait reported that banking sector assets totaled USD 251 billion in September 2021, an increase by 0.6 percent.

Twenty-two banks operate in Kuwait: five conventional local banks, five Islamic banks, 11 foreign banks, and one specialized bank.  Conventional banks include National Bank of Kuwait, Commercial Bank of Kuwait, Gulf Bank, Al-Ahli Bank of Kuwait, and Burgan Bank. Sharia-compliant banks include Kuwait Finance House, which is the second largest bank in Kuwait, Boubyan Bank, Kuwait International Bank, Al-Ahli United Bank, and Warba Bank.  Foreign banks include BNP Paribas, HSBC, Citibank, Qatar National Bank, Doha Bank, Dubai-based Mashreq Bank, the Bank of Muscat, Riyadh-based Al Rajhi Bank (the largest Sharia-compliant bank in the world), the Bank of Bahrain and Kuwait (BBK), the Industrial and Commercial Bank of China (ICBC), and Union National Bank.  The government-owned Industrial Bank of Kuwait provides medium- and long-term financing to industrial companies and Kuwaiti citizens through customized financing packages. In December 2018, the Ministry of Commerce and Industry began permitting more than 49 percent foreign ownership in local banks with the approval of the Central Bank of Kuwait.

Following the global financial crisis in 2008 when large losses reduced confidence in the local banking sector, the Council of Ministers and the National Assembly passed legislation to guarantee deposits at local banks to rebuild confidence.

Foreign banks can offer retail services.  In 2013, the Central Bank announced that foreign banks could open multiple branches on a case-by-case basis.  In 2017, the Al-Rajhi Bank opened its second branch. Qatar National Bank received CBK’s approval in 2014 and opened its second branch in 2018.  Kuwaiti law restricts foreign banks from offering investment banking services. Foreign banks are subject to a maximum credit concentration equivalent to less than half the limit of the largest local bank and are prohibited from directing clients to borrow from external branches of their bank.  Foreign banks may also open representative offices.

The Central Bank of Kuwait announced initial guidelines for digital banking in early 2022. Concurrently, they opened applications for licensing for digital banking and will remain open until June 30, 2022. It is expected many of the existing large banks will apply for a digital license—further crowding the sector.

The Kuwait Investment Authority (KIA) manages the Kuwait General Reserve Fund and the Kuwait Fund for Future Generations.  By law, ten percent of oil revenues can be deposited each annually into the Fund for Future Generations in year of budget surplus. Despite rising oil prices, a surplus has not been formally announced and thus the ten percent policy has not been reinstated as of March 2022. KIA management reports to a Board of Directors appointed by the Council of Ministers.  The Minister of Finance chairs the board; other members include the Minister of Oil, the Central Bank Governor, the Undersecretary of the Ministry of Finance, and five representatives from Kuwait’s private sector (three of whom must not hold any other public office).  An internal audit office reports directly to the Board of Directors and an external auditor. This information is provided to the State Audit Bureau, which audits KIA continuously and reports annually to the National Assembly.

The 1982 law establishing the KIA prohibits the public disclosure of the size of sovereign wealth holdings and asset allocations.  KIA conducts closed-door presentations for the Council of Ministers and the National Assembly on the full details of all funds under its management, including its strategic asset allocation, benchmarks, and rates of return.  The Sovereign Wealth Fund Institute estimated that KIA manages one of the world’s largest sovereign funds with more than USD 670 billion in assets as of March 2021.

Economic stress and budget deficits since 2016 due to diminishing oil revenues and, as of March 2020, the COVID-19 pandemic had led to the near depletion of the General Reserve Fund. Authorization to issue debt has stalled in the National Assembly.

7. State-Owned Enterprises

The energy sector is dominated by state-owned enterprises (SOEs), as law precludes private participation in most sector activities.  Outside the energy sector, Kuwait has few fully SOEs. One notable exception is Kuwait Airways.  No published list of SOEs exists. The government owns shares in various Kuwaiti companies through the Fund for Future Generations managed by the KIA or the Social Security Fund managed by Kuwait’s Public Institution for Social Security.  SOEs are permitted to control their own budgets.

The National Assembly has passed several privatization laws since 2008. The Supreme Council for Privatization was established under a Privatization Law to increase the role of the private sector in Kuwait’s national economy. The council is chaired by the prime minister and consists of five ministers and three experts from different sectors.

The Privatization Law was developed to address all the major issues related to privatization, especially the processes of transferring public projects into joint stock companies, protecting the rights of national manpower, and controlling prices and the controls which govern revenues arising from the privatization process. The Supreme Council and then the Council of Ministers must approve any privatization initiative.

Kuwaiti employees have the right to retain their jobs in a privatized company for at least five years with the same salary and benefits.  Privatized shares of any public company must be offered as follows:

  • 40 percent of shares reserved for Kuwaiti citizens;
  • 20 percent of shares retained by the government;
  • five percent of shares distributed to Kuwaiti employees, both former and current; and
  • the remaining 35 percent of shares sold at auction to a local or foreign investor.

Telecommunications is the largest service sector in Kuwait.  The Ministry of Communications owns and operates landlines and owns a fiber optic network.  Internet providers may access both landlines and fiber optic networks. Three private mobile telephone companies provide cellular telephone and data services to the country.  The government owns a significant minority interest in each, but foreign companies own majority interests in two of them. In 2014, the National Assembly passed legislation creating the independent Communication and Information Technology Regulatory Authority (CITRA), in part to prepare for the liberalization of mobile communications and Internet markets.  Officially opened in 2016, CITRA serves as the primary national telecom regulator and cybersecurity agency. In March 2022, Kuwait announced the creation of a cybersecurity center that will eventually assume CITRA’s cybersecurity role, although details have not yet been finalized. CITRA also has a mandate to attract high-tech investment.

8. Responsible Business Conduct

Kuwaitis have a general awareness of expectations for responsible business conduct, including environmental, social, and governance issues.  One aspect of responsible business conduct in Kuwait is contributions to local charities and causes.  Kuwaiti labor law is generally adequate in its protection of workers, although actual implementation of the law varies. Labor rights violations are generally more common in the domestic worker sphere than in the business community, although violations are common in low wage sectors with high expatriate populations. Economic stress following the onset of the COVID-19 pandemic in early 2020 led to an increase in illegally forced “resignations” or illegal salary cuts as businesses sought to relieve themselves of financial obligations. The Kuwait Environmental Public Authority has been active in enforcing compliance and addressing environmental violations, since the passage of the Environmental Protection Law of 2014.

Department of State

Department of the Treasury

Department of Labor

Kuwait is developing its national climate strategy. Although it has not committed to reaching net-zero carbon emissions by 2050, the New Kuwait Vision 2035 plan does incorporate a focus on environmentally sustainable economic diversification, renewable energy, and environmental conservation. Kuwait does not offer regulatory incentives to achieve policy outcomes that preserve biodiversity, clean air, or other desirable ecological benefits nor do public procurement policies explicitly include environmental considerations. Kuwait is increasing its focus on the creation of protected areas and ecosystem management plans and hopes to eventually set 18 percent of its surface area aside as protected space.

9. Corruption

In recent years, Kuwaiti authorities have increased their focus on combatting corruption and several investigations and trials involving current or former government officials accused of malfeasance are active.

Transparency International’s 2021 Corruption Perceptions Index ranked Kuwait 73 out of 180 countries, an improvement from 78 in 2020.  Kuwait ranked behind all other GCC countries except for Bahrain.  According to Transparency International, Kuwait’s numeric score is 43 out of 100.

The often-lengthy procurement process in Kuwait occasionally results in accusations of attempted bribery or the offering of other inducements by bidders.  In 1996, the government passed Law No. 25, which required all companies securing contracts with the government valued at KD 100,000 (USD 330,000) or more to report all payments made to Kuwaiti agents or advisors while securing the contract.  The law similarly requires entities and individuals to report any payments they received as compensation for securing government contracts.

Kuwait signed the UN Convention Against Corruption in 2003 and ratified it in 2007.  In 2016, the National Assembly passed legislation to establish the Anti-Corruption Authority, also known as Nazaha (integrity).  The legislation was passed to comply with the United Nations Convention Against Corruption. Nazaha has sent several cases to the Public Prosecution Office for failure to comply with financial disclosure requirements.

Contact information for the government agency responsible for combating corruption is as follows:

Mr. Abdul Aziz Abdul Latif Al Ibrahim
President
Kuwait Anti-Corruption Authority (Nazaha)
Shamiya, Block 2, Opposite Wahran Park, Kuwait City, Kuwait
Tel:  +965 2464-0200/118
Email: contact@nazaha.gov.kw

10. Political and Security Environment

The U.S. Embassy occasionally receives threat information indicating possible targeting of official and private U.S. citizens for terrorist attacks.  Soft targets are vulnerable to terrorist attack, although many have improved their perimeters and internal security. There have been no terror incidents in Kuwait since 2016.  There have been no attacks targeting businesses or infrastructure. Since late 2013, Kuwait has seen no large-scale, politically motivated demonstrations, although it experienced some small-scale protests against COVID-19 restrictions over the winter of 2020-2021. U.S. citizens are encouraged to enroll in the U.S. Department of State’s Smart Traveler Enrollment Program (STEP) for up-to-date information from the Embassy.  The Department of State shares credible threat information through its Consular Information Program, including Travel Advisories, Alerts, and Country Information for Kuwait, available at  https://travel.state.gov/content/travel.html or the Embassy’s website:  https://kw.usembassy.gov/.

11. Labor Policies and Practices

Kuwait has a diverse labor force.  According to the Central Statistical Bureau (CSB), as of September 30, 2021, approximately 1,479,454 million expatriate workers account for 77.7 percent of Kuwait’s workforce. According to the Kuwaiti government’s statistics, the number of foreign workers in the private sector fell by over 280,000 over the course of the COVID-19 pandemic.

Many expatriate workers are low-paid laborers from other Middle Eastern countries, South Asia, and the Philippines working in Kuwait under a legally established “sponsorship” system.  Under the kafala system, a migrant worker’s immigration status is legally bound to an individual employer or sponsor for their contract period. The migrant worker cannot enter the country or transfer employment for any reason without first obtaining explicit written permission from their sponsor. This situates the migrant worker as almost entirely dependent upon their sponsor for their livelihood and residency. Abuse of the sponsorship, or “kafala” system is widespread. Sponsors sometimes confiscate workers’ passports despite legislation declaring this practice illegal. Workers who fled abusive employers had difficulty retrieving their passports, and authorities deported them in almost all cases. The law does not explicitly prohibit private sector workers from paying recruitment fees. For domestic workers, employers are required to pay recruitment agency fees, which cannot be deducted from the worker’s remuneration.

White-collar workers from around the world occupy highly-skilled positions in Kuwait, while many middle management positions are occupied by Egyptian, Lebanese, and South Asian nationals.

Kuwaiti nationals occupy most of the top management positions in the private and public sectors.  Generally, unemployment among Kuwaitis is quite low, but new labor entrants are reluctant to enter the private sector. According to the Public Authority for Manpower, approximately 73,000 Kuwaiti citizens worked in the private sector as of September 2021.

The International Monetary Fund has stressed that limiting public sector employment growth should be part of broader public sector reforms and accompanied by efforts to boost private sector job and entrepreneurship opportunities for Kuwaiti youth.

Since 1991, the government has adopted inconsistent policies intended to limit growth of the resident expatriate population. This population has continued to increase steadily however.  Lower-paid, unskilled workers often suffer unfavorable working conditions. The government has an electronic labor tracking system to allow companies only enough work permits to be issued for pre-verified positions.  The tracking system is designed to protect workers, following years of visa fraud whereby Kuwaiti sponsors created ghost positions and sold the visas for personal profit. Workers brought to Kuwait under such fraudulent schemes found themselves unemployed, forced to seek illegal work, vulnerable to exploitative work conditions, and eventual arrest and deportation.  Unskilled foreign workers are restricted from transferring from one sponsor to another within the private sector for a minimum of two years, but college graduates may transfer after one year. However, the quota system has impacted ability of domestic and foreign firms, delaying their ability to bring in new expatriate workers.

Kuwaiti workers have the right to organize and bargain collectively, but Kuwaiti law restricts the right of freedom of association to only one union per occupational trade.  The law permits only one federation, the Kuwait Trade Union Federation, which comprises 15 of the 47 licensed unions. Foreign workers are permitted by law to join unions only as non-voting members after five years of work in a specific sector.  Private sector workers have the right to strike; however, negotiation and arbitration are compulsory in the case of disputes. Public sector workers do not have the legal right to strike, though groups of public sector workers threatened to strike on occasion during the past few years.  Kuwaiti labor law prohibits anti-union discrimination.

Kuwaiti labor laws establish work conditions in the public and private sectors, except for the oil sector. Kuwaiti law prohibits forced labor. Workers in industrial and dangerous jobs must be at least 18 years old; youth under the age of 18 can work part-time in some non-industrial positions.  A multi-tiered labor market ensures higher wages for Kuwaiti employees. The minimum monthly salary for the private sector is approximately 75 dinars (USD 250) whereas the approximate lowest monthly salary for Kuwaitis in the public sector is 600 dinars (USD 2,000). Domestic workers earn a minimum monthly salary of approximately 60 dinars (USD 200). Kuwaitis, whether employed in the private or public sector, receive substantial government payments and benefits on top of their base salaries. The amended labor law of 2010 did not change the previous workweek maximum from 48 hours but extended annual leave to 30 days after six months of employment. Labor laws are not consistently enforced and disputes over the payment of salaries and contract switching are common, especially among unskilled workers.  A specific set of laws and regulations cover domestic (household) workers.

The International Labor Organization’s (ILO) Committee of Experts has longstanding criticisms concerning discrepancies between the Kuwaiti Labor Code and ILO Conventions 1, 30, and 87 regarding work hours and freedom of association.  The ILO has criticized the prohibition on more than one trade union for a given field; the requirement that a new union have at least 100 workers, of whom 15 must be citizens; the regulation that workers must reside in Kuwait for five years before joining a trade union; the denial of foreign workers’ right to vote and serve in trade union leadership positions for; the prohibition against trade unions engaging in political or religious activity; and the reversion of trade union assets to the Public Authority for Manpower in the event of dissolution. While Kuwaiti public sector union leaders and workers faced no government repercussions for their roles in union or strike activities, companies directly threatened migrant workers calling for strikes with termination and deportation.

Law No. 91 of 2013 for Combating Trafficking in Persons and Smuggling of Migrants defines human trafficking in Kuwait and the penalties for trafficking in persons. Forced labor conditions for migrant workers included nonpayment of wages, long working hours, deprivation of food, threats, physical and sexual abuse, and restrictions on movement, such as withholding passports or confinement to the workplace. During recent years, the Government of Kuwait has taken several measures to address human trafficking and to improve protections for workers.  In September 2020, the Public Authority for Manpower, the Supreme Council for Planning and Development, the United Nations Development Program and the International Organization for Migration launched the Tamkeen initiative to implement the International Recruitment Integrity System to promote ethical recruitment of migrant workers. As of November 2021, the Public Authority for Manpower completed the first phase of the Tamkeen initiative, which included training for its own staff and recruitment agencies. In October 2021. the Anti-Trafficking Department of the Ministry of Interior established a 24/7 hotline in Arabic and English to receive reports of human trafficking, but there are reports it did not operate at all times.

Since 2007, labor laws have banned women from working between 10:00 p.m. and 7:00 a.m., except for sectors approved by the Public Authority for Manpower such as nursing.  The law also banned women from working in jobs that are judged to be hazardous, rough, and damaging to health, as well as in positions that the government deems “immoral or abuse women’s femininity,” or in businesses that exclusively serve men. The Supreme Council for Planning and Development reported that women make up 56 percent of the labor market in the public sector and 11 percent in the private sector.

The Director General of the Public Authority for Manpower issued an administrative decision in March 2022 annulling a previous 2021 decision that banned the renewal of work and residency permits for expatriates who reached the age of 60 and held only a high school certificate.

Kuwait’s Public Authority for Manpower assists all residents of Kuwait with private sector employment and labor disputes.  The Public Authority for Manpower’s labor and occupational safety inspectors routinely monitored private firms for labor law compliance. Noncompliant employers faced fines or a forced suspension of their company operations. Offices assist residents according to the location of the employer and are open Sunday through Thursday, 8:00 a.m. – 1:00 p.m. Some expatriate residents have reported that the offices were unable to provide any assistance. It is recommended that residents seeking assistance be accompanied by an Arabic speaker. Following is information on Public Authority for Manpower offices:

Capital Business Administration:
Sharq,
Mohammad al-Haqan Street
Tel: +965 2246-6830 and 2246-6831

Hawalli Business Administration:
Hawalli
Tunis Street, opposite Ahli Bank of Kuwait
Tel: +965 266-0229 and 2266-0228

Al-Farwaniya Business Administration:
Dajeej
Adjacent to General Department of Criminal Evidence
Tel: +965 2431-9555

Al-Jahra Business Administration:
Saad al-Abdullah (Amgarah)
Street 1, Block 10
Tel +965 9494-5446

Al-Ahmadi Business Administration:
Al Ahmadi
Next to Kuwait Oil Company
Block 1, Street 20
Tel: +965 2398-2059

Mubarak Al-Kabeer Business Administration:
Mubarak Al-Kabeer
Co-op #4, beside National Bank of Kuwait and Kuwait Finance House
Tel: +965 2543-8595

The Public Authority for Manpower offers Arabic and English responses via their Twitter handle: @manpower_KWT, or Instagram account: pr.manpower.  The Authority attempts to answer inquiries within one business day.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

According to the 2020 World Investment Report published by the United Nations Conference on Trade and Development, Kuwait attracted a foreign direct investment inflow of USD 104 million in 2019, while divesting USD 2.5 billion of overseas investment.

According to the U.S. Department of Commerce Bureau of Economic Analysis, 2019 U.S. direct investment in Kuwait was USD 398 million, down from USD 499 million in 2018.  Kuwait’s FDI stock position in the United States totaled USD 1.26 billion in 2019. Kuwaiti direct investment in the United States is largely in real estate, stocks, and logistics.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2019 $136.197 billion http://www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2019 $398 million BEA data available at
https://apps.bea.gov/international/factsheet/ 
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2018 $1,256 BEA data available at
https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data 
Total inbound stock of FDI as % host GDP 2019 $398 million 2019-2020 -5.1% UNCTAD data available at https://unctad.org/topic/investment/world-investment-report 

*Host country source: https://www.cbk.gov.kw/en/statistics-and-publication/publications/quarterly-statistical-bulletin 

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward Amount 100% Total Outward Amount 100%
Qatar 3,288 X% Cayman Islands 4,451 X%
Saudi Arabia 908 X% Bahrain 3.728 X%
United Arab Emirates 848 X% Saudi Arabia 3,401 X%
Bahrain 746 X% Iraq 3,126 X%
Oman 440 X% Turkey 2,932 X%
“0” reflects amounts rounded to +/- USD 500,000.

14. Contact for More Information

Economic Section
U.S. Embassy Kuwait
P.O. Box 77
Safat 13001
Kuwait
+965 2259 1001
KuwaitDirectLine@state.gov

United Arab Emirates

Executive Summary

The Government of the United Arab Emirates (UAE) is urgently pursuing 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 a 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) by i) not charging taxes or making restrictions on the repatriation of capital; ii) allowing relatively free movement into the country of labor and low barriers to entry (effective tariffs are five percent for most goods); and iii) offering FDI incentives.

The UAE in 2021 launched broad economic and social reforms to strengthen pandemic recovery, respond to growing regional economic competition, and commemorate its 50-year founding anniversary with a series of reforms.

The UAE 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 policies to encourage Emirati entrepreneurship and labor force participation. These economic development projects offer both challenges and opportunities for foreign investors in the coming years. In 2022, UAE changed its work week for government bodies from Sunday to Thursday to Monday to Thursday with a half day on Friday in order to more closely align with world markets.

Additionally, the UAE approved a comprehensive reform of the national legal system, which, among other aims, developed the legal frameworks around data privacy, investment, regulation and legal protection of industrial property, copyrights, trademarks, and residency. The first-ever federal data protection law regulates how personal data are processed across the UAE, with separate laws on government, financial, and healthcare data to follow. The new Commercial Companies law removes restrictions to facilitate further mergers and acquisition activity. The federal trademark law further expands the scope of legal protection for companies’ trademarks, products, innovations, and trade names by protecting non-traditional patterns of trademarks. These legal reforms are broadly considered to be positive by U.S. companies, but investors will need to carefully consider how these broad changes affect their operations.

The Ministry of Finance announced in January 2022 that the UAE will introduce a federal corporate tax on business profits starting in 2023 as part of its membership in the OECD Inclusive Framework on Base Erosion and Profit Shifting. Companies await further guidance on how the new tax policy will be implemented, but it is expected to have a broad and significant impact on companies operating both inside in the UAE and “offshore” in the country’s many economic free zones.

The UAE announced in October 2021 that it would pursue net zero greenhouse gas emissions by 2050, to include an investment of $163 billion in renewable energy.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 24 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 33 out of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $19.5 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $39,410 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

The UAE actively seeks FDI, citing it as a key part of long-term economic development plans. In 2021, as part of the series of reforms to commemorate the UAE’s 50th anniversary, the government announced a series of programs to with the goal of attracting $150 billion worth foreign investment in the coming decade. The COVID-19 pandemic accelerated government efforts to attract foreign investment to promote economic growth.

Under Federal Decree-Law No (26) of 2020, the “Commercial Companies Law,” onshore UAE companies are no longer required to have a UAE national or a Gulf Cooperation Council (GCC) national as a majority shareholder. UAE joint stock companies no longer must be chaired by an Emirati citizen or have Emirati citizens comprise the majority of its board. Local branches of foreign companies no longer must have a UAE national or a UAE-owned company act as an agent. In March 2021, an intra-emirate committee recommended a list of strategically important sectors requiring additional licensing restrictions. The Abu Dhabi Department of Economic Development (ADDED) published in May 2021 a list of 1,105 commercial and industrial business activities that are eligible for 100 percent foreign ownership, effective June 2021. In August 2021, ADDED introduced the “Reduction Program” to facilitate investment and ease of doing business in Abu Dhabi emirate by reducing requirements and cutting fees. As part of the program, Abu Dhabi cut business startup fees by 94 percent in 2021. In June 2021, the Dubai government published guidelines for full ownership procedures for more than 1,000 commercial and industrial activities.

Federal Law No (32) of 2021 introduced two new types of companies: the special purpose acquisition company, or “SPAC,” and the special purpose vehicle, or “SPV.” The law also amended certain provisions related to Limited Liability Companies and public joint stock companies and introduced a regime to allow for the division of Joint Stock Companies.

Non-tariff barriers to investment persist in the form of visa sponsorship and distributorship requirements. Several constituent emirates have introduced new long-term residency visas and land ownership rights to attract and retain expatriates with sought-after skills in the UAE.

The Federal Decree-Law No (26) of 2020, outlined above, reduced limits on foreign control and right to private ownership of companies. Neither Embassy Abu Dhabi nor Consulate General Dubai (collectively referred to as Mission UAE) has received any complaints from U.S. investors that they have been disadvantaged relative to other non-GCC investors.

UAE officials emphasize the importance of facilitating business investment and tout the broad network of free trade zones as attractive to foreign investors. The UAE’s business registration process varies by emirate, but generally happens through an emirate’s Department of Economic Development. The UAE issued Federal Law No (37) of 2021 on commercial registry law to make the Economic Register a comprehensive reference for economic activities in the country and enable use of the unified economic register number as a digital identity for establishments. Links to information portals from each of the emirates are available at https://ger.co/economy/197 . Dubai waived and reduced fees for a total of 88 services provided by various Dubai Government entities in July 2021.

In September 2021, the UAE introduced the “Green Visa,” which allows self-employed individuals meeting certain professional requirements to achieve residency for themselves and family members without obtaining a work permit, a shift from previous immigration policies. The UAE also created a “Freelancers Visa” and expanded “Golden Visa” eligibility to include certain managers, CEOs, specialists in science, engineering, health, education, business management, and technology. The Golden Visa, first announced in 2019, allows foreigners who make major investments or focus on in-demand professions to live and work in the UAE without Emirati sponsors and offers extended visa validity compared to the UAE’s traditional work-related visa program.

The UAE introduced in September 2021 a single online platform to present all foreign investment opportunities in the UAE: invest.ae .

Dubai launched the Invest in Dubai platform, a “single-window” service in February 2021 to enable investors to obtain trade licenses and launch their business quickly. In August 2020, the Dubai International Financial Center (DIFC) introduced a new license for startups, entrepreneurs, and technology firms, starting at $1,500 per year. In January 2022, ADDED announced it had removed more than 20,000 requirements to set up businesses in the emirate as part of an ongoing overhaul of procedures. Twenty-six local and federal partner entities participated in the reductions program.

As part of Dubai Multi Commodities Center’s (DMCC) broader environment, social, and governance strategy, the DMCC announced in February 2022 that it will bring 20 social and environmental impact-driven businesses into its community through an Impact Scale-Up Program. Accordingly, the DMCC will provide qualifying companies with substantial discounts on business setup costs for five years.

Five-year residence visas are available for investors who purchase property worth $1.4 million or more, and 10-year residence visas are available for individuals who invest $2.8 million in a business. The government also provides visas for entrepreneurs and specialized talent in science, medicine, and specialized technical fields. The Abu Dhabi Department of Culture and Tourism launched in February 2021, the Creative Visa for individuals working in cultural and creative industries, including heritage, performing arts, visual arts, design and crafts, gaming and e-sports, media, and publishing.

The UAE is an important participant in global capital markets, including through several sizeable sovereign wealth funds, as well as through several emirate-level, government-related investment corporations.

3. Legal Regime

The onshore regulatory and legal framework in the UAE continues to generally favor local Emirati investors over foreign investors.

The Trade Companies Law requires all companies to apply international accounting standards and practices, generally the International Financial Reporting Standards (IFRS).

The Securities and Commodities Authority (SCA) Board Decision issued a decision in 2020 that public joint stock companies listed on the Abu Dhabi Securities Exchange (ADX) or the Dubai Financial Market (DFM) must publish a sustainability report. In March 2021, the SCA made it mandatory for listed companies to have at least one female representative on their board.

Generally, legislation is only published after it has been enacted into law and is not formally available for public comment beforehand. Government-friendly press occasionally reports details of high-profile legislation. The government may consult with large private sector stakeholders on draft legislation on an ad hoc basis. Final versions of federal laws are published in Arabic in an official register “The Official Gazette,” though there are private companies that translate laws into English. The UAE Ministry of Justice (MoJ) maintains a partial library of translated laws on its website. Other ministries and departments inconsistently offer official English translations via their websites. The emirates of Abu Dhabi, Dubai, and Sharjah publish official gazettes online in Arabic. Regulators are not required to publish proposed regulations before enactment.

As a GCC member, the UAE maintains regulatory autonomy, but coordinates efforts with other GCC members through the GCC Standardization Organization (GSO). In 2021, the UAE submitted 109 notifications to the WTO committee, including notifications of emergency measures and issues relating to Intellectual Property Rights.

Islam is identified as the state religion in the UAE constitution and serves as the principal source of domestic law. Common law principles, such as following legal precedents, are generally not recognized in the UAE, although lower courts commonly follow higher court judgments. Judgments of foreign civil courts are typically recognized and enforceable under local courts. Domestic law is a dual legal system of civil and Sharia laws – the majority of which has been codified. Most codified legislation in the UAE is a mixture of Islamic law and other civil laws.

The legal system of the country is generally divided between a British-based system of common law used in offshore free trade zones (FTZs) and onshore domestic law. The United States District Court for the Southern District of New York signed a memorandum with the DIFC courts providing companies operating in Dubai and New York with procedures for the mutual enforcement of financial judgments. The Abu Dhabi-based financial free zone hub Abu Dhabi Global Market (ADGM) signed a Memorandum of Understanding (MoU) with the Abu Dhabi Judicial Department in February 2018 allowing reciprocal enforcement of judgments, decisions, orders, and arbitral awards between ADGM and Abu Dhabi courts.

The UAE constitution stipulates each emirate can set up a local emirate-level judicial system (local courts) or rely exclusively on federal courts. The Federal Judicial Authority has jurisdiction over all cases involving a “federal entity.” The Federal Supreme Court in Abu Dhabi is the highest federal court. Federal courts have exclusive jurisdiction in seven categories of cases: disputes between emirates; disputes between an emirate and the federal government; cases involving national security; interpretation of the constitution; questions over the constitutionality of a law; and cases involving the actions of appointed ministers and senior officials while performing their official duties. The federal government administers the courts in Ajman, Fujairah, Umm al Quwain, and Sharjah, including vetting, appointing, and paying judges. Judges in these courts apply both local and federal law, as appropriate. Dubai, Ras Al Khaimah, and Abu Dhabi administer their own local courts, hiring, vetting, and paying local judges and attorneys. Abu Dhabi operates both local (the Abu Dhabi Judicial Department) and federal courts in parallel.

Employment Law: In December 2021, the UAE issued Federal Law No (33) of 2021, which took effect on February 2, 2022, and repealed UAE Federal Law No (8) of 1980. The new labor law defines contracts, working hours, leave entitlements, safety, and healthcare regulations.

The new labor law also sets a minimum wage for employees in the private sector to be determined by the UAE Cabinet.

Trade unions, strikes, and collective bargaining is prohibited. Expatriates’ legal residence in the UAE is tied to their employer (kafala system), but skilled labor usually has more flexibility in transferring their residency visa. In 2009, the UAE Ministry of Human Resources and Emiratization (MOHRE) introduced a Wages Protection System (WPS) to ensure unbanked workers were paid according to the terms of their employment agreement. Most domestic workers remain uncovered by the WPS.

The constitution prohibits discrimination based on religion, race, and national origin. The new labor law protects UAE government efforts to enhance the participation of Emirati citizens and notes that such efforts do not constitute discrimination. Federal Law No (06) of 2020 stipulates equal wages for women and men in the private sector.

The DIFC issued amendments in September 2021 to The DIFC Employment Law No (2) of 2019, addressing issues such as paternity leave, sick pay, and end-of-service settlements. ADGM also issued new employment regulations with effect in January 2020, which allowed employers and employees more flexibility in negotiating notice periods and introduced protective provisions for employees ages 15-18.

The UAE signaled throughout 2021 its intention to develop a more commercially friendly legislative environment to strengthen foreign investment. In March 2021, the UAE government announced it would allow full foreign investments in the industrial investments as part of its ten-years comprehensive industrial strategy the so called “Operation 300 Billion,” by updating the industrial law to support local entrepreneurs and attract foreign direct investment. It said the new industrial law would include flexible conditions to provide opportunities to small and medium-sized companies and allow 100 percent foreign ownership.

The Commercial Companies Law removes the restriction that the nominal value of a share in a joint stock company must be no less than $272,000. The new law also makes certain changes to the provisions regulating limited liability companies and public joint stock companies. It abolishes the maximum and minimum percentage of the founders’ contribution to the company’s capital, and cancels the legal limitation of the subscription period. The law eliminates the requirement for the nationality of the members of the board of directors, and allows companies to transform into a public joint stock company and offer new shares without being restricted to a certain percentage. It allows companies to divide and create legal rules governing division operations. Branches of foreign companies licensed in the UAE would be also allowed to transform into a commercial company with UAE citizenship.

To register with the Abu Dhabi Securities Exchange, go to: https://www.adx.ae/English/Pages/Members/BecomeAMember/default.aspx

To obtain an investor number for trading on Dubai Exchanges, go to: http://www.nasdaqdubai.com/assets/docs/NIN-Form.pdf

The Ministry of Economy’s Competition Regulation Committee reviews transactions for competition-related concerns.

Mission UAE is not aware of foreign investors subjected to any expropriation in the UAE in the recent past. There are no federal rules governing compensation if expropriations were to occur. Individual emirates would likely treat expropriations differently. In practice, authorities would be unlikely to expropriate unless there were a compelling development or public interest need to do so.

The bankruptcy law for companies, Federal Decree Law No (9) of 2016, came into effect in February 2019. The law covers companies governed by the Commercial Companies Law, FTZ companies (with a few exceptions for free zones with their own bankruptcy and insolvency regime, such as the DIFC and ADGM), sole proprietorships, and companies conducting professional business. It allows creditors owed $27,225 or more to file insolvency proceedings against a debtor 30 business days after written notification to the debtor. The law decriminalized “bankruptcy by default,” ending a system in which out-of-cash businesspeople faced potential criminal liability, including fines and potential imprisonment, if they did not initiate insolvency procedures within 30 days. In October 2020, the UAE Cabinet approved amendments to the law and added provisions regarding “Emergency Situations” that impinge on trade or investment, to enable individuals and business to overcome credit challenges during extraordinary circumstances such as pandemics, natural and environmental disasters, and wars. Under the amendments, a debtor may request a grace period from creditors, or negotiate a debt settlement for a period up to 12 months.

The bankruptcy law for individuals, Insolvency Law No (19) of 2019, came into effect in November 2019. It applies only to natural persons and estates of the deceased. The law allows a debtor to seek court assistance for debt settlement or to enter liquidation proceedings as a result of the inability to pay for an extended period of time. Under this law, a debtor facing financial difficulties may apply to the court for assistance and guidance in the settlement of his financial commitments through one or more court-appointed experts, or through a court-supervised binding settlement plan.

4. Industrial Policies

All FTZs offer unique incentives to foreign investors. The UAE does not offer incentives to underrepresented investor groups nor does it yet offer green investment incentives.

There are numerous FTZs throughout the UAE. Foreign companies generally enjoy the same investment opportunities within those zones as Emirati citizens. All FTZs provide 100 percent import and export tax exemptions, 100 percent exemptions from commercial levies, 100 percent repatriation of capital and multi-year leases, easy access to ports and airports, buildings for lease, energy connections (often at subsidized rates), and assistance in labor recruitment. In addition, FTZ authorities provide extensive support services, such as visa sponsorship, worker housing, dining facilities, and physical security. Free zone businesses which conduct business with mainland UAE, will be subject to corporate tax from June 1, 2023.

FTZs have their own independent authorities with responsibility for licensing and helping companies establish their businesses. Investors can register new companies in an FTZ, or license branch or representative offices. All Abu Dhabi FTZs as well as several Dubai FTZs offer dual licensing in cooperation with local Department of Economic Development. A dual license enables an LLC established in an FTZ to obtain an onshore license allowing the company to conduct onshore business in that emirate without partnering with an Emirati national, recruiting extra staff using the services of an onshore labor office, or to rent extra office space onshore.

The cabinet published Federal Decree Law No (45) of 2021 in November 2021 regarding personal data protection (the Data Protection Law). The law came into effect in January 2022, and the executive regulations are due to be issued in March 2022. The law indicates that personal data may be transferred outside the UAE, if the country or territory to which the personal data is to be transferred has adequate protection of personal data, or if the UAE accedes to bilateral or multilateral agreements related to personal data protection with the countries to which the personal data is to be transferred. The UAE Data Office, established under a separate law (Federal Decree Law No (44) of 2021), will be the single national data privacy regulator.

All foreign defense contractors with over $10 million in contract value over a five-year period must participate in the Tawazun Economic Program, previously known as the UAE Offset Program. This program also requires defense contractors that are awarded contracts valued at more than $10 million to establish commercially viable joint ventures with local business partners, which would be projected to yield profits equivalent to 60 percent of the contract value.

The UAE does not force foreign investors to use domestic content in goods or technology or compel foreign IT providers to turn over source code, but it strongly encourages companies to utilize local content. In February 2018, the Abu Dhabi National Oil Company (ADNOC) launched the In-Country Value (ICV) strategy, which gives preference in awarding contracts to foreign companies that use local content and employ Emiratis. In February 2020, the Abu Dhabi Department of Economic Development and ADNOC signed an agreement to standardize ADNOC’s ICV certification program across the Abu Dhabi Government’s procurement process.

5. Protection of Property Rights

The federal government allows emirates to decide the mechanisms through which ownership of land may be transferred within their borders. Abu Dhabi has generally limited land ownership to Emiratis or other GCC citizens, who may then lease the land to foreigners. The property reverts to the owner at the conclusion of the lease. However, in 2019, the Abu Dhabi Government issued Law No (13) of 2019 amending the rules on foreign ownership of real estate in the Emirate of Abu Dhabi. Under the law, foreign individuals and companies wholly or partially owned by foreigners are allowed to own freehold interests in land located within certain investment areas of Abu Dhabi for an unrestricted period.

Although Dubai has restricted ownership to UAE nationals in certain older, more established neighborhoods, traditional freeholds, also known as outright ownership, are widely available, particularly in newer developments. Freehold owners own the land and may sell it on the open market. The contract rights of lienholders, as well as ownership rights of freeholders, are generally respected and enforced throughout the UAE.

Mortgages and liens are permitted with restrictions, and each emirate has its own system of recordkeeping. In Dubai, for example, the system is centralized within the Dubai Land Department, and is considered extremely reliable.

In January 2022, the ruler of Dubai issued Law No (2) of 2022 on the expropriation of property for public use in the Emirate of Dubai. The new Law regulates the terms and conditions under which buildings and facilities can be expropriated and sets out the terms for providing compensation to the owners whose properties are expropriated. In July 2021, Dubai issued resolution No (25) of 2021 to add some lands to the areas for ownership by non-UAE nationals of real property in the Emirate of Dubai.

The UAE has an established a legal and regulatory framework for intellectual property rights (IPR) protection. In recent years intellectual property holders have seen marked improvement in the protection and enforcement of IPR. In April 2021, the UAE was removed from the U.S. Trade Representative’s Special 301 Report Watch List. Recent UAE government changes include enhancing IP protections for the pharmaceutical and biotechnology industries; transforming legislation surrounding patents, industrial design, trade secrets, copyrights and trademarks; acceding to the Madrid Protocol; lowering previously prohibitive trademark fees; increasing transparency in the outcomes of counterfeit seizures; increasing notifications, seizures, and public destructions by Dubai Customs; and creating intergovernmental and quasi-governmental groups responsive to USG and U.S. industry concerns; and licensing music at Expo 2020. While additional steps are needed to remedy problems with music licensing and IPR enforcement in FTZs, the UAE government has taken action to address several concerns of rights holders.

Emirate-level authorities such as economic development authorities, police forces, and customs authorities enforce IPR-related issues, while federal authorities manage IPR policy.

Before 2021, inventors could receive patent protection in UAE through either the UAE national patent office or the regional GCC Patent Office. On January 5, 2021, the GCC Patent Office stopped accepting new patent applications as the regional patent system undergoes significant reforms. While GCC patent applications filed before January 5th will continue to be processed, inventors will need to rely on the national UAE patent office to seek patent rights until the new regional GCC system is established.

Resources for Intellectual Property Rights Holders:

Peter Mehravari
Patent Attorney
Intellectual Property Attaché for the Middle East & North Africa
U.S. Embassy Abu Dhabi | U.S. Department of Commerce U.S. Patent & Trademark Office
Tel: +965 2259 1455 Peter.Mehravari@trade.gov

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/

6. Financial Sector

The UAE issued investment fund regulations in September 2012 known as the “twin peak” regulatory framework designed to govern the marketing of investment funds established outside the UAE to domestic investors and the establishment of local funds domiciled inside the UAE. These regulations gave the Securities and Commodities Authority (SCA), rather than the Central Bank, authority over the licensing, regulation, and marketing of investment funds. The marketing of foreign funds, including offshore UAE-based funds, such as those domiciled in the DIFC, require the appointment of a locally licensed placement agent. The UAE government has also encouraged certain high-profile projects to be undertaken via a public joint stock company to allow the issuance of shares to the public. The UAE government requires any company carrying out banking, insurance, or investment services for a third party to be a public joint stock company.

The UAE has three stock markets: Abu Dhabi Securities Exchange, Dubai Financial Market, and NASDAQ Dubai. SCA, the onshore regulatory body, classifies brokerages into two groups: those that engage in trading only while the clearance and settlement operations are conducted through clearance members, and those that engage in trading clearance and settlement operations for their clients. Under the regulations, trading brokerages require paid-up capital of $820,000, whereas trading and clearance brokerages need $2.7 million. Bank guarantees of $367,000 are required for brokerages to trade on the bourses.

In March 2021, the SCA issued new corporate governance rules under the Chairman of SCA Board Decision No (03 R.M) of 2020 concerning adopting the Corporate Governance Guide for Public Joint Stock Companies. The new Rules describe the principles and objectives of corporate governance which are centered around the key pillars of accountability, fairness, disclosure, transparency, and responsibility.

In January 2022, the SCA approved the Special Purpose Acquisition Company (SPAC) regulatory framework, paving the way for the listing of the first SPAC on ADX during 2022.

Credit is generally allocated on market terms, and foreign investors can access local credit markets. Interest rates usually closely track those in the United States since the local currency is pegged to the dollar.

The UAE has a robust banking sector with 48 banks, 21 of which are foreign institutions, and six which are GCC-based banks. The number of national bank branches declined to 521 in September 2021, compared to 559 in September 2020, due to bank mergers and the transition to online banking.

Non-performing loans (NPL) comprised 8.2 percent of outstanding loans in Q2 2021, compared with 7.4 percent in Q2 2020, according to figures from the Central Bank of the UAE (CBUAE). The CBUAE recorded total sector assets of $897 billion as of November 2021.

The banking sector remains well-capitalized but has experienced a decline in lending and a rise in NPL as a result of the pandemic. These factors have significantly reduced reported profits as banks have made greater provisions for non-performing loans. On March 15, 2020, the CBUAE announced the USD $ 27.2 billion Targeted Economic Support Scheme (TESS) stimulus package, which included USD $13.6 billion in zero-interest, collateralized loans for UAE-based banks, and USD $13.6 billion in funds freed up from banks’ capital buffers. In November 2020, the CBUAE extended TESS to June 2021. In April 2021, the CBUAE extended parts of the TESS until mid-2022, accordingly financial institutions will continue to be eligible to access the collateralized USD $13.6 billion zero-cost liquidity facility. CBUAE’s financing for loan deferrals under the TESS was terminated at end of 2021, marking the first stage of the gradual exit strategy from the measures implemented during the pandemic. In December 2021, the CBUAE extended relief measures regarding banks’ capital buffers and liquidity and stable funding requirements until 30 June 2022. This includes temporary lowering of the capital conservation buffer, and the capital buffer for systemically important domestic banks.

Abu Dhabi maintains several major sovereign wealth funds. The Abu Dhabi Investment Authority (ADIA) is chaired by UAE President Khalifa Bin Zayed Al Nahyan and holds assets of approximately $829 billion. Mubadala Investment Company is chaired by Abu Dhabi Crown Prince Mohammed Bin Zayed Al Nahyan with estimated total assets of approximately $250 billion. Board members of each fund are appointed by the ruler of Abu Dhabi and is the chair of Mubadala. Abu Dhabi Holding (ADQ) includes both investment portfolios and state-owned firms with interests in agriculture, aviation, financial services, healthcare, industries, logistics, media, real estate, tourism and hospitality, transport and utilities with estimated total assets of approximately $ 110 billion. Emirates Investment Authority, the UAE’s federal sovereign wealth fund has estimated assets of $86 billion. The Investment Corporation of Dubai (ICD) is Dubai’s primary sovereign wealth fund, with an estimated $301.6 billion in assets according to ICD’s June 2021 financial report.

7. State-Owned Enterprises

State-owned enterprises (SOEs) are a key component of the UAE economic model. There is no published list of SOEs or GREs at the national or individual emirate level. The influential Abu Dhabi National Oil Company (ADNOC) is strategically important and provides a major source of revenue for the government. Emirates Airlines and Etisalat, the largest local telecommunications firm, are also internationally recognized brands. In some cases, these firms compete against other state-owned firms (Emirates and Etihad airlines, for example, or telecommunications company Etisalat against du). While they are not granted full autonomy, these firms leverage ties between entities they control to foster national economic development. In Dubai, SOEs have been used as drivers of diversification in sectors including construction, hospitality, transport, banking, logistics, and telecommunications. Sectoral regulations in some cases address governance structures and practices of state-owned companies. The UAE is not party to the WTO Government Procurement Agreement.

There is no privatization program in the UAE. There have been several listings of portions of SOEs, on local UAE stock exchanges, as well as some “greenfield” IPOs focused on priority projects. However, several SOEs have allowed partial foreign ownership in their shares. For example, Abu Dhabi National Oil Company for Distribution, many national banks, some utility operators and the telecom operators, Etisalat and du, now allow minority foreign ownership. In November 2021, Dubai announced plans to list ten SOEs on the Dubai Financial Market as part of a broader strategy to double the financial market’s size to $817 billion.

8. Responsible Business Conduct

There is a general expectation that businesses in the UAE adhere to responsible business conduct standards, and the UAE’s Governance Rules and Corporate Discipline Standards (Ministerial Resolution No 518 of 2009) encourage companies to apply social policy towards supporting local communities. In January 2021, the corporate social responsibility (CSR) UAE Fund announced that it would launch an index as an annual performance measurement tool for CSR & Sustainability practices in the UAE. Many companies maintain CSR offices and participate in CSR initiatives, including mentorship and employment training; philanthropic donations to UAE-licensed humanitarian and charity organizations; and initiatives to promote environmental sustainability. The UAE government actively supports and encourages such efforts through official government partnerships, as well as through private foundations.

In December 2021, the Dubai Executive Council approved a CSR policy to raise the role of companies and private establishments in social and economic development, and to align their projects and contributions with the priorities set by the government.

The UAE has not subscribed to the OECD Guidelines for Multinational Enterprises and has not actively encouraged foreign or local enterprises to follow the specific United Nations Guiding Principles on Business and Human Rights. The UAE government has not committed to adhere to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas, nor does it participate in the Extractive Industries Transparency Initiative. The Dubai Multi-Commodities Center (DMCC), however, passed the DMCC Rules for Risk-Based Due Diligence in the Gold and Precious Metals Supply Chain.

 

The UAE has pledged to reach net zero carbon emissions by 2050 and announced it would invest $163 billion in clean and renewable energy and key technologies.

The UAE has made significant progress in developing its urban infrastructure, as the country diversifies from an hydrocarbons-focused economy to a knowledge-based economy. UAE’s per capita energy and water consumption are among the highest in the world, leading to a heavy carbon footprint. The UAE is one of the world’s most water-scarce nations, caused by a dry climate, high temperatures, and very low levels of precipitation. With limited natural freshwater resources, the country relies on desalinated seawater to meet its demand for potable water.

The UAE takes the need to address and mitigate negative impacts on the environment seriously and has taken steps to demonstrate the importance of the issue, including establishing the Ministry of Climate Change and Environment (MOCCAE) in 2016. The UAE launched a National Climate Change Plan in 2017 and was one of the first Gulf countries to ratify and sign the Paris Accord in 2015. The UAE has adopted policies and strategies aimed at addressing the impacts of climate change, improving air quality, reducing the emission of greenhouse gases, improving water and food security, promoting low-carbon energy, and conserving the UAE’s natural resources.

The UAE aims to increase its global competitiveness by increasing the share of low-carbon energy in the country’s total energy mix; establishing robust recycling and waste management industries, including several waste-to-energy plants; developing massive reverse osmosis seawater desalination plants to replace older, energy-intensive thermal plants; improving water efficiency through “reduce and reuse” initiatives; implementing green standards in the construction and management of buildings; and adopting green products and technologies. The UAE and local governments in Dubai and Abu Dhabi have launched various platforms to engage businesses to share knowledge and best practices. The Abu Dhabi Future Energy Company (MASDAR), founded by the Abu Dhabi government’s Mubadala Investment Company and co-owned by government-owned energy firm the Abu Dhabi National Energy Company (TAQA) and ADNOC, develops and finances greenfield renewable energy projects in UAE and abroad.

9. Corruption

The UAE has strict laws, regulations, and enforcement against corruption and has pursued several high-profile cases. The UAE federal penal code and the federal human resources law criminalize embezzlement and the acceptance of bribes by public and private sector workers. There is no evidence that corruption of public officials is a systemic problem. In August 2021, the president of the UAE issued a federal decree holding ministers and senior officials accountable for wrongdoing. Under the decree, the Public Prosecution can receive and accordingly investigate complaints against senior official and take necessary actions, including banning travel and freezing family financial accounts.

The Companies Law requires board directors to avoid conflicts of interest. In practice, however, given the multiple roles occupied by relatively few senior Emirati government and business officials, conflicts of interest exist. Business success in the UAE also still depends much on personal relationships. The monitoring organizations GAN Integrity and Transparency International describe the corruption environment in the UAE as low-risk and rate the UAE highly on anti-corruption efforts both regionally and globally. Some observers note, however, that the involvement of members of the ruling families and prominent merchant families in certain businesses can create economic disparities in the playing field, and most foreign companies outside the UAE’s free zones rely on an Emirati national partner, often with strong connections, who retains majority ownership. The UAE has ratified the United Nations Convention against Corruption.

There are no civil society organizations or NGOs investigating corruption within the UAE.

Resources to Report Corruption

Contact at government agency or agencies are responsible for combating corruption:

Dr. Harib Al Amimi
President
State Audit Institution
20th Floor, Tower C2, Aseel Building, Bainuna (34th) Street, Al Bateen, Abu Dhabi, UAE
+971 2 635 9999
info@saiuae.gov.ae , reportfraud@saiuae.gov.ae

10. Political and Security Environment

Violent crimes and crimes against property are rare.  U.S. citizens should take the same security precautions in the UAE that one would practice in the United States or any large city abroad.  In March 2022, the United States published a travel advisory for UAE noting pandemic concerns and the potential for missile or drone strikes.  The latest information can be found at https://travel.state.gov/.  Visitors should enroll in the Smart Traveler Enrollment Program (STEP) to receive security messages.

11. Labor Policies and Practices

Despite a pandemic-induced economic slowdown in 2020, unemployment among UAE citizens remains low. Although there were significant departures of foreign workers during the pandemic, expatriates represent over 88.5 percent of the country’s 9.6 million residents, accounting for more than 95 percent of private sector workers. As a result, there would be large labor shortages in all sectors of the economy if not for expatriate workers. Most expatriate workers derive their legal residency status from their employment.

The Emiratization Initiative is a federal incentive program to increase Emirati employment in the private sector. Requirements vary by industry, but the Vision 2021 national strategic plan aimed to increase the percentage of Emiratis working in the private sector from five percent in 2014 to eight percent by 2021; in 2019 the UAE reached 3.64 percent. The government said it would work closely with the private sector to achieve this target. In August 2020, the Emirates Job Bank (EJB), a government-facilitated job portal for UAE nationals, obliged government, and onshore private employers to provide an explanation for interviewed UAE citizens were not hired, before allowing the employer to hire a non-citizen. Most Emirati citizens in the private sector are employed by government-related entities (GREs). In September 2021, the UAE launched Program Nafis (“compete” in English) to support the employment of Emirati nationals in the private sector. Under Nafis, the UAE will spend up to $6.5 billion to employ 75,000 Emiratis in the private sector over 2021-2025, with the aim for Emiratis to hold 10 per cent of the UAE’s private sector jobs by 2026.

A significant portion of the country’s expatriate labor population consists of low-wage workers who are primarily from South Asia and work in labor-intensive industries such as construction, manufacturing, maintenance, and sanitation. In addition, several hundred thousand domestic workers, primarily from South and Southeast Asia and Africa, work in the homes of both Emirati and expatriate families. Federal labor law does not apply to domestic, agricultural, or public sector workers. In 2014, the federal government implemented a law mandating a standard contract for all domestic workers. The UAE in 2017 issued a domestic workers law, which regulates their rights and contracts.

Under the new UAE labor law, employers must pay severance to workers who complete one year or more of service, which is calculated on the basis of their basic salary. Expatriate workers do not receive UAE government unemployment insurance. Termination of UAE nationals in most situations requires prior approval from the Ministry of Human Resources and Emiratization (MOHRE).

The guest worker system generally guarantees transportation back to country of origin at the conclusion of employment. Repatriation insurance costs $16 per year per employee. Most employees are not subject to excessively onerous visa, residence, work permit, or similar requirements inhibiting mobility. Article (8) of the new Law indicates that unlimited contracts are to be abolished and replaced with work contracts of a fixed term for a period of three years.

Employees who live in the UAE on a sponsored work visa can undertake part-time jobs and work for multiple employers simultaneously to earn additional income. The new labor law allows children aged 15 and over to take on part-time jobs. The UAE Cabinet approved a measure in January 2021 permitting foreign university students in the UAE to sponsor their families, provided they have the financial means to do so and can afford suitable housing.

Although UAE federal law prohibits the payment of recruitment fees, many prospective workers continue to make such payments in their home countries. In 2018, the UAE government launched Tadbeer Centers, publicly regulated but privately operated agencies to improve recruitment regulation and standards. Tadbeer Centers are currently the only legally operating recruitment agencies.

There is no minimum wage in the UAE; however, article 27 of the new federal labor law (Federal Law No (33) of 2021) says the cabinet may, upon the proposal of the Minister of Human Resources and Emiratization and in coordination with the concerned authorities, issue a resolution to determine the minimum wage for workers or any category thereof. MOHRE unofficially mandates an AED 5,000 ($1,360) monthly minimum wage for locals at job fairs and requires job titles offered for Emiratis to be socially acceptable. Some labor-sending countries require their citizens to receive certain minimum wage levels as a condition for allowing them to work in the UAE. In January 2020, the UAE government introduced a salary requirement for residents seeking to directly sponsor a domestic worker, raising the minimum monthly income for the individual or entire family from $1,630 to $6,810, inclusive of all allowances.

The law prohibits public sector employees, security guards, and migrant workers from striking, and allows employers to suspend private sector workers for doing so. In addition, employers can cancel the contracts of striking workers, which can lead to deportation. Changes to the penal code effective January 2022 mandate deportation of noncitizen workers inciting or participating in a strike. According to government statistics, there were approximately 30 to 60 strikes per year between 2012 and 2015, the last year for which data is available. In December 2019, construction workers in Abu Dhabi engaged in an hours-long strike, claiming they had not been paid in months and that each was owed over $3,400. The police intervened to defuse the protests and arrested some of the workers for resisting. Mediation plays a central role in resolving labor disputes. MOHRE and local police forces maintain telephone hotlines for labor dispute and complaint submissions. MOHRE manages 11 centers around the UAE that provide mediation services between employers and employees. Disputes not resolved by MOHRE are transferred to the labor court system.

MOHRE inspects company workplaces and company-provided worker accommodations to ensure compliance with UAE law. Emirate-level government bodies, including the Dubai Municipality, also carry out regular inspections. MOHRE also enforces a mid-day break from 12:30 p.m.-3:00 p.m. during the extremely hot summer months. The federally mandated Wages Protection System (WPS) monitors and requires electronic transfer of wages to approximately 4.5 million private sector workers (about 95 percent of the total private sector workforce). There are reports that small private construction and transport companies work around the WPS to pay workers less than their contractual salaries. In 2020 the UAE began a pilot program to begin integrating domestic workers into the WPS. Less than one percent of domestic workers are enrolled in WPS. MOHRE announced the optional implementation of WPS for domestic workers starting January 27, 2022.

Following the promulgation of similar legislation in Abu Dhabi, Dubai’s government fully implemented Law No 11 in May 2017, which mandates employers provide basic health insurance coverage to their employees or face fines. Dubai’s mandatory health insurance law covers 4.3 million people.

The multi-agency National Committee to Combat Human Trafficking is the federal body tasked with monitoring and preventing human trafficking, including forced labor. Child labor is illegal and rare in the UAE. The UAE continues to participate in the Abu Dhabi Dialogue, engage in the Colombo Process, and partner with other multilateral organizations such as the International Organization for Migration and the United Nations Office on Drugs and Crime regarding labor exploitation and human trafficking.

Section 7 of the Department of State’s Human Rights Report (http://www.state.gov/j/drl/rls/hrrpt) provides more information on worker rights, working conditions, and labor laws in the UAE. The Department of State’s Trafficking in Persons Report (https://www.state.gov/reports/2021-trafficking-in-persons-report/) details the UAE government’s efforts to combat human trafficking.

14. Contact for More Information

Samuel Juh
Economic Officer
First Street, Umm Hurair -1
Dubai UAE
Juhshk@state.gov

Investment Climate Statements
Edit Your Custom Report

01 / Select a Year

02 / Select Sections

03 / Select Countries You can add more than one country or area.

U.S. Department of State

The Lessons of 1989: Freedom and Our Future