It goes without saying that keeping your company’s official documentation up-to-date and relevant not only helps with internal procedures but also keeps you on the right side of the law. Outdated credentials, papers, certificates and expired licenses can incur hefty fines and penalties, as well as damage your firm’s reputation and market standing. 

With the country opening up for business as we settle into the ‘new normal’, it is advisable to sort your official paperwork sooner rather than later. Elena Schildgen, a qualified German lawyer and certified business coach offering legal consulting to entrepreneurs in Dubai weighs in on the potential ramifications of procrastination. 

Documentation

“Businesses in the UAE are well advised to keep their company documentation in order,” says Elena. “The timely annual renewal of the trade license and continuous updating of records, like addresses and contact numbers, not only lets customers know that your business is open and operational, it also saves you from fines and serves as legal proof should there be any kind of litigation against you or your company,” she adds. 

Elena suggests that businesses regularly update employee records, including offer letters, signed contracts, proof of payments, performance evaluations, updated personal data, and possible termination letters and communication with the relevant ministries like the MOHRE, Chamber of Commerce, Ministry of Health and Ruler’s Court etc., depending on the work the company does. 

“Ensuring the timely payment of salaries through the Wages Protection System (WPS) on the MOHRE portal is very important,” stresses Elena. “If they are delays in salaries, your business could be blocked, which will prevent you from renewing existing visas or applying for new ones.”

 She further recommends displaying the business license and registration in a prominently visible place, as failure to do so can also result in fines. 

Accounts and bookkeeping

Companies in the UAE must keep books and accounts in accordance with UAE Commercial Transactions Law (Federal Law No 18/1993) and international standards, especially since the introduction of VAT and ESR. 

“As per Article 30 and 31 of the CTL, company records must be maintained for at least a period of five years. Maintaining up-to-date documentation, like minimum balance on bank accounts, etc., is handy for internal business procedures and can serve as evidence in possible bankruptcy proceedings and for inspection for VAT regulations,” adds Elena. 

VAT and Economic Substance Registrations

Companies that have an annual turnover of AED 375,000 must register for VAT and obtain a tax registration number with the Ministry of Finance.

“Companies below the turnover threshold cannot register,” explains Elena. “However, as soon as the government-prescribed amount is reached in the previous 12-month period or expected to be reached during the next 30 days, a business becomes eligible for registration,” she adds. 

Conversely, companies that are registered and fall below a turnover of AED 187,500 in the 12 months after registering with the Federal Tax Authority must apply for VAT deregistration.

“All companies registered in the UAE are, therefore, advised to continuously recheck their obligation to apply for registration or de-registration,” adds Elena. 

Data Protection and GDPR Rules

Elena explains that there is still no general law for data protection currently in the UAE. But there are some considerations, especially in an HR context, that may be legally binding under the UAE Penal Code. These include prohibitions on disclosure of business secrets or misuse of information and data.

“In case of a data breach involving local authorities, sections of the data protection laws in the free zones may be applicable,” explains Elena. “Both the DIFC and the Abu Dhabi Global Market currently are in the process of, or have already updated their data protection regime for consistency with European Data Protection Directives,” she adds. 

As a company registered in the UAE but dealing with other parts of the world, Elena advises further exploration of the General Data Protection Regulation (GDPR) rules to ascertain the extent to which they can affect a business. 

For more advise on legal and regulatory consulting and mentoring that ensure you remain on the right side of UAE laws and regulations, please book a session with our legal mentor, Elena Schildgen.