About The UAE

The economy of the United Arab Emirates (UAE) is the second largest amongst the Arab countries and is the most diverse economy in the Gulf Cooperation Council (GCC). The UAE also has the largest consumer base amongst all Arab countries and is considered one of the most open economies in the world.

While its economy is largely oil-driven, the UAE government has diversified and established financial centres within the Gulf state to attract investment. One of these financial centres is the Dubai International Financial Centre (DIFC), a special economic zone in the UAE, which serves as a gateway to the Middle East, Africa and South Asia (MEASA) markets.

In May 2018, the government announced it will allow 100% foreign ownership of companies in certain industries by the end of the year, removing the need for a local partner. Companies may also opt for 100% ownership in one of the UAE’s free-trade zones. Other benefits such as 0% tax rates and an English-speaking environment have made Dubai and the rest of the UAE an attractive destination for foreign investment, a key factor in the UAE's success in diversifying its economy. The lack of capital requirements to establish businesses, a streamlined licensing procedure and a stable banking sector have further enhanced the business climate in the UAE.

While the UAE shares most of its trading relationships within the MEASA markets, China is its second largest trading partner and biggest source of imports. Given the Gulf state’s status as a vibrant centre of trade and commerce in the Middle East as well as its proximity to China’s Belt and Road routes, the UAE is well positioned to benefit as a strategic hub between East and West.

The UAE Treasury Management Market Profile Infographic_Small

What solutions are available in The UAE?

Solution Description
Interest Optimisation Maximise your interest yield from for your balances held with the bank.
Notional Pooling Cash balances in different accounts are notionally offset to derive the net balance, which is then used to calculate interest.
Sweeping/ Zero Balance Account (ZBA) ZBA are checking accounts with zero balances where funds are physically swept to eliminate excess balances and maintain greater control over disbursements.

Corporate Treasury in United Arab Emirates

The UAE, which is a federation of seven states (Abu Dhabi, Ajman, Dubai, Fujairah, Ras al Khaimah, Sharjah and Umm al Quwain), is one of the fastest-growing economies in the Middle East, and serves as a financial hub for the region and Africa. Here, we highlight some of the key benefits relevant to treasury and cash management in the UAE.


Financial Market Development

  • The World Economic Forum ranks the UAE 24th in the world for financial market development in The Global Competitiveness Report 2017-2018.
  • It ranks the UAE 20th in the world for the soundness of its banks, while it rates it seventh for venture capital availability, ninth for ease of access to loans and 18th for financing through local equity markets.
  • The UAE has highly developed business infrastructure, an excellent macroeconomic environment, an efficient labour market and strong legal rights.
  • The UAE has no foreign-exchange controls.
  • The main financial centre is Dubai.
  • There are more than 35 free-trade zones, known as Free Zones, in the UAE that have special tax, customs and imports regimes, as well as their own regulations. Each Free Zone is designed around one or more business categories and only offers licenses to companies in these categories.


Sophistication of Banking Systems

  • The UAE has 22 domestic banks and 39 foreign banks, which operate 81 branches. The three largest banks are majority state-owned. There are eight dedicated Islamic banks in the UAE which account for around 20% of the banking sector's total assets (2016/2017).
  • The UAE is the main foreign-exchange hub for the region, and an offshore renminbi centre.
  • Dubai is the world's largest centre for sukuk listings, which totalled USD56.47 billion at the end of March 2018. Conventional bonds issued by governments and corporations are also available.


Regulatory Bodies

  • The banking industry is regulated by the Central Bank of the United Arab Emirates. Regulation is in line with international standards.
  • The Dubai International Finance Centre is regulated by the Dubai Financial Services Authority.



  • The UAE does not have a federal corporate income tax (CIT) regime at present, but the government is currently studying the possibility of establishing one. In the late 1960s, each of the seven Emirates enacted its own income tax decree with scope to impose CIT on all companies (including branches and permanent establishments) at a rate up to 55%. For the most part, however, only companies operating in the UAE in the production of oil and gas as well as the extraction of natural resources are being held accountable for CIT.
  • Depending on the Emirate and its specific banking tax decrees, branches of foreign banks may be taxed at a flat rate of 20%.
  • The standard rate for Value Added Tax (VAT) is 5%, with certain goods and services being zero rated and some exempted.
  • There are no stamp duties laws  in the UAE.
  • There are no withholding taxes in the UAE.
  • The UAE has more than 35 Free Zones in which businesses are generally eligible for tax holidays of 15 to 50 years.
  • The UAE has tax treaties with about 115 countries and territories.
  • The UAE is a signatory to the Organisation for Economic Co-operation and Development's Multilateral Competent Authority Agreement, through which information is exchanged between tax administrations, to provide a single, global picture on some key indicators of economic activity within multinational enterprises.


Benefits for Regional Treasury Centres

  • The Dubai International Finance Centre acts as the regional financial hub for the Middle East and Africa.
  • It is a popular location for companies' regional treasury and pooling operations, as well as shared service centres.
  • The UAE is a low-tax environment with trading hours that overlap with Southeast Asia and Europe. Companies operating in Free Zones can enjoy up to 50 years of CIT exemption.
  • The UAE is a regional renminbi hub.
  • The UAE Funds Transfer System settles transactions in real time.
  • Cash concentration between resident and non-resident companies and cross-border cash concentration is permitted in the UAE.
  • Notional pooling and cross-border notional pooling is permitted.




Banking System

  • The United Arab Emirates has 22 domestic banks and 39 foreign banking operations (either banks or representative offices). Of those 61 banks and representative offices, 17 are dedicated Islamic banks or offer Islamic window services.
  • There are a total of 381 financial institutions in the UAE, and these include investment banks, wholesale banks, commercial banks and finance companies.
  • Four local banks, First Abu Dhabi Bank (FAB, merger of National Bank of Abu Dhabi and First Gulf Bank), Emirates NBD (merger of Emirates Bank International (EBI) and National Bank of Dubai), Abu Dhabi Commercial Bank (ADCB) and Dubai Islamic Bank (DIB), dominate the banking sector, together owning more than 62% of total assets (December 2016).
  • The UAE's Islamic banking sector is the third-largest globally, next to Saudi Arabia and Malaysia, and accounts for 20% of the country's total banking assets.


Bank Accounts

  • Residents may hold foreign and domestic currency accounts both domestically and overseas, whereby domestic currency accounts are freely convertible into foreign currency.
  • Non-residents may hold foreign and domestic currency accounts both domestically and overseas, whereby domestic currency accounts are freely convertible into foreign currency.
  • Interest is available on savings accounts, time deposit accounts and current accounts (upon approval by the Central Bank of the UAE).


Legal and Regulatory

  • The Central Bank regulates and oversees the banking sector.
  • A company is resident if:
    • All shares are beneficially owned by residents of the UAE;
    • Most of the company's income originates from business or trade conducted in the UAE, excluding an investment business; and
    • Most of the value of the company's property is used for trade or business in the UAE.
  • There are no foreign-exchange controls.
  • The domestic currency is pegged to the US dollar: AED3.67: USD1.
  • The UAE is a member of the Gulf Cooperation Council (GCC). Future developments include a monetary union and a single currency between member-states.
  • There is anti-money laundering and counterterrorism legislation in place.
  • The UAE is a member of the Financial Action Task Force (FATF) and the Middle East and North Africa Financial Action Task Force (MENAFATF).
  • A financial intelligence unit has been set up, the Anti-Money Laundering and Suspicious Cases Unit (AMLSCU), which is a member of the Egmont Group.




Payment Systems


(UAE Funds Transfer System)

The UAE's Real-time Gross Settlement (RTGS) system

  • Managed by the Central Bank.
  • All commercial banks operating in the UAE must use UAEFTS for all UAE Dirham (AED) transfers.
  • Processes all AED-denominated interbank transfers (no value threshold).
  • Activates the final settlement of participants' net balances from the ICCS.
  • Transactions settled in real time and with immediate finality.
  • Settlement is done across participant banks' correspondent accounts at the Central Bank.


(Image-based Cheque Clearing System)

Paper-based and cheque-clearing system

  • Managed by the Central Bank.
  • All commercial banks operate in the ICCS.
  • All cheque payments processed through ICCS.
  • Cheques are truncated into electronic images and then processed.
  • Final settlement is done across participants' accounts at the Central Bank through the UAEFTS same day.


(UAE Direct Debit System)

Automated deferred net settlement system

  • Managed by the Central Bank.
  • All commercial banks operate in the UAEDDS.
  • All direct debit payments processed through UAEDDS.
  • Final settlement is done across participants' accounts at the Central Bank same day, and next day if payments are received after business hours.


National ATM-sharing scheme

  • Operated by the Central Bank.
  • Connected to GCCNET, allowing ATM access throughout the region.



Payment Instruments


Credit Transfers

  • Credit transfers can be paper-based or automated.
  • Settlement done through UAEFTS same day.
  • No value threshold.
  • Used for payroll and supplier transactions by government and companies.
  • Salaries paid by companies registered with the Ministry of Labour must be paid electronically through the Wages Protection System (UAEWPS).


Direct Debits (auto debits)

  • Used for low-value, regular payments such as utility bills and government payments.
  • Processed through the UAEDDS next day with funds received by beneficiary next day.


Card Payments

  • Payment cards are the most popular mode of payment. Of sales transactions in the retail sector, 45% were paid with credit and debit cards, more than all other payment types combined (Euromonitor, 2017). The main card brands are Visa and MasterCard, and all cards are Europay, MasterCard and Visa (EMV)-compliant.
  • The banks each organise individual clearing and settlement arrangements for the card transactions.
  • The Ministry of Finance and the NBAD issue the e-Dirham card, a reloadable pre-paid card which can be used to pay for public and private services. Payments can be made at EFTPOS terminals and online.


Online Payments

  • The government has set up initiatives to promote and support the financial technology (fintech) sector and is recognised as the fintech centre of the Middle East and North Africa (MENA). As such, it was the first city to launch a fintech regulatory regime in the region.
  • The country has adopted a highly active regulatory sandbox system, known as the Regulatory Laboratory (RegLab), to facilitate innovation.
  • As part of the UAE’s Vision 2021, the government launched an initiative to develop a National Payment Systems Strategy in order to build a cashless, efficient and competitive economy. It is working towards a sophisticated digital payments framework and has already implemented WPS, which ensures migrant workers are paid wages electronically.
  • Digital wallet use is on the rise, with digital payments increasing by 30% annually, supported by high mobile phone and internet penetration and a young, tech-savvy population. Popular digital wallets are global providers Apple Pay and Samsung Pay, as well as local players Emirates NBD Pay, Mashreq Pay and FAB payit.
  • In late 2018, Emirates Digital Wallet launched the Klip payment and transfer app, which is licensed and regulated by the Central Bank. Developed by the UAE Banks Federation, Klip doesn’t require a bank account and is targeted at the UAE’s more than one million unbanked residents.
  • AliPay has partnered with Mashreq to provide a payment facility for visitors from East Asia and China. Paypal is only used by some e-commerce providers.


Digital Currencies

  • The UAE’s first regulator of cryptocurrency activities is the Financial Services Regulatory Authority (FSRA), a financial regulator of the Abu Dhabi Global Markets (ADGM). The ADGM’s regulatory framework, launched in June 2018, regulates “spot crypto asset activities, including those undertaken by exchanges, custodians and other intermediaries,” according to the ADGM website.
  • Part of the job of the ADGM’s framework is to classify crypto-offerings, on a case-by-case basis, as either securities or commodities.
  • Cryptocurrencies are not legal tender in the UAE, and the Securities and Commodities Authority (SCA) has issued a public warning statement on ICOs.
  • In other fintech developments, the UAE Blockchain Strategy 2021, launched in April 2018, aims to transform 50% of government transactions into the blockchain platform by 2021.


Cash, Cheques and Money Orders

  • Cash is still commonly used, making up 75% of all payments. However, cash usage is on the decline as card and digital payments become more common.
  • Cheques are a common form of cashless payment for retail and commercial payments. The UAE has a high volume of bounced cheques, with 4.3% of the value of cleared cheques returned in the first half of 2018.
  • Cheques are truncated into electronic images and then cleared through ICCS. Final settlement is made through UAEFTS same day.
  • Money exchange houses, which facilitate money exchanges and remittances largely for the UAE’s huge expatriate population, are regulated by the Central Bank. New government standards issued early in 2018 aim to tighten oversight of the sector and eliminate cash money transfers due to concerns about money laundering and terrorism financing.
  • Ranging from one-shop operations to exchange houses with 100+ branches across the seven emirates, money changers are an integral part of the UAE’s financial infrastructure.


The UAE Treasury Management Market Profile_Infographic

1 Tax rate varies from Emirate to Emirate; no federal corporate tax


Recent developments


Abu Dhabi Sandbox Open for Applications

Abu Dhabi Global Market (ADGA) has opened applications for the fourth cohort of its regulatory sandbox, known as Reglab. The latest phase of the sandbox is focused on the themes of application programming interfaces (API) and sustainable finance. Companies working on these areas in the fintech or regulatory technology (regtech) space are invited to apply. ADGA is one of the fastest growing financial hubs in the region.

Read more about the development here.


UAE Named Top Fintech Hub

The UAE is home to the highest number of fintech start-ups in the Middle East, according to research by Bloomberg Intelligence. The country has 67 start-ups in the sector, significantly ahead of second place Turkey at 44 and Jordan and Lebanon at 30 each. The sector has flourished on the back of a high level of government support, a friendly regulatory environment and initiatives such as the financial free zones in Dubai and Abu Dhabi.

Read more about the development here


Shared Digital Currency Project

The UAE Central Bank and the Saudi Monetary Authority are launching a pilot project in which they will use a shared digital currency to reduce the cost of remittances between the two countries and speed up the time the transfers take. The new currency, dubbed Aber, will be backed by distribution leger technology. The initial trial of the currency will be limited to a small number of banks in both countries.

Read more about the development here


Loan Onboarding App Launched

Dubai-based Monami Tech has launched an app to help consumers gain faster access to loans. Its Lendme app is a lending on-bording platform, which aims to simplify the process of applying for a loan by reviewing and submitting loan applications on behalf of consumers and granting them immediate approval if they are eligible. It incorporates a range of structured and unstructured data, ranging from information from Etihad Credit Bureau to social media posts, to provide credit institutions with enhanced profiles of applicants.

Read more about the development here


Fintech MOU signed with UK

Dubai International Finance Centre’s FinTech Hive and the UK’s Innovate Finance, an independent body that represents the UK’s fintech community, have signed a memorandum of understanding to increase collaboration and cooperation between the two locations. The MOU will see them jointly exploring concepts that will benefit start-ups in both places, as well as sharing knowledge, hosting learning initiatives and running fintech programmes. The two organisations will also work to develop relationships between the regulatory authorities and financial communities.

Read more about the development here



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Sources: IMF, World Economic Forum, PwC, Central Bank of the UAE, Nasdaq Dubai, RAK Center for Statistics and Studies, Association for Financial Professionals, OECD, Reuters.

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