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 has also 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 established financial centres within the UAE to attract investment. One of these financial centres is the Dubai International Financial Center (DIFC), a special economic zone in the UAE, which serves as a gateway to the Middle East, Africa and South Asia (MEASA) markets.

As the DIFC is one of Dubai's independent free-zones, foreign companies may opt to have 100% ownership in the zone without the need of a local partner. Other benefits such as 0% tax rates and an English-speaking environment, have made Dubai and 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-UAE trade is expected to grow over the next few years. China's largest trading hub outside of the mainland is built in Dubai and given the UAE's status as a vibrant centre of trade and commerce in the Middle East, the UAE is well positioned as a strategic hub for the realisation of China's Silk Road Initiative.

What solutions are available in 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 United Arab Emirates (UAE) is one of the fastest-growing economies in the Middle East, and acts 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 20th in the world for financial market development in The Global Competitiveness Report 2015-2016.
  • It ranks the UAE 21st  in the world for the soundness of its banks, while it rates it third for ease of access to loans and 21st 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 in Dubai.
  • There are more than 30 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 category and only offers licenses to companies in these categories.


Sophistication of Banking Systems

  • The UAE has 23 domestic banks and 28 foreign banks, as well as 121 foreign bank representative offices. The 10 largest banks account for around 70% of total banking assets. Islamic banks in the UAE account for around 20% of the banking sector's total assets.
  • 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 at USD 49.06 billion. 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, with CIT decided on an Emirate-by-Emirate basis. While CIT may be imposed on all companies at rates of up to 55%, it is currently only enforced on companies in the oil and gas sector. Some Emirates also impose CIT of 20% on branches of foreign banks.
  • Companies are generally taxed only on profits arising within the UAE.
  • There is currently no VAT in the UAE. VAT of 5%, with some exceptions, is expected to be introduced in January 2018.
  • There are no stamp taxes in the UAE.
  • There are no withholding taxes in the UAE.
  • The UAE has 30 free trade zones (Free Zones) in which businesses are generally eligible for tax holidays of 15 to 50 years.
  • The UAE has tax treaties with around 70 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 of 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 South-east Asia and Europe. Companies operating in FTZs can secure a 50-year exemption on CIT.
  • 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 (UAE) has 23 commercial banks (of which four are Islamic banks), and there are 28 foreign banks and 121 representative offices of foreign banks (2014).
  • There are a total of 381 financial institutions in the UAE, and these include investment banks (two), wholesale banks (five), commercial banks and finance companies.
  • Four local banks, National Bank of Abu Dhabi (NBAD), Emirates National Bank of Dubai (ENBD), Abu Dhabi Commercial Bank (ADCB) and First Gulf Bank (FGB), dominate the banking sector, together owning more than 50% of total assets.
  • The UAE's Islamic banking sector is the third-largest globally, next to Saudi Arabia and Malaysia, comprising 19% 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: Available to savings accounts, time deposit accounts and current accounts (upon approval by the Central Bank of the UAE (Central Bank)).


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: AED 3.67: USD 1.
  • 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 operate in the UAEFTS.
  • 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.
  • 43 participant banks
  • 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 require salaries paid electronically through the Wages Protection System.


Direct debits (auto-debits)

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



  • Common form of cashless payment for retail and commercial payments.
  • Cheques are truncated into electronic images and then cleared through ICCS.
  • Final settlement through UAEFTS same day.


Card payments

  • Payment cards have grown in popularity, with the Central Bank recording 652 million card transactions in 2015 (Central Bank of the UAE).
  • 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.
  • There are 5,119 ATM and 141,972 POS terminals in 2015 (Central Bank of the UAE).
  • The Ministry of Finance and the NBAD issue the e-Dirham cards, reloadable pre-paid cards which can be used to pay for public and private service. Payments can be made at EFTPOS terminals and online.



Recent developments


New Regulations for Alternative Finance Providers

Abu Dhabi Global Market Financial Services Regulatory Authority has published proposals for a new regulatory framework for alternative finance providers. It plans to create a new regulated activity to enable operators of financing platforms for non-public companies to offer loans and carry out investment-based transactions. It hopes the move will improve access to funding for startups and small and medium-sized enterprises.

Read more about the development here


Mobile Payments Take Off         

Mobile payments are gaining popularity in the UAE due to a combination of high smartphone penetration and a growing young population. Contactless payments now account for more than 10% of Emirates NBD’s total payments, up from just 2% three years ago. The group said digital transactions were currently growing at a rate of 30% year-on-year, with only 8% of transactions now conducted face-to-face. MashreqPay also reported strong growth, with mobile payment take up increasing by nearly 20% month-on-month.

Read more about the development here


National Payment Systems Strategy Developed

The Central Bank of the Unites Arab Emirates is developing a National Payment Systems Strategy to support the transition to a cashless society. It will oversee developments in the sector to ensure payment systems are interoperable and well regulated, leading to increased competition and higher quality services for users. The strategy should lead to reduced transaction fees, higher levels of efficiency, improved collection cycles and more innovative payment channels.

Read more about the development here



This Market Profile is brought to you by DBS. Get in touch with us for further insights on doing treasury in the UAE and take advantage of our innovative solutions to empower your business. Click here to find out more.



Sources: IMF World Economic Outlook database, October 2016; CIA World Factbook; Trading Economics; PwC

Please note that the information contained in this document, assembled based on information available and accurate as at July 2017, is of a general nature only and is subject to change whether for economic, political, social or other reasons.


Last updated on 07 Jun 2018