Compliance Checklist for New Entity Incorporation in the UAE

Here’s a comprehensive checklist covering the key areas of compliance for HR, medical insurance, tax, VAT, and other critical obligations for setting up a new entity in the UAE.

1. Trade License & Registration



  • Tasks:Obtain a trade license from the relevant authority (e.g., DED, free zone authority).
    Register the entity with the Chamber of Commerce.



  • Timeline: 1-2 weeks.

  • Penalty for Non-Compliance: Operating without a valid license can result in fines up to AED 500,000 and business closure.




2. Employment & Labor Law Compliance



  • Tasks:


    • Register employees with the Ministry of Human Resources and Emiratisation (MOHRE).

    • Issue compliant employment contracts (aligned with Federal Decree-Law No. 33 of 2021).

    • Ensure adherence to Emiratisation requirements (if applicable).



  • Timeline: Upon employee onboarding.

  • Penalty for Non-Compliance: AED 96,000 per unappointed Emirati worker (if applicable); labor ban for serious violations.




3. Medical Insurance



  • Tasks:


    • Provide health insurance for all employees and dependents as per emirate-specific mandates.

      • Dubai & Abu Dhabi: Health insurance mandatory.
      • Northern Emirates: Basic health insurance required as of January 2024.


    • Use approved insurance providers.



  • Timeline: Within 30 days of visa stamping.

  • Penalty for Non-Compliance: Fines of AED 500 per month per uninsured employee.




 

4. Employee Pension & Social Security



  • Tasks:


    • Enroll UAE nationals in the General Pension and Social Security Authority (GPSSA).

    • Ensure timely contributions (5% employee + 12.5% employer for UAE nationals).



  • Timeline: Within 30 days of employment start date.

  • Penalty for Non-Compliance: Fines up to AED 5,000 per employee and backdated contributions.




5. Corporate Tax Compliance



  • Tasks:


    • Register for corporate tax (if applicable) under Federal Decree-Law No. 47 of 2022.

    • Maintain proper accounting records and file annual tax returns.

    • Ensure qualifying free zone entities meet substance requirements.



  • Timeline: Within 30 days of taxable activity or incorporation.

  • Penalty for Non-Compliance: AED 20,000 for late registration; additional penalties for late filings and inaccuracies.




6. VAT Registration & Compliance



  • Tasks:


    • Register for VAT if annual taxable supplies exceed AED 375,000.

    • File quarterly VAT returns and maintain VAT-compliant invoices.



  • Timeline: Within 30 days of meeting the threshold.

  • Penalty for Non-Compliance: AED 10,000 for late registration; 1% daily penalty for late payments.




7. Payroll Compliance



  • Tasks:


    • Register with the Wage Protection System (WPS) for salary disbursement.

    • Ensure accurate payroll calculations (e.g., gratuity, leave, and deductions).

    • Comply with working hour and overtime regulations.



  • Timeline: Upon hiring the first employee.

  • Penalty for Non-Compliance: Fines up to AED 50,000 for non-payment or delayed payment of salaries.




8. Anti-Money Laundering (AML) Registration



  • Tasks:


    • Register with the UAE Financial Intelligence Unit (FIU) if operating in a regulated sector (e.g., financial services, real estate).

    • Implement AML policies and reporting mechanisms.



  • Timeline: Within 60 days of incorporation.

  • Penalty for Non-Compliance: Fines ranging from AED 50,000 to AED 5,000,000, business suspension, or closure.




9. Data Protection Compliance



  • Tasks:


    • Comply with the UAE Data Protection Law (Federal Decree-Law No. 45 of 2021).

    • Implement data security measures and obtain employee consent for processing personal data.



  • Timeline: Ongoing from the start of operations.

  • Penalty for Non-Compliance: Fines up to AED 100,000 per violation.




10. Economic Substance Regulations (ESR)



  • Tasks:


    • File ESR notifications and reports if conducting relevant activities.



  • Timeline: Annually within the specified filing period.

  • Penalty for Non-Compliance: AED 20,000 for late filings; AED 50,000 for failure to demonstrate substance.




11. Ultimate Beneficial Ownership (UBO) Disclosure



  • Tasks:


    • Submit UBO details to the licensing authority.

    • Maintain a UBO register.



  • Timeline: Within 15 days of incorporation.

  • Penalty for Non-Compliance: AED 50,000 to AED 100,000 for non-compliance or incorrect filings.




Simplified Compliance Timeline Overview

Task

Timeline

Penalty for Non-Compliance

Trade License & Registration

1-2 weeks

Up to AED 500,000

Employment Contract Registration

Upon onboarding

AED 96,000 per unappointed Emirati worker

Medical Insurance

Within 30 days of visa

AED 500 per uninsured employee per month

Pension Registration

30 days

AED 5,000 per employee

Corporate Tax Registration

30 days

AED 20,000 late registration

VAT Registration

30 days post-threshold

AED 10,000 late registration

AML Registration

60 days

AED 50,000 to AED 5,000,000

WPS Registration

Upon first payroll

Up to AED 50,000

Data Protection

Ongoing

AED 100,000 per violation

ESR Filings

Annually

AED 20,000 to AED 50,000

UBO Disclosure

15 days post-incorporation

AED 50,000 to AED 100,000

How Fastlane Can Help

Fastlane Consultancy offers end-to-end support to ensure your new entity complies with all UAE regulatory requirements. Our services include:

  • HR and Payroll Compliance: Setting up WPS, managing employment contracts, and payroll calculations.

  • Medical Insurance: Facilitating employee health insurance registration.

  • Tax and VAT Services: Assisting with registration, filing, and reporting.

  • Regulatory Guidance: Providing expertise on UBO, ESR, and AML compliance.

  • Ongoing Monitoring: Proactive updates to ensure your entity remains compliant as regulations evolve.


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