HSBC Treasury Management Profiles 2018 -

Current section, Introduction


The UAE is the second-largest economy in the Arab world (behind Saudi Arabia). With significant natural oil reserves, one of the world’s most open economies, liberal trade regulations and a favourable business climate, the UAE has become a popular place in which to work and invest. The UAE benefits from revenues from a large expatriate workforce which make up approximately 80 per cent of the country’s population; expatriate household income as a share of GDP is 52 per cent of GDP in the UAE. As the seventh-largest oil producer in the world, the UAE’s economy is highly dependent on the oil market; real oil GDP declined 1.5 per cent in 2017 (growth of 3.8 per cent in was recorded in 2016), following an OPEC agreement stipulating a coordinated cut in oil production among its members and other non-OPEC countries. The government has adopted a strategy of economic diversification and reducing the country’s dependence on oil revenues focused on innovation, manufacturing, tourism and financial services; in 2017, for example, the direct contribution of the travel and tourism sector to the UAE’s GDP was AED69.1 billion, equivalent to 5.1 per cent of the total GDP. In addition, the Ministry of Economy is introducing a number of measures to increase economic productivity and boost the contribution of the non-oil sector to 80 per cent by 2021. These measures include industry regulation law and commercial transactions law. The non-oil sector expanded 2.9 per cent in 2017 (helping drive overall economic growth of 1.5 per cent) up from 2.7 per cent in 2016. Growth of 3.7 per cent is forecast in 2018. The introduction of a 5 per cent VAT on 1 January 2018 will also enable the UAE to diversify their revenues away from oil.

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Legal and regulatory

  • Foreign exchange accounts can be held by residents both domestically and abroad. Resident domestic currency (AED) accounts are freely convertible
  • Non-resident bank accounts are permitted in both foreign and domestic currency. Non-resident domestic currency accounts are freely convertible
  • All transactions between residents and non-residents must be reported to the central bank on a monthly basis
  • The UAE does not apply exchange controls

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  • Income tax decrees have been issued by five of the seven Emirates (Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Qaiwan, Ras Al Khaimah and Fujairah), but are currently only enforced on the income of oil and gas exploration and production companies, branches of foreign banks and certain petrochemical companies. A flat rate of 50 per cent/55 per cent (Dubai/Abu Dhabi) is applied in these instances
  • The UAE offers several free trade zones with renewable 15- to 50-year tax holidays and exemption from import duty on goods brought into that free zone
  • The UAE introduced VAT at a rate of 5 per cent on 1 January 2018. Basic food items, healthcare and education are exempt. Twenty designated free zones will also be exempt for VAT purposes

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Payment instruments and systems

  • Cash is an important payment medium in the UAE, particularly for low-value retail. Cheques are a common cashless payment instrument, for both retail and commercial payments, although salary payments are increasingly being made via electronic credit transfer; all companies registered with the Ministry of Labour are required to pay salaries electronically via the Wages Protection System (UAEWPS). In 2016, 50.9 million payments were processed via the system, a 6.6 per cent increase on 2015. Payment card use, particularly of debit cards, is rising. Debit cards account for approximately 67 per cent of all the payment cards in circulation. The eDirham card, a reloadable prepaid card, can be used to pay for public and private services
  • The UAE operates four national payment systems: UAEFTS, an RTGS system; the ICCS for cheque payments; the UAE Direct Debit System; and the UAEWPS

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Cash management

  • Domestic and cross-border notional pooling and cash concentration is permitted between resident and non-resident companies
  • A range of collection services are available, including cheque collection

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Electronic banking

  • Electronic banking is commonplace in the UAE. There is no bank-independent electronic banking standard
  • Internet and mobile banking services are provided by all of the country’s banks for both corporate and retail purposes. Approximately 92 per cent of consumers use online banking services. Mobile banking services are used by 79 per cent of smartphone users
  • eDirham is the UAE’s official electronic payment platform for the collection of government fees
  • Emirates Digital Wallet will launch in 2018. Available from all participant banks, Emirates Digital Wallet will be available to both banked and unbanked residents in the UAE. Users will be able to move funds from any UAE bank, deposit cash into their Digital Wallet, pay for goods or services, send and receive money, and store money

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To read the full report on the UAE and to discover more on these and other topics, including banking and trade, please click on the Download PDF option.


  • IMF
  • Central Bank of the UAE
  • World Travel & Tourism Council: Economic Impact 2018 United Arab Emirates

The materials contained on this page were assembled in April 2017 (unless otherwise dated).



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