How to Find the Best Bank for your Business in the UAE

If you open a company in the UAE, the second most important aspect you start looking at is a bank account. You need a bank account for your company to receive payments and to be able to transact in general. Additionally, you need your own account to pay for your day-to-day needs. As such, in this module and in the following chapters we will provide you with a general framework, that will help you to navigate through many options that will be offered to you in the UAE.

First of all, let’s have a look at the financial institutions in the country. Financial institutions of the United Arab Emirates include the Central Bank of the UAE, local commercial banks, including Islamic banks, branches of foreign banks, as well as investment banks.

The Central Bank of the UAE oversees all banks in the UAE, except for the Dubai International Financial Centre, where this role is given to the Dubai Financial Services Authority, and Abu Dhabi Global Market, where own regulatory authority is in place, which is Financial Services Regulatory Authority. Due to the rigorous approach the Central Bank has towards allowing financial intuitions to operate in the UAE, you will only find reputable and well established financial organizations within the local financial market.

As we already mentioned, in the financial sector you can find ordinary commercial banks as well as Islamic banks. The key differences between the two types of banks are that Islamic banks are not allowed to establish interest rates on loans and deposits as interest-based banking (“riba”) is prohibited by Sharia Law. Additionally, Islamic banks will not involve themselves with any entity that is engaged in activities that are prohibited in Islam (such as companies working with pork or alcohol).

The modern banking system in the UAE offers a great number of advantages. As a start-up entrepreneur new to the country you may even not know them. Therefore, kindly allow us to share this information with you.

United Arab Emirates has a stable and modern banking system. There has not been any recorded case of a bank going bankrupt in the history of national banking institutions. This is due to the stringent requirements set by the Central Bank for financial activities. Thus, all credit and banking institutions must have sufficient capital to survive even in times of crisis. Additionally, UAE banking system proves to be very stable. Just see an exchange rate of the dirham against the US dollar, which remains fixed since 1997.

If you have or had a business in Europe or some parts of Asia and you had a chance to experience how banks there work, you will feel a great difference, as soon as you start banking in the United Arab Emirates. Since the state system excludes any taxes (only VAT is introduced as of 2018), banks are not extremely burdened by a great amount of administrative work. As such, businesses do not need to prove that often every single transaction happening in the bank account. Although bank account checks happen, they are not so frequent and do not burden you with a large amount of administrative work, related to proving the bank the nature of transaction and collecting and providing a multitude of supporting documents.

United Arab Emirates understand very clearly the role and power of technology. Therefore, use of advanced technology in the country, by the banking sector including, is an important aspect and indicator. You will be surprised by some advanced internet banking facilities in the UAE, by various high-tech access devices, contactless payment cards, fingerprint payments and more.

In addition to that, in the UAE you will have an access to a large number of banks and their products. To date, there are 46 local banks and branches of foreign banks in the UAE, and 9 foreign banks have their representative offices in the country. As a service provider we are often approached by individuals from overseas asking for assistance with identifying if a particular bank exists and is registered in the UAE. You can always check the list of licensed and approved banks in the UAE on the web-site of the UAE Central Bank. Just type «Links to commercial banks in the UAE» in your browser.

UAE understands the importance of having a strong and extremely reliable banking system. As such, several mergers took place in the past years in order ro create better synergies. The largest bank Emirates NBD was established in 2007 as a result of the merger of Emirates Bank International and National Bank of Dubai. Today Emirates NBD is the second largest bank in the country. Similarly, in 2017 First Gulf Bank and National Bank of Abu Dhabi merged into First Abu Dhabi Bank, with a total capital of more than $ 180 billion.

Businessmen from all around the world have made use of the UAE's financial institutions for a very long time and UAE aims to attract even more international investors in the years to come. This can be further achieved by obtaining higher rankings internationally, therefore, United Arab Emirates made an important decision to make its system more transparent. This resulted into joining OECD initiative on automatic exchange of information for tax purposes.

If you are wondering, what automatic exchange of information for tax purposes means, we have summarized the main aspects of the initiative for your convenience:

Dozens of countries are signing a framework agreement on automatic tax information exchange and enter further into bilateral agreements with the UAE. Countries with which the UAE, at the time of September 30, 2018, have bilateral agreements, will automatically receive information about their tax residents who have accounts with banks in the UAE. In the case of countries that have not joined the initiative and do not have the due infrastructure and legislative framework for automatic exchange, but have Double Taxation Agreements, information will be transmitted on request. As of now, UAE has signed over 104 Double Taxation Treaties, where each document has its own structure and provisions depending on the year of signing the document. Additionally, the Emirates signed 8 bilateral agreements on the exchange of tax information.

We have tried to provide you with an overview of the banking system in the UAE and update you on the relevant developments in financial sector. We hope you found provided information of help and would love to have a further look, as to how you can benefit further from doing business in the UAE. In the next chapter, we will look at banking options in the country in further details.

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Disclaimer: Business Boutique UAE-Consultants.com is not affiliated with any particular government or legal entity. Business Boutique does not give professional legal advice nor any other professional advice subject to a public office in the government. This article merely sets out a simple and basic idea as to the reasons of Dubai freezone company setup and Dubai free zone company formation cost. Business Boutique in no way holds nor imposes any official governmental or legal authority and the article herein is only to be taken as a guide. All further governmental or legal issues should be addressed to the corresponding authorities.

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