The do’s and don’ts of doing business in the UAE

A bounced cheque can get you prison time in the United Arab Emirates, as former Hastie Group Middle East head Gavin Appleby recently realised.

Appleby fled the UAE after becoming aware the company’s collapse in May would result in several post-dated rent and labour cheques being dishonoured.

He told The Australian last night, “the Middle East is a very dangerous place with respect to cheque laws and the legal process is not reliable to allow a transparent resolution through legal means.”

Which prompts the question: What else do people need to be aware of when doing business in the UAE?

DFAT and Austrade both offer comprehensive advice. Here are SmartCompany’s top 10 tips from the two bodies:

1. Bouncing cheques and unpaid bills can mean prison

As Hastie’s Appleby found, “fraudulent practices”, which include dishonoured cheques and unpaid bills, can result in imprisonment or fines. Those attempting to leave the UAE with unpaid debts may be detained.

2. Don’t ask after the health of female relatives

You should attempt to chat with business associates to establish a trusting relationship, and asking about your associate’s well-being is fine. However, the well-being of a businessman’s wife or female relatives is regarded as a private matter, and enquiries along these lines may offend. Similarly, do not include an associate’s wife in an invitation to dine with you, unless you have prior indication that she is likely to accept.

3. Don’t get caught with drugs (including some Australian prescription medications)

The UAE has a zero tolerance policy towards illegal drugs. Penalties can include the death sentence or life imprisonment, and some medications available over the counter or by prescription in Australia are illegal in the UAE. The presence of illegal drugs detected in blood or urine tests is considered possession, and you can be charged with possessing drugs if trace amounts are found on your body, clothing or luggage. Amounts of 0.05 grams or less can lead to guilty verdicts.

4. It’s illegal for your employer to hold onto your passport

Foreign employees may be asked to leave their passports with employers as a condition of employment in the UAE. While this practice is not unusual, it is against the law. Australians intending to work in the UAE should clearly establish the terms and conditions of their employment or sponsorship at the beginning of their employment to minimise the risk of contractual or labour disputes. Should a dispute arise, the UAE Ministry of Labour has established a special department to review and arbitrate labour claims.

5. You need a permit to drink

Drinking or possession of alcohol for UAE residents without a UAE Ministry of Interior liquor permit is illegal and can lead to arrest and imprisonment. Alcohol is served in some hotels and sold in a limited number of designated stores, and it may only be purchased from stores by people who hold a liquor licence. These licences are only available to UAE residents and only permit the holder to purchase or consume alcohol in the emirate which issued the licence.

Alcohol consumption and pork are completely illegal in the Emirate of Sharjah.

During the holy month of Ramadan, eating, drinking and smoking between sunrise and sunset is forbidden for Muslims. Non-Muslims are also expected to refrain from eating, drinking and smoking in public in front of Muslims between sunrise and sunset. A small number of large establishments, such as five star hotels, will cater for non-Muslims

6. Dress modestly

Standard business dress for men is a business suit and tie. Evening functions can require anything from a sports coat to a business suit with tie and, on casual occasions, trousers and a shirt are acceptable.

Women should wear loose fitting clothing and dress conservatively, avoiding short skirts or revealing blouses, but their heads need not be covered.

7. Do not admire your host’s possessions

It is common to exchange gifts in business circles, but items are usually limited to small corporate items such as pens and brochures. Guests should take care not to express admiration for something owned by their host, as they may have the object offered to them immediately, according to an ancient custom still observed in many traditional areas.

8. Address Gulf nationals by their first names

Gulf nationals are usually addressed by their first name. For example, a Mr Khalid bin Abdallah Al Thani’s first name is Khalid, he is the son of Abdallah, and his family group or tribe is Al Thani. He would therefore be called Mr Khalid.

Business is often conducted with non-Arab managers, many of whom will likely be of Indian origin. Many Indians do not use surnames, and often the initial of their father’s name is placed in front of their own name. An A. Sivam would be referred to as Mr Sivam, with the A representing the father’s name. Indian women generally take their husband’s name on marriage, so a Miss R. Selvarajan could become Mrs A. Sivam or Mrs Sivam Selvarajan.

9. Drink that coffee

At business meetings, coffee or tea is generally offered to guests in order of their rank. Guests should always accept initial offerings and may accept more than one cup, but never any more than the host or others present. You can signify that you’ve had sufficient coffee by shaking your cup when handing it back to the server.

10. It’s a tax haven

Unless you’re a bank or an oil company, you are not required to pay income or consumption tax in the United Arab Emirates. Foreign banks pay a 20% tax on their profits and foreign oil companies pay taxes and royalties on their proceeds. Imports generally incur a 5% customs duty, with the exception of some luxury goods such as tobacco, which is levied at 50-70%.