Corporate Treasury & Cash Management in UAE

Corporate Treasury & Cash Management in UAE

At a glance

About The UAE 

The economy of the United Arab Emirates (UAE) is the third largest amongst the Arab countries and is the most diverse economy in the Gulf Cooperation Council (GCC). The UAE is considered to be one of the most open economies in the world. With a location linked to Asia, Europe and Africa, the UAE is an attractive region for foreign investment. 

While its economy is largely oil-driven, the UAE government has diversified and established financial centres within the Gulf state to attract investment. One of these financial centres is the Dubai International Financial Centre (DIFC), a special economic zone in the UAE, which serves as a gateway to the Middle East, Africa and South Asia (MEASA) markets. 

The government has recently amended laws to allow 100% foreign ownership of companies involved in 122 different activities in agriculture, manufacturing, and services, which removes the need for a local partner. Companies may also opt for 100% ownership in one of the UAE’s free-trade zones. Other benefits, such as 0% tax rates and an English-speaking environment, have made Dubai and the rest of the UAE an attractive destination for foreign investments. 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. 

The UAE has most of its trading relationships within the MEASA markets and is well positioned to act as a strategic hub between the East and West. Its main export partners are Japan, India, and Iran. 

Corporate Treasury in United Arab Emirates  

The UAE, which is a federation of seven states (Abu Dhabi, Ajman, Dubai, Fujairah, Ras al Khaimah, Sharjah and Umm al Quwain), is one of the largest economies in the Middle East and serves as a financial hub for the region and Africa. In this section, we highlight some of the key factors relevant to treasury and cash management in the UAE.  

Financial Market Development  

  • Dubai is ranked 19th and Abu Dhabi is ranked 38th in the 2021 Global Financial Centres index by Z/Yen Group. 
  • The UAE has a highly developed business infrastructure, an excellent macroeconomic environment, an efficient labour market and strong legal rights.  
  • The UAE has no foreign-exchange controls.  
  • There are 45 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 categories and only offers licenses to companies in these categories.  
  • The DIFC supports innovation through a financial technology (fintech) accelerator, regulatory sandbox, and a USD100 million fintech fund. It has also developed a dedicated commercial licence for fintech, regulatory technology (regtech) and insurance technology (insurtech) firms. 

Sophistication of Banking Systems  

  • The UAE has 21 domestic banks and 37 foreign banks, while around 40 foreign banks also operate representative offices. The three largest banks are majority state-owned. There are eight dedicated Islamic banks in the UAE, which account for 26% of the banking sector's total deposits.  
  • 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, which totalled USD76.04 billion at the end of 2020. 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 DIFC is regulated by the Dubai Financial Services Authority.  


The UAE does not have a federal corporate income tax (CIT) regime at present. Each of the seven Emirates has its own income tax decree, with scope to impose CIT on all companies (including branches and permanent establishments) at a rate up to 55%. For the most part, CIT is only enforced on oil companies engaged in upstream petroleum activities and branches of foreign banks, which are subject to CIT at a flat rate of 20%. 

  • The standard rate for Value Added Tax (VAT) is 5%, with certain goods and services being zero rated and some exempted.  
  • There are no stamp duties in the UAE.  
  • There are no withholding taxes in the UAE.  
  • The UAE has 45 Free Zones in which businesses are generally eligible for tax holidays of 15 to 50 years.  
  • The UAE has tax treaties with more than 95 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 DIFC acts as the regional financial hub for the Middle East and Africa.  
  • It is a popular location for 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 Southeast Asia and Europe.  
  • 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 are permitted.  

Bank Accounts 

  • Residents and non-residents may hold foreign and domestic currency accounts both domestically and overseas, whereby domestic currency accounts are freely convertible into foreign currency. 
  • Interest is available on savings accounts, time deposit accounts and current accounts (upon approval by the Central Bank of the UAE). 

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. 
  • The domestic currency, UAE Dirham (AED), is pegged to the US dollar: AED3.67: USD1. 
  • The UAE is a member of the GCC. Future developments include a monetary union and a single currency between member-states. 
  • The UAE is a member of the Financial Action Task Force (FATF) and the Middle East and North Africa Financial Action Task Force (MENAFATF). 

Payment Systems



(UAE Funds Transfer System) 

The UAE's Real-time Gross Settlement (RTGS) system 
  • Managed by the Central Bank. 
  • All commercial banks operating in the UAE must use UAEFTS for all AED transfers.  
  • 108 participants, including 52 banks. 
  • Processes all AED-denominated interbank transfers (no value threshold). 
  • Activates the final settlement of participants’ net balances from the ICCS. 
  • Transactions are 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 are 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 within the same day. 
  • 82 participants, including 56 banks.


(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 are processed through UAEDDS. 
  • Final settlement is done across participants' accounts at the Central Bank within the same day, or the next day if payments are received after business hours. 
UAESWITCH  National automated teller machine (ATM) sharing scheme 
  • Operated by the Central Bank. 
  • Connected to GCCNET, allowing ATM access throughout the region. 
  • 43 participating banks incorporating over 4,343 ATMs. 


Payment Instruments 

Credit Transfers 

  • Credit transfers can be paper-based or automated. 
  • Settlement is done through UAEFTS within the 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 must be paid electronically through the Wages Protection System (UAEWPS). 

Direct Debits (auto debits) 

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

Card Payments 

  • Payment cards are the most popular mode of payment. The main card brands are Visa and MasterCard, and all cards are Europay, MasterCard and Visa (EMV)-compliant. 
  • Contactless card penetration is increasing and represents most card payments. 
  • Banks each organise individual clearing and settlement arrangements for card transactions. 
  • The Ministry of Finance and the National Bank of Abu Dhabi (NBAD) issue the e-Dirham card, a reloadable pre-paid card, which can be used to pay for public and private services. Payments can be made at electronic funds transfer at point of sale (EFTPOS) terminals and online. 

Online Payments 

  • The government has set up initiatives to promote and support the fintech sector, and the UAE is now recognised as the fintech centre of the Middle East and North Africa. As such, it was the first in the region to launch a fintech regulatory regime. The country has adopted a highly active regulatory sandbox system, known as the Regulatory Laboratory (RegLab), to facilitate innovation. 
  • As part of the UAE’s Vision 2021, the government launched an initiative to develop a National Payment Systems Strategy in order to build a cashless, efficient and competitive economy. It is working towards a sophisticated digital payments framework and has already implemented the Wages Protection System (WPS), which ensures migrant workers are paid wages electronically.  
  • Digital wallet use is on the rise, with digital payments increasing by 30% annually, supported by high mobile phone and internet penetration and a young, tech-savvy population. Popular digital wallets comprise global providers Apple Pay and Samsung Pay, as well as local players Emirates NBD Pay, Mashreq Pay and FAB payit. 
  • Card payments were used for 39% of e-commerce payments in 2020, followed by 20% for cash, 18% for e-wallets and 16% for bank transfers. 
  • The Emirates payment and transfer app Klip was launched in September 2020, and is licensed and regulated by the Central Bank. Developed by the UAE Banks Federation, Klip doesn’t require a bank account and is targeted at the UAE’s more than one million unbanked residents. 

Digital Currencies 

  • The UAE’s first regulator of cryptocurrency activities is the Financial Services Regulatory Authority (FSRA), a financial regulator of the Abu Dhabi Global Markets (ADGM). The ADGM’s regulatory framework regulates “spot crypto asset activities, including those undertaken by exchanges, custodians and other intermediaries,” according to the ADGM website. 
  • Part of the job of the ADGM’s framework is to classify crypto-offerings, on a case-by-case basis, as either securities or commodities. 
  • Cryptocurrencies are not legal tender in the UAE, and the Securities and Commodities Authority (SCA) has issued a public warning statement on initial coin offerings (ICOs). 
  • In other fintech developments, the UAE Blockchain Strategy 2021 aims to transform 50% of government transactions into the blockchain platform. 

Cash, Cheques and Money Orders 

  • Cash is still commonly used but is on the decline as card and digital payments become more common. 
  • Cheques are a common form of cashless payment for retail and commercial payments. 
  • Cheques are truncated into electronic images and then cleared through ICCS. Final settlement is made through UAEFTS the same day. 
  • Money exchange houses, which facilitate money exchanges and remittances largely for the UAE’s huge expatriate population, are regulated by the Central Bank. New government standards aim to tighten oversight of the sector and eliminate cash money transfers due to concerns about money laundering and terrorism financing. 
  • Ranging from one-shop operations to exchange houses with 100+ branches across the seven emirates, money changers are an integral part of the UAE’s financial infrastructure. 

For more information, login to Treasury Prism for contextual insights on market regulations that are relevant to your cash management structure.

Sources (Intro & Corporate Treasury):  
World Economic Forum, Bank for International Settlements, Central Bank of the UAE, Dubai International Financial Centre, Nasdaq Dubai, PwC, DBS, IMF, CIA World Factbook, Trading Economies, CEIC, the World Bank. 

Sources (Banking & Payments): 
RAK Center for Statistics and Studies, Association for Financial Professionals, OECD, Reuters, Al Arabiya Network, Finextra, Statista, Noor Bank. 

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