Laws Governing eBusiness in the UAE

Laws Governing eBusiness:

This is a research I had to make for my university studies. It’s very useful for anyone planning to start an eCommerce in the UAE. Enjoy reading.

Introduction to eBusiness:

eBusiness (or Electronic Business) is a field of study that deals with the conduct of commercial activities over the Internet. This includes online marketing, turning companies into online businesses, and other matters that are related to establishing and sustaining an online business such as search engines; social media and networking sites like Facebook, Twitter, and YouTube; eCommerce websites such as eBay, and so on.

We chose to study eBusiness because of the current commercial landscape. Businesses, both large and small, need to be able to keep abreast of the advancements in technology in order to sustain their growth and keep up with their competition. It is a program that effectively combines our entrepreneurial spirit with a platform for trade, information, and communication that successfully meets the demands of today’s digital age.

Relevant eBusiness Laws:

Electronic communications and transactions in the United Arab Emirates (UAE) are predominantly governed by two federal laws: Federal Law No. 1 of 2006 On Electronic Commerce and Transactions (eCommerce Law) and Federal Law by Decree No. 5 of 2012 regarding Cyber Crimes (Cybercrime Law). An older law, Federal Law No. 15 of 1980 on Publications and Publishing (Publications Law), was primarily intended for the publishing of traditional content, but is also now used to regulate digital content.

Sheikh Khalifa issued a decree that turned the UAE into one the first countries within the region to enact a cyber law. Federal Law No. 1 of 2006 on Electronic Commerce and Transactions or the eCommerce Law is considered as one of the most detailed and extensive law governing digital transactions in the Middle East. The law underscored the need to regulate commercial transaction in the digital sphere within a legal structure. 

Federal Law by Decree No. 5 of 2012 was intended to fight cybercrime. It delineates the type of digital and online activities that would be considered as punishable offenses under the law. Some of these include invasions of privacy, malicious and illegal pursuits such as hacking, fraud, inappropriate system use, defamation, threats to state security, terrorism, insult to religions, and other comparable activities. 

Because of the multinational nature of the Internet, the laws have an extra-territorial reach. This means that owners and operators of websites that are based in the UAE, no matter what their nationalities may be, will be covered by these laws. Furthermore, there may be other laws and regulations that online businesses will need to take note of depending on which area of the UAE they are in (whether on the mainland or in a free zone).

Taxation laws also cover e-commerce transactions. Because of the multiple national jurisdictions that may be involved in a single digital transaction, it is highly possible that a consumer and an online business owner may be subject to multiple taxes. The UAE is a party to double taxation treaties with numerous countries all over the world. Double taxation agreements are meant to foster trade and an easier flow of capital, technology, and resources. They make certain that online entrepreneurs and companies will not be subject to multiple taxes in two jurisdictions for the same item. 

The issue of which tax authority will have jurisdiction depends on several factors such as the nationalities of the parties to a certain transaction, the location of the server, or the location of the bank that finances the payment. Owing to the cooperation of multiple administrative and taxation authorities, double taxation treaties are also expected to prevent fiscal evasion.

UAE laws also prohibit particular activities and conduct in the digital sphere. In general, any content that that disrupts public order or is contrary to morality, the rule of law, or religion (or otherwise illegal by other laws of the UAE) is prohibited from being distributed. This has several ramifications and effects. For instance, a company that is developing an app for public consumption should see to it that it will not be publishing or hosting content that is prohibited under the laws. Depending on the content, severe penalties may be imposed.

Regulatory Bodies and Requirements for eBusiness Practitioners:

In general, the requirements that are needed to establish an online company in the UAE are similar to the requirements that are required for any company that operates within the UAE. To start a company that will conduct business electronically, one has to secure a business license from the Department of Economic Development (DED). If the company is based on a free zone, the license should be obtained from the corresponding free zone authority. Requirements differ depending on the type of website content.

For instance, if a person want to start a shopping website which targets UAE customers, he has to secure a commercial trading license because this is essentially tantamount to selling products in the traditional way. If the company is based in a free zone, the owner will need the services of a local agent or distributor to sell the products in the UAE market which is outside of the free zone he is in.

The Telecommunications Regulatory Authority (TRA) launched the UAE .ae Domain Administration or ae.DA in 2007. This agency regulates and approves all .ae domain sites, including the Arabic script versions. The ae.DA has enacted numerous policies that govern the registration, licensing, and use of .ae websites, such as eligibility restrictions. What this means is that particular domain names like co.ae will only be licensed to individuals or corporations that are presently engage in commercial trading in the country. Numerous companies in the UAE offer domain name registration services to help speed up and simplify the registration process.

Voluntary and Professional Associations:

Currently, there are no well-established and reliable professional associations based in the UAE that specifically cater to eBusiness owners and practitioners. However, there are certain organizations that deal with business and trade in general. Chambers of commerce, which have chapters in various areas of the UAE, are intended to further the interests of businesses and entrepreneurs. The local chapters advocate on the behalf of the business community in the corresponding location.

Conclusion:

By researching about the various laws that govern and impact our future profession, we were able to understand certain regulations and government agencies are crucial in creating and running a career in eBusiness. We realize that the law has always been an essential aspect of any business venture, but with the increasing interconnectedness and decreasing barriers offered by online platforms, certain transactions and activities are becoming more and more complex. 

For instance, we learned that taxation may not be confined to a single jurisdiction because of the fluid nature of online transactions. As eBusiness students, knowing about these laws can help us anticipate not only the needs of our future clients and customers, but also potential setbacks and problems that may take place in the course of daily operations.

Rashed Al Sheikh

I work on startups, eCommerce platforms, and game studio projects that aim to generate high revenues. We try to bring technology products that solve problems and enhance capabilities. The recipe for succeeding is knowing your demographics, your audience, why people need your services, and the economics of your place, Founder of GrinderScape which compelled over 1M registered members, and 15,000 unique daily logins. I also work and focus on real estate and cryptocurrency investments on the side.

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