UAE Financial Terms Glossary
Your comprehensive guide to financial, business, and real estate terminology in the UAE
AECB (Al Etihad Credit Bureau)
The UAE's federal credit information company that provides credit reports and scores to financial institutions. Your AECB score affects loan approvals and interest rates.
Arm's Length Principle
Transfer pricing requirement that transactions between related parties must be priced as if they were between independent parties.
Amortization Schedule
A detailed table showing each periodic payment on a mortgage or loan, breaking down the amount going toward principal versus interest.
Basic Salary
The fundamental component of your compensation in the UAE, excluding allowances and benefits. Used as the basis for calculating gratuity, overtime, and other entitlements.
Bounced Cheque
A cheque that is returned by the bank due to insufficient funds. In the UAE, issuing bounced cheques can result in criminal liability and travel bans.
Corporate Tax
A 9% federal tax on business profits in the UAE, introduced in June 2023. Small businesses with revenue under AED 3 million qualify for 0% rate.
Cooling-off Period
A period (typically 5 days for off-plan properties) during which a buyer can cancel a property purchase and receive a full refund minus administrative fees.
Debt-to-Income Ratio (DTI)
The percentage of your monthly gross income that goes toward paying debts. UAE banks typically limit DTI to 50% for mortgage approval.
DEWA
Dubai Electricity and Water Authority - the government utility provider for Dubai. Property owners must register DEWA accounts and pay security deposits.
DLD (Dubai Land Department)
The government authority responsible for property registration, regulation, and real estate transactions in Dubai.
Down Payment
The initial cash payment required when purchasing property. Typically 20-25% for UAE residents and 25-30% for expatriates.
EIBOR (Emirates Interbank Offered Rate)
The benchmark interest rate at which UAE banks lend to each other. Variable mortgages are typically priced as EIBOR plus a margin.
Ejari
Dubai's rental contract registration system managed by the Real Estate Regulatory Agency (RERA). Mandatory for all tenancy contracts in Dubai.
Emirates ID
The official identity card for all UAE residents, required for most government transactions, banking, and employment.
End-of-Service Gratuity
A mandatory payment to employees upon termination of employment, calculated based on basic salary and years of service (21 or 30 days per year).
Free Zone
Designated business areas offering 100% foreign ownership, tax exemptions, and simplified company setup. Examples include DMCC, JAFZA, and Dubai Internet City.
Freehold
Complete ownership of property and the land it occupies. Foreign nationals can buy freehold properties in designated areas of the UAE.
FTA (Federal Tax Authority)
The UAE government body responsible for administering and collecting federal taxes including VAT and Corporate Tax.
Gratuity
End-of-service benefit paid to employees based on their basic salary and length of service. Calculated as 21 days per year for first 5 years, 30 days per year thereafter.
Group Relief
Corporate tax provision allowing qualifying group companies to transfer tax losses between entities within the group.
Housing Allowance
A common component of UAE salary packages, typically 20-40% of basic salary, provided to help employees cover accommodation costs.
Islamic Finance
Banking and financing that complies with Sharia law, prohibiting interest (riba). Common in UAE for mortgages and business financing.
Labor Card
An official document issued by the Ministry of Human Resources showing employment details. Required for all employees in the UAE.
Leasehold
Property ownership for a specific period (typically 99 years) with the right to use and rent the property. Common in non-freehold areas.
Limited Contract
An employment contract with a specified end date, typically 2-3 years. Resignation before the end date may result in penalties.
Loan-to-Value Ratio (LTV)
The ratio of a loan to the value of the purchased asset. UAE banks typically offer 75-80% LTV on properties, requiring 20-25% down payment.
Mainland Company
A business registered in the UAE mainland (outside free zones), allowing trade throughout the UAE and internationally but requiring a UAE national partner in most cases.
Mortgage Registration Fee
A fee of 0.25% of the loan amount paid to register a mortgage with the Dubai Land Department.
MOU (Memorandum of Understanding)
An initial agreement between buyer and seller outlining the terms of a property sale. Usually requires a 10% deposit.
NOC (No Objection Certificate)
A document from a sponsor (employer or property owner) giving permission for various transactions such as bank loans, visa changes, or property modifications.
Notice Period
The advance notice required before resignation or termination, typically 1-3 months as specified in the employment contract.
Off-Plan Property
Property purchased before construction is complete, often at a lower price with flexible payment plans but with construction delay risks.
Oqood
The official property registration system in Dubai for off-plan properties, providing legal protection to buyers during construction.
Owners' Association (OA)
A governing body of property owners in a development, responsible for managing common areas and making community decisions.
Pre-approval
A preliminary approval from a bank for a mortgage, valid for 60-90 days, helping buyers understand their budget before property hunting.
Probation Period
An initial employment period (typically 3-6 months) during which either party can terminate employment with minimal notice.
RERA (Real Estate Regulatory Agency)
Dubai's government authority regulating the real estate sector, managing the Ejari system and enforcing real estate laws.
RERA Index
The rental calculator system in Dubai that determines the maximum allowable rent increase based on comparable properties in the area.
Rental Yield
The annual rental income as a percentage of the property's value. Calculated as (Annual Rent / Property Value) × 100.
Residence Visa
A visa allowing foreigners to live in the UAE, typically sponsored by an employer or property ownership. Must be renewed every 2-3 years.
Security Deposit
A refundable deposit paid at the start of a tenancy, typically 5% of annual rent in Dubai, held as security against damages or unpaid rent.
Service Charges
Annual fees paid by property owners for maintenance of common areas and facilities, typically AED 10-25 per square foot.
Small Business Relief
Corporate tax exemption for businesses with annual revenue under AED 3 million, applying a 0% tax rate.
Taawtheeq
Abu Dhabi's rental contract registration system, equivalent to Dubai's Ejari. Required for all rental agreements in Abu Dhabi.
Tenancy Contract
A legal agreement between landlord and tenant specifying rental terms, typically for 12 months in the UAE.
Title Deed
The official document proving property ownership, issued by the Dubai Land Department or relevant emirate authority.
Trade License
A government-issued license required to conduct business in the UAE, specifying permitted business activities.
Transfer Pricing
Rules governing pricing of transactions between related companies to ensure they're conducted at market rates (arm's length).
Trustee
An authorized party (usually a property agency) that holds funds in escrow during property transactions to protect both buyer and seller.
Unlimited Contract
An employment contract with no specified end date, offering more flexibility for resignation (typically 30-90 days notice).
Usufruct
The right to use property for up to 99 years without actual ownership. Less common than freehold or leasehold arrangements.
VAT (Value Added Tax)
A 5% consumption tax in the UAE on most goods and services, introduced in January 2018.
VAT Return
A periodic report (monthly or quarterly) submitted to the FTA detailing VAT collected and paid, with net amount due to or from the government.
Variable Rate Mortgage
A mortgage with an interest rate that fluctuates with market conditions, typically linked to EIBOR plus a fixed margin.
Work Permit
Official authorization allowing a foreign national to work in the UAE, linked to their employment contract and residence visa.
Zakat
An Islamic obligation to give a portion of wealth (typically 2.5% of savings) to charity. Not a government tax but a religious duty.
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