Policy Summary

The Ending China's Dominance in Electric Vehicles in the United States Act (2024) passed by the UAE Cabinet aims to restrict electric vehicles containing Chinese components from qualifying for U.S. electric vehicle tax credits. This measure may have a certain impact on Chinese electric vehicle companies entering the U.S. market, forcing them to reassess their supply chains and possibly increase R&D investment to adapt to market changes. At the same time, the Chinese auto industry may need to seek new market opportunities and partners to remain globally competitive. The American Automotive Innovation Alliance expressed concern that this may lead to a reduction in the number of electric vehicles eligible for tax credits and called on the United States to relax relevant regulations. Currently, only a few electric vehicles sold in the United States are eligible for tax credits, and only some models can receive the full $7,500 tax credit. The passage of this bill may have an impact on the diversity of the U.S. auto market and consumer interests.

“Policy Information Policy Interpretation”

The UAE Cabinet, full name of the United Arab Emirates Federal Cabinet (The Cabinet of the United Arab Emirates), is the highest administrative body in the United Arab Emirates, responsible for formulating and implementing national policies and managing state affairs, Through the formulation of positive policies, developing a flexible future economy, ensuring a prosperous business environment, encouraging investment and attracting talents, and improving the living standards and prosperity of society.

The UAE has formulated a number of preferential policies for foreign investors, and foreign joint ventures and wholly-owned enterprises enjoy equal treatment with local enterprises in terms of taxation, land, etc. Companies registered in the free zone can enjoy benefits such as exemption from corporate income tax, personal income tax, corporate tax and import and export tariffs.

The UAE's main foreign investment regulations and policies include the Commercial Companies Law (Federal Decree-Law no. (32) of 2021) and the UAE Cabinet Resolution No. 55 of 2021 of May 30, 2021.

Positive list

Among them, the Commercial Companies Law stipulates some investment incentives for foreign investors in the UAE:

Negative list

On May 30, 2021, the UAE Cabinet issued Resolution No. 55, announcing restrictions on foreign investment in the following industries:

1. National security and defense;

2. Banks, foreign exchange, financial institutions, insurance;

3. Printing currency;

4. Communications;

5. Hajj and Umrah related services;

6. Quran recitation institutions;

7. Fishery related services.

In the UAE, for foreign investors to participate in activities with strategic impacts 1 to 6, they need to obtain approval from relevant industry regulators. These regulators have the power to:

1. Specify the proportion of foreign investment in the capital of the enterprise.

2. Determine the composition of foreign investment in the company's board of directors.

3. Impose other additional conditions related to company control.

For the 7th activity, foreign investors are not allowed to invest. In order to obtain approval from the industry regulator, foreign investors first need to submit an application to the corporate affairs authority of their respective emirates and ensure that the application materials meet legal requirements. Once the complete application materials are received, the relevant department has 5 working days to forward the application to the industry regulator.

After receiving the application materials, the industry regulator needs to complete the review and make one of the following decisions within a maximum of 14 working days:

1. Approve the application and specify the minimum shareholding ratio that UAE nationals must hold and other control conditions.

2. Refuse to approve the application.

After the regulatory agency makes a decision, it must notify the company affairs authority of the corresponding emirate of the decision so that appropriate follow-up procedures can be taken.