Ministry of Economy reviews law on Commerce through Modern means of Technology & its role in enhancing business environment’s competitiveness

The Ministry of Economy held a media briefing today to introduce the Federal Decree-Law No. 14 of 2023 on Commerce through Modern Means of Technology (e-commerce) in line with the country’s strategic direction for digital transformation. The law aims to stimulate the growth of trade conducted through the means of advanced technologies and the development of smart infrastructure in the country. It supports the UAE’s attractiveness to investments and contributes to enhancing the country’s leadership as a global business and trade hub.

H.E. Abdullah Ahmed Al Saleh, Undersecretary of the Ministry of Economy, emphasized that the UAE is steadily transitioning to a new economic model that has resilience, innovation and entrepreneurial thinking as its key pillars. Moreover, the country boasts a competitive and flexible economic legislative environment at the regional and global levels, and offers an attractive business climate for entrepreneurs, investors and entrepreneurs from around the world.

In his speech during the briefing, the Undersecretary said: “Today, we are witnessing a new milestone in the country’s efforts to achieve sustainable economic and social development through the promulgation of the new law for e-commerce. The law forms part of the integrated legislative updates undertaken by the UAE government to accelerate the transition towards a new economic model and achieve higher levels of competitiveness for the country’s business and trade environment.”

He continued: “The new law is an integrated framework for the development of the legislative and regulatory environment for trade conducted via modern technical means in the country, in line with global best practices in this regard. It will help our efforts to achieve the national target of raising the UAE’s position to the number one ranking globally in the development of proactive legislation governing new economic sectors, in the light of the ‘We the UAE 2031’ vision.”

The Ministry of Economy worked alongside its federal and local stakeholders and in partnership with the private sector and relevant experts to develop the articles of the law in a forward-looking and flexible manner. This supports the sustainability of the national economy and enhances its competitiveness, in the light of the principles of the 50 and the UAE Centennial 2071.

Furthermore, H.E. explained that the new law is particularly important as it is the main federal legislation governing e-commerce in the UAE. It has been designed to enhance the business environment in the country by facilitating the conduct of business and contracting; enhancing its efficiency; reducing the cost of doing business; and enhancing stability.

The law also ensures the establishment of a dynamic and fertile investment environment that encourages domestic and foreign investment by raising investor confidence in it. It further supports the country’s trade aspirations and enhances its position on the global trade landscape by achieving better compatibility with international trade requirements, keeping abreast of best practices in business transactions and ensuring transparency.

During the media briefing, H.E. Al Saleh highlighted the provisions and outputs of the law that affirm the UAE’s vision for the sector. These include:

• The new law is compatible with international digital commerce trends and adopts a flexible approach to legislation to streamline businesses and facilitate services for consumers in the country.
• Emphasizes the key role of entities and authorities responsible for licensing and regulating e-commerce, as well as the associated logistic services and digital payment gateways.
• Does not impose new requirements on digital traders or providers of other services.
• Protects consumer interests, both in terms of safeguarding intellectual property rights regarding the purchase of goods or services through modern technology means, and the provision of sufficient technological protection measures to enable consumers to safely purchase goods and services, as well as regulating the refund and exchange of goods and services.
• Legally authorizes trade conducted through modern technology means, making it similar to trade conducted through traditional methods and conventional procedures.
• Provides optional jurisdictions for dispute resolution including arbitration and introduces the optional insurance coverage principle regarding obligations arising from trade through modern technological means.
• Integrates roles of federal and local entities involved in the entire e-commerce value chain, enabled by flexible legislation for those entities, starting from the requirements of the Central Bank on digital payment gateways, followed by the requirements of the Federal Tax Authority and the TDRA, in addition to the security requirements of federal and local entities regarding cybersecurity.
• Regulates the shared roles of the concerned federal and local entities with regard to the requirements and necessary approvals from the local entities concerned with the digital transformation of business activities and the e-commerce licensing requirements of economic development departments.
• Creates an optional authority for the integration of supervisory, regulatory, and judicial control operations.
• Organizes the relationship between the merchants (B2B) and the relationship between the digital merchant and the consumer (B2C).
• Applicable to free zones in the country, in addition to financial free zones, regarding activities that are not related to financial activities.
• Organizes the relationship between parties of digital contracts and protects online consumers and relevant parties.
• Supports the exploitation of technological advancements and the communications revolution to increase trade growth through modern technology, especially in times of crises and emergencies, as well as utilizes the UAE’s infrastructure and logistics and transportation sectors.
• Organizes digital payment gateways in coordination with the relevant entities in the country.
• Adopts the approach of imposition of fines since the Ministry of Economy, in coordination with the competent authority, has been mandated with preparing a list of violations and administrative penalties for actions committed in violation of the provisions of this law, and issued by a Cabinet resolution.

Responsibilities of the Ministry of Economy with regard to the new law

 The e-commerce law places a specific set of responsibilities on the Ministry of Economy, which includes proposing and preparing a general e-commerce policy in coordination with the relevant authority and supervising its implementation after obtaining the Cabinet’s approval. It also includes the issuance of specific terms and conditions for the protection of consumer interests to achieve the objectives of the new law, and coordinating with the competent authority regarding the blocking of any application, website, or platform when any actions violating the provisions of this law that affect public order or morals arise.

In addition, the law grants MoEc the right to coordinate with the competent authority to meet tax compliance requirements, customs authorities’ requirements, and other relevant authorities in this regard.

The law clarifies the criteria that must be met to engage in business and activities of trade through modern technology means in the UAE. These include:

• Possession of legal capacity
• Compliance with all legal, regulatory, professional, and technical requirements
• Necessary approvals, permits, and licenses from the competent authority for conducting business through modern technology means and the physical store
• A secure technology infrastructure for offering e-commerce services
• Compliance with the requirements and standards of cyber security and combating piracy as specified by the competent authority, ensuring that consumers can browse and purchase goods or services securely.

Merchants are allowed to sell only goods and services that are legally allowed to be sold in the country and must refrain from selling any goods or services that require special approval from the competent authority before obtaining those approvals. They must also meet the conditions and requirements approved by the competent authorities regarding promotional and marketing campaigns and the sharing of customer data in this regard. They are also required to refrain from engaging in deceptive practices or providing false information that does not accurately describe the goods or services. A detailed digital invoice for purchases through modern technology means must be issued to customers.

H.E. Al Saleh pointed out that the new law also takes future developments into account and therefore does not limit the provision of trade to a specific technological means such as digital, or even blockchain, but covers any current or future modern technological means. This means that this law does not require modification whenever a new technology emerges in the future. It also contributes to achieving the requirement of technological neutrality, especially since this legislation primarily relies on technology and its ongoing advancements to conduct trade.

H.E. Al Saleh confirmed that the law will enhance the economic legislative structure that boosts national and foreign investments and further diversification of business activities, while ensuring the provision of best services to consumers and increasing job opportunities. It will help enhance the UAE’s position in global economic competitiveness indicators such as the Global Competitiveness Report and the Ease of Doing Business Report, as well as accelerate the digital transformation in the economy.