The UAE Cabinet, chaired by His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Vice President, Prime Minister, and Ruler of Dubai, recently approved a total of 122 economic activities across 13 sectors eligible for up to 100 percent foreign ownership in the UAE. This is big news for business set-up opportunities in the UAE.
One of the main concerns business owners have while setting up an onshore business in the UAE has always been ownership rights. Once this legislation comes into effect, it will do away with the previous rule which required foreign companies seeking to set up business on the mainland in the UAE to partner with a UAE national, who would own 51% shares of the company.
This move by the UAE government should prove to be economically beneficial with an anticipated increase in foreign direct investment. The new legislation will significantly help boost interest from investors, innovators, and businessmen from around the world who are looking to set up business in the UAE. It will also provide investors an opportunity to move and expand beyond the UAE-free zones.
It is worth noting that while the UAE Cabinet has approved up to 100% foreign ownership, it is still up to the discretion of the local governments to determine the level of ownership for eligible industries and economic activities. This will be crucial and will have a significant impact because while investors and businessmen would expect to receive complete 100% ownership rights, the local government will make that decision and it may potentially differ between each of the emirates.
The UAE is continuously introducing reforms and legislations to foster a positive economic environment and position itself as an investment hub across the global platform. According to the World Bank’s 2019 Ease of Doing Business report, a composite indicator that measures government procedures around business activity, the UAE ranks 11th globally. It has the highest-ranking economy in the Middle East and North Africa region.
Earlier this year, the UAE Cabinet also approved a new long-term visa for international investors and talented professionals in the medical, scientific, research, and technical fields. Since it launched, a total of 400 long-term golden visas have been awarded so far in the UAE, with a target of 6,800 by the end of the year.
The new ownership legislation, which is expected to pass in the first half of 2020, will cover sectors including renewable energy, space, agriculture, and the manufacturing industry. Furthermore, the legislation will provide investors with an opportunity to acquire various shares in several economic activities including the production of solar panels, power transformers, green technology, and hybrid power plants. The sectors of foreign ownership also include transport and storage, which allows investors to own projects in the fields of e-commerce transport, supply chain, logistics, and cold storage for pharmaceutical products.
The Cabinet’s decision includes other areas of ownership by foreign investors, including hospitality and food services, information and communications, as well as professional, scientific, and technical activities, thereby allowing for ownership in laboratories for research and development in biotechnology. The list also includes administrative services, support services, educational activities, healthcare, art and entertainment, and construction.
With these new reforms and legislation coming into effect, the UAE aims to drive economic development and increase its attractiveness to foreign investment, and in the long term, we will surely witness a spur in economic activity and foreign direct investment.
We offer free zone licenses across the UAE in:
Fujairah Creative City Free Zone;
Sharjah Media City Free Zone (SHAMS);
Ras Al Khaimah Free Zone (RAK);
Rak International Corporate Centre (RAK ICC);
Ajman Free Zone (AMC);
Khalifa Industrial Zone Abu Dhabi (KIZAD);
Dubai Multi Commodities Centre (DMCC);
Dubai World Trade Centre (DWTC);
Dubai Design District (D3);
and Abu Dhabi Global Markets (ADGM)