The UAE government has made specific reforms over the years, one of the most drastic of which concerns foreign ownership in the UAE. So whether you’re an investor, the owner of your company, or an aspiring start-up, there are essential things to know for anyone.
In this guide, we will get you acclimated with everything concerning foreign ownership in the UAE.
- Understanding Foreign Ownership Laws in the UAE
- Benefits of Foreign Ownership in the UAE
- List of Industries Where 100% Foreign Ownership Is Allowed
- FAQs
Understanding Foreign Ownership Laws in the UAE
Before proceeding, let’s discuss foreign ownership. By definition, foreign ownership is the ownership of a portion of a country’s assets, such as businesses, properties or natural resources.
In 2020, the UAE government made a significant move by amending the Federal Commercial Companies law. This law, known as the Federal Decree-Law No. 26 of 2020, has reshaped the provisions of Federal Law No. 2 of 2015 on Commercial Companies, particularly in terms of foreign ownership.
Thanks to this amendment, companies have been given the freedom to have 100% foreign ownership. Before this law, foreigners were required to have a major Emirati stockholder or agent in the company.
With this requirement annulled, you can establish a 100% owned onshore company in the UAE, giving you full control and empowerment over your business.
Significance
The UAE’s foreign ownership law has proven to be vastly significant for owners and stockholders. One of the major upsides of this law is that individuals can own their company without bringing in an Emirati shareholder. This, in turn, leads to much more flexibility in planning and decision-making.
Other significant points include:
- With the abolition of the requirement that a UAE national must own 51% of the company’s stakes, starting a company in the UAE has gotten significantly easier. This change encourages and motivates foreign entrepreneurs to bring their business ideas to the UAE.
- With ownership constraints removed, company costs can be allocated more efficiently. Owners no longer have to allocate additional costs to function under the ownership restrictions.
- Businesses can now more freely expand their range out of the free zone areas in the UAE.
- The simplification of the administrative process and removing bureaucratic hurdles have allowed more individuals to enter the market.
Benefits of Foreign Ownership in the UAE
Owning a business in the UAE offers a plethora of economic benefits. Investors can tap into one of the fastest-growing economies in the Middle East, with the UAE’s central location connecting businesses to markets in Africa, Asia, and Europe, which reach over two billion people.
The country has excellent infrastructure, with top-notch ports, airports, and roads, making business operations and trade smooth and efficient.
Strategic Advantages for Businesses
The UAE provides significant strategic advantages for businesses. It is known for its focus on innovation and technology and has a diverse and talented workforce.
The country’s stable political environment, robust legal system and clear business regulations offer a safe and predictable place for companies to operate, instilling a sense of security and confidence in your business decisions.
This stability attracts large multinational corporations and small startups, creating a competitive and collaborative business environment.
Tax Incentives and Business-Friendly Policies
One of the biggest draws for foreign businesses in the UAE is the attractive tax incentives and business-friendly policies. The UAE has no corporate tax on most companies, personal income tax or capital gains tax, making it a very appealing place for investors.
Free zones in the UAE offer even more benefits, such as 100% foreign ownership, full profit repatriation and no import or export duties. These incentives, easy business registration processes and supportive government programs help reduce costs and increase profits for foreign-owned businesses.
List of Industries Where 100% Foreign Ownership Is Allowed
The Department of Economic Development has non-citizens who have the right to own over one thousand registered commercial and industrial activities. They must:
- Own an economic license.
- Establish companies with 100% or less ownership.
Some of these industries include:
- Technology and IT: Software development, IT services and tech startups
- Healthcare: Medical clinics, hospitals and pharmaceutical companies
- Education: Private schools, training centres and educational consultancies
- Tourism and Hospitality: Hotels, travel agencies and tour operators
- Manufacturing: Production and assembly plants in various sectors
- Media and Entertainment: Advertising agencies, film production and media companies
- Logistics and Supply Chain: Warehousing, transportation and distribution services
- E-commerce: Online retail and digital marketplaces
- Financial Services: Investment firms, consultancy and financial advisory services
These activities are also part of the “Positive List,” which highlights the activities in UAE where direct foreign investment is permitted. The full list includes 122 activities.
Restricted Industries and Special Conditions
While many industries are open to 100% foreign ownership, some sectors have restrictions or special conditions. These include:
- Oil and Gas: This sector often requires joint ventures with local companies and significant local ownership.
- Telecommunications: Typically, foreign ownership is limited and partnerships with local entities are required.
- Defence and Security: High-level government approval and local partnerships are necessary.
- Real Estate: Foreign property ownership is allowed in designated freehold areas, but there are restrictions in other areas.
- Retail: Foreign ownership is limited outside free zones and a local sponsor or partner is often required.
These restrictions ensure that certain strategic sectors remain under local control while allowing foreign investment in many areas of the economy.
FAQs
Indians comprise the largest percentage of the expat community in the entirety of the UAE.
The most prominent foreign investors in the UAE are the United Kingdom, India, the United States, France and Saudi Arabia. This is based on foreign direct investment into the UAE.
Dubai has formed a stark reputation as a major economic hub of the UAE. Its state-of-the-art infrastructure and technological advancements make Dubai highly attractive to foreign investors worldwide.
Foreign investors are fundamental to a country’s economic growth. They provide the funds to finance new ventures and create employment opportunities.
With this guide, you now know everything there is to know about foreign ownership in the UAE. Thanks to amended laws concerning foreign ownership, starting a firm in the UAE by foreign entrepreneurs has gotten more straightforward than ever before.
Are you planning to live in the UAE? Here’s our guide on the cost of living in the UAE.
