The UAE Cabinet, under the leadership of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Vice President, Prime Minister, and Ruler of Dubai, has recently approved 122 economic activities across 13 sectors that will now allow up to 100% foreign ownership in the UAE. This is a significant development for business setup opportunities in the country.
Historically, one of the main challenges for business owners establishing onshore companies in the UAE has been ownership rights. Previously, foreign companies wishing to set up business on the mainland were required to partner with a UAE national, who would hold 51% of the company shares. However, this new legislation will eliminate that requirement, granting full ownership rights to foreign investors.
This decision by the UAE government is expected to have a positive economic impact, likely attracting increased foreign direct investment. The legislation will spark global interest from investors, innovators, and entrepreneurs looking to establish businesses in the UAE, and it will also allow companies to expand beyond the free zones.
It’s important to note that while the Cabinet has approved up to 100% foreign ownership, the level of ownership permitted will be determined by the local governments for specific industries and economic activities. This could vary between the emirates, which will have a significant impact on investors’ expectations of full ownership.
The UAE continues to introduce reforms aimed at creating a favorable economic environment and strengthening its position as a global investment hub. According to the World Bank’s 2019 Ease of Doing Business report, which evaluates government processes affecting business activity, the UAE ranks 11th globally and holds the top spot 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 highly skilled professionals in fields such as medicine, science, research, and technology. So far, 400 golden visas have been issued, with a goal of reaching 6,800 by the end of the year.
The new foreign ownership law, expected to take effect in the first half of 2020, will cover sectors such as renewable energy, space, agriculture, and manufacturing. It will allow investors to acquire shares in activities like solar panel production, power transformer manufacturing, green technology, and hybrid power plants. The legislation also includes sectors such as transport and storage, allowing full ownership of projects in e-commerce logistics, supply chain management, and cold storage for pharmaceuticals.
Additionally, the Cabinet’s decision extends foreign ownership to industries like hospitality, food services, information and communication, as well as professional, scientific, and technical activities. This includes ownership in research and development labs focused on biotechnology. Other sectors included are administrative services, education, healthcare, arts and entertainment, and construction.
With these reforms, the UAE aims to drive economic growth, enhance its appeal to foreign investors, and, in the long term, stimulate increased economic activity and foreign direct investment.
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