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The United Arab Emirates (UAE) has historically offered significant potential for foreign businesses, with its well-known free zones and status as a major regional business hub.
However, until a few years ago, foreign investors faced hurdles due to regulations requiring local partnerships for foreign businesses wanting to incorporate. Any foreign entity wishing to do business in the UAE would need to have a local partner or “sponsor”. That meant sharing control and profits and leading some foreign businesses to decide not to make the investment.
This arrangement often hindered foreign investors seeking greater control or autonomy over their investments. However, five years ago, UAE President Sheikh Khalifa bin Zayed Al Nahyan introduced a vision for 100% foreign ownership in certain emirates. This means foreign investors can now wholly own and operate companies without the need for a local partner or sponsor, presenting new opportunities for expansion into the UAE market.
The UAE’s new 100% foreign ownership policy has opened the country to a range of investors, entrepreneurs, and business owners. Some of the benefits of this new policy include tax benefits and greatly reduced paperwork and bureaucratic hassle. Owners might also be eligible to apply for UAE residency.
Although the UAE has become more welcoming to foreign investors, there are still limitations imposed on commercial companies. Foreign investors are mandated to establish their businesses either in a free zone or offshore. Operating outside these designated areas limits their access to certain markets and customers.
The UAE government has suggested the potential for a policy that offers free zone businesses the opportunity to transition to the mainland UAE, unlocking a range of possibilities. Not all economic activities fall under the new regulations. Some notable sectors eligible for 100% foreign ownership include manufacturing, trading, consultancy, and professional services, as well as IT and Telecommunications.
