Know the Dubai Mainland Activities with 100% Ownership
Dubai Mainland, governed by the Department of Economy and Tourism (DET), is a hub for trade and commerce in the Middle East, with diverse industries such as finance, real estate, retail, and manufacturing.
With the implementation of 100% foreign ownership for limited liability companies (LLCs), Dubai Mainland has opened up many opportunities for existing businesses and those looking to establish new ventures with total control over their operations, explore local, engage in government and semi-government projects, and tap into the vast potential of the UAE market.
Setting up a business in the mainland offers several advantages, including access to the local market, flexibility in choosing a business location, and the ability to trade freely within the UAE. However, it is essential to note that certain restrictions and requirements may apply depending on the type of business activity.
Understanding Full Foreign Ownership in UAE
The Federal Decree-Law No. 26 of 2020 amends Federal Law No. 2 of 2015 on Commercial Companies to allow foreigners to establish companies with 100 per cent ownership. This ownership structure benefits foreign investors, as they have complete control over their businesses and can make strategic decisions without the involvement of a local partner.
Previously, foreign investors could only own up to 49% of a company, and a UAE national must hold the remaining 51%. This requirement is known as the Emirati sponsorship system or the UAE local partner requirement. However, in recent years, the UAE government has significantly changed foreign ownership restrictions to attract more foreign investment and boost the economy. However, the UAE introduced the Foreign Direct Investment (FDI) Law, which aimed to relax foreign ownership restrictions in specific business sectors, known as the Positive List, in 2018. The decision was part of the government's efforts to attract more foreign investment and enhance the country's competitiveness.
The FDI Law allows up to 100% foreign ownership in UAE businesses within these sectors, subject to specific requirements and approvals from the relevant licensing authorities. Then in March 2020, Dubai allowed foreign investors to own 100% of companies in all economic sectors, including trading. Foreign investors could establish and wholly own a trading company in Dubai without requiring a local partner.
Benefits and Implications of 100% Foreign Ownership in Dubai Mainland
Implementing 100% foreign ownership in Dubai Mainland brings many benefits and implications for businesses and investors. Let's explore these in detail:
1.Attracting Foreign Investment
By removing the previous restrictions on foreign ownership, Dubai Mainland aims to attract more foreign direct investment (FDI) into the region. The amendment positions Dubai as an investor-friendly destination, offering entrepreneurs and businesses worldwide opportunities to establish and fully own their companies.
2. Stimulating Economic Growth
The amendment is expected to stimulate economic growth in Dubai by creating a more favourable business environment. With increased foreign ownership, businesses can freely pursue their growth strategies and contribute to the overall development of the city's economy.
3. Enhancing Ease of Doing Business
The amendment improves the ease of business in Dubai Mainland by eliminating the complexities of finding local sponsors or agents. Foreign investors can now navigate the business setup process more efficiently, reducing bureaucratic hurdles and saving time and resources.
4. Promoting Global Competitiveness
The amendment enhances Dubai's global competitiveness by aligning its business environment with international standards. The removal of ownership restrictions attracts businesses and investors who were previously deterred by their limited control over their ventures.
5. Encouraging Innovation and Entrepreneurship
The amendment fosters an environment conducive to innovation and entrepreneurship. With greater ownership and control, foreign investors take chances, drive innovation, and introduce new ideas and technologies to the market.
Activities with 100% foreign ownership for Businesses in Mainland UAE
The UAE cabinet has approved over 1000+ economic activities across various sectors eligible for full foreign ownership. These activities fall under different industrial, agricultural, and service industries.
Some of the activities categories eligible for 100% foreign ownership include:
1. Manufacturing: production of various products such as food products, beverages, pharmaceuticals, medical devices, and construction materials
2. Technology: development and distribution of software, e-commerce platforms, artificial intelligence, and other advanced technologies
3. Education: the operation of educational institutions, including universities, colleges, and training centres.
4. Healthcare: Certain medical facilities, hospitals, clinics, and specialised healthcare centres may permit 100% foreign ownership, subject to specific licensing requirements.
5. Renewable Energy: The UAE has promoted renewable energy projects, including solar and wind energy. Foreign companies may have the opportunity to own and operate such projects fully.
6. Tourism and Hospitality: Certain tourism and hospitality activities, such as hotels, resorts, tourist agencies, tour operators, and event management companies, may allow full foreign ownership.
7. Wholesale and retail: Businesses involved in purchasing goods from manufacturers or suppliers and selling goods.
8. Agriculture and Fisheries: Foreign investors may be able to fully own agricultural and fishery projects, including the cultivation of crops, farming of livestock, and fish farming.
9. Food & beverage: Setting up a food and beverage business, including a restaurant, café, food truck, or any other F&B establishment, can have full ownership.
10. Professional Services: Companies that offer legal, accounting, engineering, and consulting services can be wholly owned by foreign investors. These companies are registered as Sole Establishments or Civil Companies.
11. Publishing and Media: Businesses involved in publishing, printing, distribution, and online media activities may be eligible for 100% foreign ownership.
Please access the complete list here.
Are You Ready to Take Advantage of the 100% Ownership for Foreign Investors in UAE?
It is important to note that while these activities can now have 100% foreign ownership in Dubai, there may still be specific requirements and regulations that businesses must adhere to.
To set up a 100% foreign-owned trading company in Dubai, investors must apply for a commercial license from the Department of Economy and Tourism (DET). The permit will allow the company to engage in trading activities such as buying and selling goods within the UAE and internationally.
Overall, the full foreign ownership of companies on the Dubai mainland is a significant development expected to attract more foreign investment and spur economic growth in the region.
How can Ascent Partners help?
Ascent Partners is a boutique consultancy providing bespoke, end-to-end corporate services ranging from company formation to accounting, bookkeeping, and compliance services for entrepreneurs looking to set up their next venture in the UAE. We work alongside to strategise, startup, and scale businesses in the UAE and the broader region.
With a combined experience of 50+ years, our expert consultants provide reliable and unparalleled guidance throughout all strategic phases of a business' evolution.
Contact us at ask@ascentpartners.ae or +971 52 553 7565