New Investment law in UAE, which allows 100% ownership to foreign investorsKWSME
For the past few decades, UAE has been actively participating in business setup in Dubai deals as an official business hub. Middle East, Russia, Asia, Europe and Africa have been using Dubai as an official transit point. Due to this, UAE has always been establishing their laws to provide convenience to the investors. By upgrading their regulations that allow investors to create business activity, UAE maintains its status as one of the most important business hubs.
As the government recognized the huge invest opportunities being taken up by the investors, UAE started creating different types of zones. These zones are to help protect the residents businesses as well as provide zero to almost no tax payments. For example, free zones allow people to only create business setup in Dubai deals within the same free zone or internationally. Businesses established in free zones are not allowed to directly trade locally. However, the businesses set up in Mainland zones allow business owners to work both locally and internationally.
The out dated laws
According to the previous Law, when a foreign investor was interested in establishing their own business, the government did not allow complete ownership to the investor. Therefore, the investors would be advised to look for residents that were interested in part ownership.
These residents are also called as sponsors. The sponsors are divided into three categories, local individual sponsors, local corporate sponsors and local service agents. Local corporates own 51% shares of the business they decide to sponsor. Similarly, local individuals also act as 51% shareholders of a business while usually taking the role of a silent partner.
Local service agents, on the other hand, are individual nationals who only act as representatives for the business. They are paid a fixed annual fee and do not own any shares in the business.
New Law and its Advantages
On the 30th of October, in 2018, the government of UAE introduced the Foreign Direct Investment Law. The FDI Law allows foreign investors to hold ownership of 100% shares of their businesses that have been established outside of the free zones regions.
With the new law, the investments received by the UAE is to have a huge impact and create even bigger opportunities for foreign direct investment, especially in the sectors other than oil. According to the economists, a rise in the prices of oil and tourism with the new law in effect will help balance out the implications created due to the implementation of Value Added Tax (VAT). While the new law and the VAT are set to balance out the private consumption, the OPEC agreement will help maintain the oil outflow consistent and stabilized.
Furthermore, the FDI Law will help to create a balance in local and international businesses. The government will be providing equal treatment of licensed foreign businesses. As the new investment opportunities attract further direct foreign investment, the local economy is expected to be more diversified.
What we can help you with!
With the numerous law upgradations, UAE has been seeing over the past few years, it can be difficult for foreign investors to keep track of the correct guidelines and the process of company formation Dubai. In addition, language and cultural barriers can be one of the reasons a foreign investor may suffer from business loss.
Therefore, it is always advised to business owners to seek professional help in company formation Dubai. Due to their work environment, professional consultancies are always well aware of the new market trends and the laws set by the government.
KWS Middle East is a consultancy that provides their services to new business owners and helps them in setting up their business setup in UAE. The consultancy provides help for PRO services, registrations, obtaining licenses and opening up bank accounts. Due to their experience, KWS Middle East is able to provide a comfortable and inefficient business setup in UAE process.
We are ready to answer your queries. Send them to us through email or call us for help.