Legislation in Dubai for Foreign Investments
Legislation in Dubai for Foreign InvestmentsUpdated on Wednesday 11th April 2018
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Dubai is among cities with high rates of foreign direct investments. It is also a prolific destination for business for all types of entrepreneurs. The oil and gas sectors generate huge profits in the UAE, including in Dubai, but there are also other fields like the real estate sector or the tourism which are preferred for investments by foreigners. If you are interested in opening a ccompany in Dubai, please observe the rules and regulations related to foreign investments and the ownership in this sense. We also mention that for a better understanding of the business environment in Dubai, you can rely on the legal support offered by our lawyers in Dubai.
The Dubai Free Zone system
Dubai and the rest of the Emirates that comprise the UAE have established special areas for investments, known as the free zones, which have differed laws in terms of foreign ownership. Companies incorporated in these areas, as opposed to those incorporated outside of the free zones, will typically allow full foreign ownership.
The most important free zones in Dubai include the Dubai International Financial Center, the Dubai Airport Free Zone, the Dubai Media, and Technology Free Zone etc. In order to facilitate foreign investments in the area, the United Arab Emirates has also signed a number of double tax treaties and other bilateral agreements. Our Dubai attorneys can give you information about the provisions of these treaties and how they can influence your business in Dubai if you own a branch or a subsidiary of an international company.
Laws for foreign investors in Dubai
The United Arab Emirates, including Dubai, has an investment policy that favors nationals and also restricts foreign investments in certain strategic sectors. According to the Commercial Companies Law, enterprises incorporated outside of the special free zones must have no less than 51% of the share capital owned by a UAE national. This prevents foreign investors from owning more than 49% of a Dubai company if it is not incorporated in one of the areas that allow full foreign ownership. Restrictions for investments exist in certain business sectors like insurance, financial services, the real estate (where in certain cases foreign ownership is not allowed at all) or for commercial agencies. Our Dubai attorneys can give you more information about the foreign ownership limitations in certain business sectors.
A new legislation related to the ownership of a company in Dubai
Since 2017, the authorities in Dubai decided to reconsider the restrictions regarding the ownership of companies as foreign entrepreneurs. In this sense, starting with the first quarter of 2018, the rule which obliges overseas business persons to own no more than 49% of the shares in the company has been lifted. This rule is now applicable for the non-free zone areas in the UAE, also called onshore zones. The new Investment Law observes only a few types of activities, such as banking, and sets out the new regulations in complete agreement with the Companies Law which will also suffer modifications. It is good to know that such change comes with the idea of continuing to sustain the development opportunities of the UAE, including Dubai, considering that support and enhancement in the business environment are always welcomed. This measure was also part of the preparations for Dubai World Expo 2020 and the business visions which are going to be discussed at this major event with participants and future investors from all over the world.
Although investments in the Dubai free zones are more permissive and straightforward for foreign investors, the UAE welcomes foreign investments. Our team of advisors can help you, if you want to invest in one of the special areas or if you want to incorporate a company outside of the free zones.
You can contact our law firm in Dubai for more information about foreign investments in the UAE.