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Abu Dhabi, the capital city of the UAE |
The Federal Government of the UAE will be ratifying a new Foreign Investment Law for the country in early 2008. The impending legislation aims to streamline the inflow of investments into the United Arab Emirates, introduce transparency and the best possible conditions for developing an ideal investing clime. The UAE currently ranks among the top 15 global destinations for foreign direct investment.
The formulation of the law is proving to be complicated as each of the 7 emirates has its own yardsticks for regulating foreign investments in sectors like land ownership. For instance, Sharjah offers foreign nationals leasehold property ownership whereas in Dubai and Ajman, 100% foreign ownership is possible. Taking into account, conflicting elements like these, the UAE Federal Government seeks to provide investors ‘a common denominator, a standard law governing foreign investment.’ Also, the new law is expected to quadruple foreign funds in areas like ‘start-up’ enterprises.
The UAE is one of the most investor-friendly destinations in the world, as it is one of the lowest taxed countries, with zero corporate, income and sales taxes.
At present, a foreign investor may choose to participate with up to 49% in a company formed in one of the structures open to foreign investors. Despite the requirement that the majority of shares must be held by UAE nationals, it is still looked upon as the easiest solution to carry out business in the UAE. Other available methods are the establishment of a branch or the use of commercial agency agreements. Special attention should also be paid to the possibilities offered by the Free Trade Zones where businesses are exempt from most requirements applicable in the regular UAE territory. (Courstey: www.government.ae)
