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UAE clears 100% ownership rules

Waheed Abbas/Dubai
Filed on April 18, 2020 | Last updated on April 19, 2020 at 02.44 pm
The full ownership law will have a positive multiplier effect in form of creation of jobs.

(Reuters file)

Nation issues list of all 122 activities under 100% foreign ownership regime

The UAE has released the full list of 122 categories for 100 per cent ownership in the mainland under the Foreign Direct Investment (FDI) Law.

Cabinet Resolution No.(16) of 2020 determines the 'Positive List' of sectors and economic activities in which foreign direct investment is permissible and the percentage of ownership is 100 per cent.

In 2019, the UAE Cabinet had approved a Positive List of activities under which 100 per cent foreign ownership in companies outside free zones was permitted. However, this remained subject to certain criteria being satisfied.

The list covers key sectors - agriculture; manufacturing; transport and storage; hospitality and food services; information and communications; science and technology; healthcare; education; art and entertainment; and construction.

Cabinet Resolution No.(16) of 2020 also sets condition that companies need to invest in new technologies, contribute to research and development and meet the requirements of UAE licensing entities.

The Positive List includes a number of interesting activities such as manufacturing of toys, sports goods, electrical equipment, consultancy services, advertising, photographic activities, construction of buildings, translation services, primary, secondary and higher education, hotel and restaurant management, hospitals and music bands, among others.

"Manufacturing is the backbone of any country but it has not taken off so much here due to the nature of capital intensive projects and legal ownership restrictions. The investor is a minority shareholder legally always which is a major limitation, therefore, operating a manufacturing set up is very difficult," said Raju Menon, chairman of Kreston Menon.

He noted that operating a manufacturing unit in the free zones is the options available to hold 100 per cent but operating costs in free zones now-a-days are too expensive.

"Holding 100 per cent manufacturing operations in mainland is very attractive. However, capital adequacy is a precondition which any serious industrialist would adhere to. In my opinion manufacturing is the sector more benefitted. Apart from that, Private Joint Stock Company (PSC) can be the set-up vehicle. It is fully protected with the shield of limited liability," said Menon.

Anurag Chaturvedi, managing partner at Chartered House Tax Consultancy, said the full ownership law will have a positive multiplier effect in form of creation of jobs, an increase in productive capacity, resulting in less need to import because goods are produced in the domestic economy.

"FDI will compensate for the decrease in domestic investment as a result of Covid-19, and can help 'kick-start' the process of economic development," said Chaturvedi.

He said the allowing full-ownership to PJSC and a single person company is one of the unique preposition to boost the investment in service sector with minimum capital as per the current legislation in legal, audit and accounting amongst others. The minimum investment has been set at Dh2 million for manufacturing; Dh3 million for manufacturing of sports and toy industries; Dh20 million for manufacturing activities of automobiles, metal ad medical equipment; and Dh100 million for healthcare.

- waheedabbas@khaleejtimes.com

 

 

Agriculture sector

 

ISIC4

Business activity

Minimum Capital

Conditions and controls for foreign direct investment

1     

01111

Grain cultivation (wheat, corn, barley, etc.)

 

- use of modern technology

- achievement of high added value

- contribution in the research and development field

- satisfaction of the requirements of the licensing entities in the state

2     

01112

Cultivation of bean crops

 

3     

0113

Cultivation of vegetables, melons, roots and tubers

 

4     

0114

Cultivation of sugar cane

 

5     

0116

Cultivation of fiber crops

 

6     

0119001

Flowers and Flower Buds Cultivation

 

7     

0121

Growing of grapes

 

8     

0123001

Fruits and Citrus Cultivation

 

9     

0124

Growing of pome fruits and stone fruits

 

10 

0125

Growing of other tree and bush fruits and nuts

 

11 

0126

Growing of oleaginous fruits

 

12 

0127

Growing of beverage crops

 

13 

01289

Growing of aromatic, drug and pharmaceutical crops

 

14 

0161

Support activities for crop production

10

15 

0162

Support activities for animal production

 

16 

0163

Post-harvest crop activities

 

17 

0164

Seed processing for propagation

 

18 

0210

Silviculture and other forestry activities

 

19 

0240

Support services to forestry

 

 

Manufacturing sector

 

ISIC4

Business activity

Minimum Capital

Conditions and controls for foreign direct investment

20 

10

Manufacture of food products (except):

1071- Manufacture of bakery products

105 - Manufacture of diary products

108 - Manufacture of prepared animal feeds

 

15

- use of modern technology

- achievement of high added value

- contribution in the research and development field

- satisfaction of the requirements of the licensing entities in the state

21 

10

Manufacture of beverages (except):

1101 -Distilling, rectifying and blending of spirits

1102 -Manufacture of wines

1103- Manufacture of malt liquors and malt

15

22 

14

Manufacture of wearing apparel (except):

14109 - Tailoring and Sewing of Wearing Apparel

1410122 - Military Garments Manufacturing

15

23 

15

Manufacture of leather and related products

15

24 

16

Manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials

15

25 

2012002

Straight or Complex Fertilizers Manufacturing

15

26 

2013

Manufacture of plastics and synthetic rubber in primary forms

15

27 

2021

Manufacture of pesticides and other agrochemical products

15

28 

2022

Manufacture of paints, varnishes and similar coatings, printing ink and mastics

15

29 

2023

Manufacture of soap and detergents, cleaning and polishing preparations, perfumes and toilet preparations

15

30 

2029006

Glues and Prepared Adhesives Manufacturing

15

31 

2029008

Manufacture of dyestuffs and pigments

15

32 

2029009

Textiles and Leather Finishing Used Chemical Materials Manufacturing

15

33 

2029013

Manufacture of photographic plates, films

15

34 

2029019

Gelatine and Its Derivatives Manufacturing

15

- use of modern technology

- achievement of high added value

- contribution in the research and development field

- satisfaction of the requirements of the licensing entities in the state

35 

2029021

Essential Oils Manufacturing (Essence)

15

36 

2029022

Extracted Natural Aromatic Products Manufacturing

15

37 

2029023

Aromatic Distilled Waters Manufacturing

15

38 

2029024

Matches Manufacturing

15

39 

2029025

Welding Powders and Pastes Manufacturing

15

40 

2030

Manufacture of man-made fibres

15

41 

2100

Manufacture of pharmaceuticals, medicinal chemical and botanical products

15

42 

22

Manufacture of rubber and plastics products

15

43 

23

Manufacture of other non-metallic mineral products

15

44 

24

Manufacture of basic metals (except):

242 Manufacture of basic precious and other non-ferrous metals

2432 Casting of non-ferrous metals

20

45 

25

Manufacture of fabricated metal products, except machinery and equipment (except)

2529 Manufacture of weapons and ammunition

15

46 

26

Manufacture of computer, electronic and optical products

15

47 

27

Manufacture of electrical equipment

20

48 

28

Manufacture of machinery and equipment n.e.c. (except)

28259 Tobacco Processing Machinery Manufacturing

100

49 

29

Manufacture of motor vehicles, trailers and semi-trailers

100

50 

3011101

Building of Commercial Vessels

100

51 

3011103

Ships and Floating Structures Sections Manufacturing

100

52 

3011905

Construction of Drilling Platforms, Floating or Submersible

100

53 

3011906

Construction of Floating Structures

100

54 

3011907

Building of Hovercraft

100

55 

3012

Building of pleasure and sporting boats

15

56 

3020

Manufacture of railway locomotives and rolling stock

20

57 

3030

Manufacture of air and spacecraft and related machinery (except):

3030006 Military Ballistic and Guided Missiles Manufacturing

100

58 

3090

Manufacture of transport equipment n.e.c.

20

59 

31

Manufacture of furniture

15

60 

3220

Manufacture of musical instruments

2

61 

3230

Manufacture of sports goods

3

62 

3240

Manufacture of games and toys

3

63 

3250

Manufacture of medical and dental instruments and supplies

20

64 

3290

Other manufacturing n.e.c.

3

65 

3312001

Repair and maintenance of train engines

15

66 

3312002

Repair and maintenance of engines ship

15

67 

3315001

Repair and maintenance of ships

15

68 

3315004

Repair and maintenance of trains and railway equipment

15

69 

3315005

Maintenance and Repair of Aircrafts Engines

15

70 

3315006

Repair and maintenance of aircraft

15

 

Service sector

 

ISIC4

Business activity

Minimum Capital

Conditions and controls for foreign direct investment

71                  

6910002

Legal Consultancy Offices

As per the applicable regulations

-          Not to advocate before the UAE courts.

-          Not to carry out any judicial procedure before courts, arbitral tribunals, and judicial and administrative committees.

-          Not to carry out attestation activities

-          To obtain the approval of the relevant entities in charge of licensing such activities in the State

-          To be a natural or legal person known for its excellence in this field

72                  

692

Accounting, bookkeeping and auditing activities; tax consultancy

As per the applicable regulations

Only permissible for tax planning for businesses and consultancies, preparing and reviewing taxes on businesses

73                  

711

Architectural and engineering activities and related technical consultancy

As per the applicable regulations

To be a natural or legal person known for its excellence in this field

74                  

862

Medical and dental practice activities

75                  

75

Veterinary activities

76                  

620

Computer programming, consultancy and related activities

As per the applicable regulations

To provide a technical team of no less than 5 specialized programmers by the end of the first year of the company

77                  

72

Scientific research and development

As per the applicable regulations

As per the applicable regulations

78                  

7730-77300

Renting and leasing of other machinery, equipment and tangible goods

79                  

471

Retail l sale in non-specialized stores (except Cooperative Societies 4711001)

80                  

731

Advertising

81                  

732

Market research and public opinion polling

82                  

702

Management consultancy activities

83                  

712

Technical testing and analysis

84                  

331

Repair of fabricated metal products, machinery and equipment (except ships or aircrafts and other transport equipment)

85                  

8121-81210

General cleaning of buildings

86                  

742

Photographic activities

87                  

8292-82920

Packaging activities

88                  

823

Organization of conventions and trade shows

89                  

741

Specialized design activities

90                  

7490005

Legal Translation Services

91                  

7490006

Translation services, movies and television programs

92                  

7490012

Translation Publications Services

93                  

8299002

Translation Services

94                  

41

Construction of buildings

As per the applicable regulations

Only permissible for large-scale infrastructure projects such as airports, highway roads, sport facilities and projects whose value exceed AED 450,000,000

95                  

42

Civil engineering

96                  

432

Electrical, plumbing and other construction installation activities

97                  

433

Building completion and finishing

98                  

431

Demolition and site preparation

99                  

439

Other specialized construction activities

100               

7730009

Construction and Building or Demolition Machines and Equipment Renting

101               

851

Pre-primary and primary education

As per the applicable regulations

  1. Public education excluded.
  2. To obtain the approval from the entities in charge of education to license such activities and to comply with such standards and controls as may be determined by them.
  3. To comply with the conditions and standards of school facilities and to ensure a high level of education quality

102               

852

Secondary education

103               

853

Higher education

104               

854

Other education

105               

370

Sewerage

As per the applicable regulations

As per the applicable regulations in this regard

106               

382

Waste treatment and disposal

107               

3900001

Pollution Consequences Treatment and Environment Protection

108               

861

Hospital activities

100

  1. Subject to the approval of the relevant authorities in light of the economic need taking into account the number of hospitals, medical and health centers in a specific area.
  2. Dubai Healthcare City is excluded from the above condition.

109               

869

Other human health activities

70

As per the applicable regulations

110               

8211001

Hotel Management

As per the applicable regulations

111               

8211004

Restaurants Management

112               

90009

Creative activities and presentation of arts drama (theater)

Permissible only for theater activities and live bands

As per the applicable regulations

113               

9000104

Music Band

114               

9000110

Circus

115               

8130002

landscape and gardening services

116               

9103-91030

Botanical and zoological gardens and nature reserves activities

Permissible only for public garden services and specialized garden services.

117               

5012-50120

Sea and coastal freight water transport

As per the applicable regulations

118               

5022001

Internal Water Transportation of Goods

119               

7730016

Commercial Ships Rental

120               

5222002

Ship Piloting and Towing

121               

5222007

Marine towing of boats and jet sk

122               

New

Activities of holding companies in intellectual property

 Source: Fichte & Co.





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