October 4, 2024

Perspectives of the UAE: the project of a 10-year ''golden license''

The United Arab Emirates (UAE) has earned a reputation as one of the most global centers for business. Every year the number of registered companies in the UAE is increasing, what is not surprising, because this country really creates comfortable conditions for doing business, attracting businessmen with a low corporate tax rate in free zones.

What is a trade license?

Previously and until now, in order to take advantage of the favorable business environment in the UAE, companies must obtain a trade license. Any registered company in the UAE must obtain it, regardless of the type of activity.

A trade license is a mandatory legal document issued by the Department of Economic Development (DED) or other relevant authorities such as free zone authorities. For a registered company, the trade license confirms the nature of the economic activity that the company is entitled to carry out in the UAE.

Obtaining a trading license is a vital aspect of setting up a company in Mainland Dubai or Free Zones, allowing for seamless import and export of goods to and from the UAE.

Why is a 10-year trade license called "golden"?

The UAE government is currently considering a proposal to introduce new trade license rules, including a 10-year gold license and a five-year silver license, to encourage business in the Emirates.

What does it mean? The previously obtained trade license after the registration of the company had to be renewed every year (except for every three years). Of course, this imposed certain obligations on company owners and created bureaucratic obstacles. However, the government currently wants to create conditions for long-term licenses, so-called "gold" and "silver", which will have to be renewed every 10 or 5 years. Isn’t attractive?

The 10-year license offers unprecedented stability and flexibility. Why so?

• Unlike standard one-year or three-year licenses, the "Gold" license ensures continuity of work for ten years. For enterprises, this means a reduction in administrative burdens and long-term planning.

• The license allows companies to engage in multiple activities under one umbrella. Whether you are a retail, service or manufacturing business, the Gold license accommodates a variety of services.

• With a 10-year license, businesses can avoid annual renewal fees and administrative costs. This cost-effectiveness frees up resources for expansion and innovation.

• Enterprises can now plan their growth trajectory with confidence. The extended term allows for strategic decisions such as real estate investment, talent acquisition and new market entry.

How does the UAE government plan to stimulate the country's economy?

Industry analysts and top executives say the proposed trade licenses if implemented, will instill confidence among investors and make the UAE more attractive to companies looking to set up operations here.

The government said the move is aimed at increasing government revenue, stimulating business activity and promoting sustainable growth and prosperity in the country.

Moreover, if the proposed long-term trading licenses come into effect, it will not only add confidence to businesses in the Emirates, but also expand the opportunities of the startup community from around the world who want to enter the UAE market.

Everyone knows that one of the main problems of small and medium-sized businesses and start-ups is business continuity, and this is exactly what the UAE government is seriously dealing with. Eliminating the need to renew trade licenses every year will provide an incredible margin of time for establishing internal processes, and, just as importantly, will save significant money.

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Successful experience of regulatory changes in the UAE

Over the past few years, the UAE has introduced various policies and legislations, helping to create a competitive environment for conducting and establishing business and economic activities in the country. These developments have opened various opportunities for companies, investors and entrepreneurs from around the world, leading to an increase in the number of companies operating in the UAE to over 788,000 by the end of 2023.

The UAE has already unveiled several initiatives and policies – from allowing 100 percent foreign ownership of companies to more flexible visa programs – to help attract more capital and talent to the country. The Golden Visa residence program in the UAE has become a magnet for highly qualified talents, entrepreneurs, investors and wealthy people. There is no reason why a trade license program cannot be as effective as a residence visa.

What results to expect?

The UAE economy is expected to grow by five percent this year thanks to a strong expansion of the country's non-oil sector and increased foreign direct investment.

The country has also set an ambitious goal of attracting 550 billion dirhams ($150 billion) in foreign investment by 2031 and becoming one of the top 10 countries in the world for foreign direct investment as part of its diversification strategy.

Consequently, regulation is increasingly driving the strategic agenda around the world. The UAE government does much more than set the rules, it encourages growth in creative ways on many levels. They are less of a regulator, but more of a catalyst for successful business. There are more than 780,000 companies in the UAE, which demonstrates its magnetic appeal. We expect that the proposed business licenses will reduce administrative obstacles and increase business efficiency.

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