UAE 10-year 'Golden' trade licence: Will this be another game-changing reform for businesses?
With 10-year licences, business owners can hope for lower costs - and longer term clarity
Dubai: While multi-year business licences are already offered by some free zones and emirates, any move by the UAE to raise that to 5- or 10-year stretches would take the corporate landscape to a whole new level altogether.
Currently, 2- or 3-year licences are issued on a case-by-case basis, typically tied to whether the business has an extended rental agreement in place as well. “Leading UAE free zones have allowed taking out extended licenses for up to 3 years in such cases as part of special promotions,” said Atik Munshi, Managing Partner at the consultancy Finexpertiza UAE.
“In such instances, the company and the free zone authority both benefit - the company saves itself the trouble of the yearly renewal and the other requirements. And the free zone authority is able to collect the multi-year license renewal fees in advance.”
For the licensed businesses, there is another potential perk from signing up for multi-year renewals. Depending on the free zone they are in, they also get some fairly generous discounts compared to the annual renewals.
“The company chooses the option of a multi-year license along with the lease they sign up, and thus both are valid for that period. Normally up to 3 years are offered.”
Straight away, multi-year licences offer businesses a better chance to try and lower their licensing related costs. A 10-year licence can be such a great boost for UAE companies
Even on the mainland, some emirates and their departments of economic development do provide for multiyear licenses, provided these are ‘generic licenses’, according to consultants.
Om Wednesday (March 27), news emerged that the UAE has discussed the possibility of extending up to 10-year trade licenses in one go under a ‘golden’ business licensing program. Also on the anvil – a 5-year ‘silver’ business licensing option.
These are still early stages for the proposal – but the UAE already has a successful formula to make it deliver some outstanding results. The UAE has been running the ‘Golden Visa’ residential program, whereby investors who have Dh2 million and more in property investments get the 10-year visas.
Initially, the Golden Visas were issued by invitations, and the scope of it systematically extended to wider categories of individuals. It was instrumental in creating a flood of new investments flowing through the local property market, and anchoring residents to stay in-country for longer. Or for good.
Longer-term business development strategies undoubtedly add to the enhancement of the UAE’s attraction and economic development in alignment with the 'We are the UAE 2031' program
Same dynamics for businesses
The UAE currently hosts close to 800,000 licensed entities. The vast majority go through annual renewals of their licensing. Any option to take multi-year licenses will also help with their costs long-term, and that would obviously constitute a big plus.
For businesses, there is also the extra clarity and consistency that comes with a pre-set licensing tenure.
“Providing a longer-term visa or license promotes a state of stability, which allows for longer-term planning,” said Damian Hitchen, CEO, Saxo Bank MENA. “In the context of a business, longer-term strategies that will undoubtedly add to the enhancement of the UAE’s attraction and economic development in alignment with the ‘We are the UAE 2031’ vision.”
Starts with allowing 100% ownership
Business owners in the UAE reckon a ‘golden business license’ as part of the same set of Big Bang reforms that started with foreign investors being allowed 100 per cent foreign ownership. That one piece of regulation on its own led to clear and consistent surge in new businesses launching in or coming to the UAE.
UAE's Golden Visa residency programme acted as a magnet for high skilled talent, entrepreneurs, investors and high net worth individuals. There is no reason why a trade licence program cannot be just as impactful as the residency visa one
Again, this was about offering ‘clarity’ on what business owners could do. It was about affirming their rights on their investments and how they went about exercising it. The reforms are also about giving the UAE a clear edge before other economies come up with their options.
“It is now unquestionable that the UAE is a global business hub,” said Sachin Kerur, Head of Middle East Region at Reed Smith.
“The Golden Visa residency programme launched in 2019 has been key. It undoubtedly acted as a magnet for high skilled talent, entrepreneurs, investors and high networth individuals.
“Hot on the heels of this program is the potential golden- and silver trade Licence program. If this proposal leads to long-term continuity for businesses, more investment will find its way to the UAE. “Businesses are always looking for more certainty as to tenure, status, license and set up costs, which will in turn, encourage long-term planning.
“There is no reason why a trade licence program cannot be just as positive and impactful as the residency visa program.”
Businesses in the UAE can focus more on innovation, expansion, and value creation, rather than being confined to frequent licence renewals.
- Anirudhe Ghosh, head of TASC Corporate Services