100% Foreign Ownership in the UAE and Saudi Arabia: What Investors Need to know in 2025

The Middle East continues to reshape its investment landscape and setting up a business in the UAE and Saudi Arabia is now more attractive than ever. With both countries abolishing the need for a local sponsor under previous Kafala-style rules, foreign investors can now establish and fully own their businesses across most sectors. 

This is a major shift for global investors who once faced ownership restrictions or complex partnership structures. Today, the UAE and Saudi Arabia are driving reforms that offer not only 100% foreign ownership but also clearer rules, competitive tax incentives, and improved ease of doing business. 

Let’s break down how full ownership works in these two markets, what sectors it covers, and what investors still need to watch for.

- Business Setup in the UAE: Full Ownership and Flexibility 

The UAE has completely redefined its corporate ownership model. Under the Foreign Direct Investment (FDI) Law of 2018, most activities now allow 100% foreign ownership without the need for a UAE national holding 51% of the company. This change applies to both mainland and freezone setup, giving investors flexibility to choose what best fits their goals.

- Mainland Company Setup 

For UAE mainland setup, foreign investors can now operate under their full ownership in most professional and commercial sectors. This includes industries such as retail, general trading, construction, consulting, and healthcare.

Professional service firms can be fully owned by foreigners. They only require a Local Service Agent (LSA), an Emirati who serves as a liaison for government and administrative tasks. The LSA does not hold equity or have decision-making power.

This structure ensures that entrepreneurs retain total control over management and profits while staying compliant with local administrative requirements.

- UAE Freezone Setup 

Free zones remain one of the most efficient routes for business setup services in the UAE. With over 40 active zones, each with its own sector focus (e.g., logistics, media, tech, finance), they offer: 

• 100% foreign ownership 

• 0% corporate and personal income tax (subject to recent corporate tax guidelines) 

• Full capital and profit repatriation 

• Simplified licensing and visa processing
  
  An added advantage is the “One Freezone Passport” initiative, which allows companies licensed in one participating free zone to operate in others without additional registration, cutting red tape and costs for regional expansion. 

- Business Incorporation in Saudi Arabia: Vision 2030 and Full Ownership 

Saudi Arabia’s Vision 2030 reforms have transformed its business environment, positioning it as one of the most open markets in the GCC. Foreign companies can now own 100% of their businesses in most sectors without a Saudi sponsor. The Ministry of Investment (MISA) oversees foreign investment licenses and issues two primary types of approvals: 

• Service License (for professional and commercial businesses) 

• Industrial License (for manufacturing and production activities)
  
  - Sector Highlights 

1. Retail and E-Commerce
Foreign investors can now establish fully owned limited liability companies (LLCs) under a MISA Service License. However, companies must show proof of one year of global operation. This has opened the door for global fashion, tech, and e-commerce brands to operate directly in Saudi Arabia without intermediaries. 

2. Manufacturing and Light Industry
Through MISA’s Industrial License, manufacturers can set up production or assembly units with full ownership. No local partner is required, but investors must secure industrial land, factory permits, and environmental clearances. Saudization rules also apply. 

3. Professional and Technology Services
Firms in IT, consulting, and engineering can operate as fully foreign-owned branches or subsidiaries. Licensing falls under MISA’s Service category, and companies may use their parent brand names or establish a new Saudi identity.

- When a Joint Venture Still Makes Sense 

While 100% ownership is now the norm, there are still situations where a local partner can add value, especially for market navigation or government contracting. When forming a joint venture, it’s essential to have a strong legal framework that defines: 

• Equity and voting rights 

• Profit distribution and exit clauses 

• Dispute resolution mechanisms 

• Local partner’s administrative role
  
  Well-drafted JV agreements, often governed under Saudi law with optional arbitration clauses, can ensure long-term stability and trust.
  
  - Choosing the Right Setup
  For investors eyeing expansion into the Gulf, both the UAE and Saudi Arabia now offer investor-friendly pathways, but each has its nuances. 

• Choose UAE mainland setup if you want easy access to local markets and flexibility in service-based sectors. 

• Opt for UAE freezone setup for global operations with tax efficiency and simplified compliance. 

• For Saudi Arabia, ensure you meet MISA capital, licensing, and Saudization requirements before applying for a foreign investment license. 

With the right structure, planning, and expert support, entering these two markets is smoother than ever. 

Final Takeaway
The removal of local sponsorship requirements has turned the UAE and Saudi Arabia into global hubs for entrepreneurship and investment. But understanding the fine print, be it capital thresholds, sector licensing, or compliance, is key to long-term success. 

If you’re exploring business setup in Saudi Arabia or the UAE, partnering with professional advisors ensures your company launches on solid ground and stays compliant from day one.