Guiding you through regulatory authorisation in the UAE
The UAE has emerged as one of the world’s leading financial centres and there are now many benefits to setting up in the UAE. The establishment of the Dubai International Financial Centre (DIFC) was a catalyst for this and subsequently, the addition of the Abu Dhabi Global Market (ADGM) has added to the benefits. The local UAE market, however, also has its own benefits and may prove a better jurisdiction for those wishing to penetrate the UAE investor base. These benefits include:
- strategic location – The UAE is strategically located between the East and West, providing a platform for businesses and financial institutions to reach into and out of the emerging markets of the region.
- growing demand – The UAE is an excellent base from which to take advantage of the region’s rapidly growing demand for financial and business services. It also fills the time-zone gap between Europe and the US in the west and Asia and India in the east. There are several options open to you on how and where in the UAE you establish your business.
Key considerations for establishing a business in the UAE
What will the legal structure of your business be?
Outside of the Financial Free Zones, you will need to consider the requirement that you may need a local sponsor to help you establish your legal entity. However, if you set up within the Financial Free Zones of the DIFC and the ADGM, your company can have 100% foreign ownership. Whether or not you are part of an already established business could impact your choice of either a branch or a subsidiary or whether or not you can set up outside the Financial Free Zones as a Representative Office.
Are you seeking to provide purely advisory services or will you be managing assets, providing credit or even accepting deposits? There are some restrictions on certain types of business being provided in or from the Financial Free Zones including dealing in the UAE Dirham or insuring risks within the UAE. You must also consider whether you need to be regulated for the types of activities your business is planning to undertake and whether or not this is affected by where in the UAE the business is based.
What is your client base?
Whilst a regulatory licence to do business from a Financial Free Zone allows you to do business in or from that Financial Free Zone you should also be aware that, with the exception of the fund passporting regime between the DFSA, FSRA and the SCA, there are no passporting arrangements in the GCC as well as within the UAE. As such, you must ensure that the business you are undertaking is allowed to be marketed/provided to clients under the regulations applicable in the jurisdiction in which the client is based. This may be more relevant if your client base is mainly retail, where few exemptions to the local regulations are available.
Are you familiar with the regulatory and legal environment?
Both the DIFC and the ADGM operate their own civil and commercial laws. The DIFC’s legal framework is based on international standards and principles of common law, whilst in the ADGM, there is the direct application of English common law. Each centre has its own UAE financial regulator, the Dubai Financial Services Authority (“DFSA”) in the DIFC, and the Financial Services Regulatory Authority (“FSRA”) in the ADGM. Both regulatory regimes are based on international standards. This may be more relevant to those who already have an internationally-based business and may be more familiar with this environment, whereas a more regional-based business may find that the UAE local market regulations are designed more for their type of business.
What is the availability of staff, support services and suitable office space?
The UAE has, over the years, attracted many experienced professionals, as well as investing heavily in the education and training of the local population. This provides an ideal balance of junior, senior, local and international staff who can operate in a culturally diverse environment. The UAE has also attracted many of the larger law firms, accountants, auditors, fund administrators and other financial professionals. In addition, an abundance of new properties, both residential and commercial, should meet your requirements, although the price of property will vary depending on where the business is established. If you wish to incorporate your business in the DIFC, the ADGM or in the UAE outside of the Financial Free Zones you will be required to establish premises in that location from which to provide your financial services.
What is the cost of doing business here?
The UAE has introduced Federal corporate income tax of 9%. Financial Free Zones were given guarantees regarding zero taxes on corporate income and profits for 50 years from 2004 for firms incorporated in the DIFC, and from 2013 for ADGM incorporated firms . This, as well as the UAE’s wide network of double taxation avoidance treaties with regulators and central banks, makes the UAE a tax-efficient environment. In addition, as a financial services firm you will be required to establish a premises from which to operate, and you must consider that the cost of compliance may vary depending on the regulatory environment within each differing jurisdiction.
For specific information of the regulatory jurisdiction options in the UAE, visit the following pages:
- Setting up in the DIFC
- Setting up in the ADGM
- Getting authorised by the Securities & Commodities Authority (SCA)
- Setting up a Rep Office with the UAE Central Bank.
Kingsley Compliance Solutions can help you to consider all your options before you launch any regulatory authorisation application, in order that you choose the right jurisdiction for you.
Authorisation in the Dubai International Finance Centre
Guiding You Through DIFC Authorisation
- Variations of Permission and Endorsements
- FinTech in the DIFC
Authorisation in the ADGM
Guiding You Through ADGM Authorisation
- Variations of Permission
- Private Financing Platforms in the ADGM
- ADGM Virtual Assets
Central Bank of the UAE (Representative Offices)
CBUAE Representative Office regulatory application.
- Variations of Permission
- Private Financing Platforms in the ADGM
- ADGM Virtual Assets
Securities & Commodities Authority (SCA)
Guiding you through UAE SCA Authorisation
- SCA Focus Series
Unsure which regulatory environment is right for you or need help with a regulatory application? Contact a Kingsley Compliance Solutions representative today to learn more about our Middle East Compliance Services.
Represented lender on a $125,000,000+ refinancing of various credit facilities for a multinational manufacturer with assets located across Canada and in the United States.
