The government in Dubai has stated its intention that the Dubai International Financial Centre become a major regional player in financial markets, and to that end they have been working to ensure regulation is adapted and adopted as required to facilitate those who do business through DIFC.
Dubai is becoming an expat businessperson and investor’s friend as a result, and the latest regulations to have been passed relate specifically to Special Purpose Companies. The regulations passed allow for a format to exist for the formation of these companies so that Dubai can directly compete with other offshore jurisdictions that allow for the formation of these vehicles.
According to the Sovereign Group, the new regulations allow individuals to create Special Purpose Companies for “facilitating both Islamic and conventional transactions, as well as vessel registrations” for example. And the real significance of the governmental regulation implementation in our opinion is that it is clearly committed to ensuring that those who are operational through DIFC are completely assisted and facilitated so that the centre becomes a real player.
This is fantastic news for expatriate and offshore investors who are aware that the benefits of many offshore jurisdictions are being eroded by increased international ‘interference.’ The G20 leaders and the OECD have declared that there will be a crackdown on non-compliant jurisdictions which fail to adhere to guidelines on tax information transfer for example, and this may mean that certain previously popular havens become less appealing if they remain on any OECD type watch list. However, Dubai is raising its profile and appeal at the same time, and it is committed to meeting both the demands of international voices when it comes to security and compliance, as well as the demands of those who use DIFC.
We find it interesting that the Dubai International Financial Centre is becoming such a strong presence in the region and in terms of international financial jurisdictions at the same time as the GCC is considering the implementation of certain types of taxes such as individual and corporate income taxes. It seems that Dubai’s leaders are once again ahead of the game – they are putting everything in place to ensure Dubai can operate as a tax haven, ready for what may very well become a reality, i.e., taxes in Dubai.
Some may say that the government in Dubai is fighting something of a losing battle in terms of securing the long-term fortunes of its property market, but it is certainly doing all it can to make sure that its reputation and standing as a key player in the global financial marketplace is established and protected, and that even if personal and corporate income taxes are adopted by the GCC, that Dubai can still provide a tax-free haven to qualifying individuals and companies. This bodes well for the ongoing appeal of the emirate as a centre for international trade, business and investment.
If you’re an expat and you’re looking at your offshore investment options, ask your financial adviser to discuss with you the benefits of the different offshore havens available.