The United Arab Emirates (UAE) is emerging as a leading global hub for fund managers, providing unparalleled access to the wealth of the Middle East, Africa, and South Asia (MEASA) region. With its sophisticated financial infrastructure and business-friendly policies, the UAE offers immense opportunities for investment management and capital raising.
Why the UAE?
Strategically positioned as a bridge between the East and West, the UAE serves as a gateway to high-growth emerging markets. Its commitment to fostering a knowledge-based economy, coupled with a stable political environment, no foreign exchange controls, and no personal income tax, enhances its attractiveness for global businesses and investors.
Key Financial Hubs
Dubai International Financial Centre (DIFC)
As a premier financial free zone, the DIFC operates under English common law, providing an internationally recognized legal framework. It hosts a dynamic ecosystem of financial institutions, fintech companies, and innovation-driven firms, making it a preferred destination for fund managers.
Abu Dhabi Global Market (ADGM)
ADGM offers a comprehensive regulatory, legal, and tax environment designed for fund managers. With minimal capital requirements, cost-effective structures, and a streamlined market entry process, ADGM supports various fund types, including investment companies, partnerships, and trusts.
Regulatory Environment
The UAE’s regulatory landscape is designed to balance investor protection with business growth. Key regulatory bodies include:
- Emirates Securities and Commodities Authority (SCA)
- Dubai Financial Services Authority (DFSA) (for DIFC)
- Financial Services Regulatory Authority (FSRA) (for ADGM) These regulators ensure a transparent and efficient framework for fund operations, promoting confidence among investors.
Investment Trends and Opportunities
The UAE’s asset management sector is experiencing rapid growth, with increasing demand for customized fund management services. Key investment areas include:
- Real estate – A thriving sector attracting domestic and foreign investors.
- Private equity – Expanding opportunities in various industries.
- Venture capital – A growing startup ecosystem fuelled by government initiatives.
Fund Passporting and GCC Initiatives
The UAE is actively working towards a Gulf Cooperation Council (GCC)-wide fund passporting regime to facilitate cross-border fund distribution. Recent regulatory updates are aligning the UAE’s investment management rules with those of other GCC countries, further enhancing regional integration.
Taxation and Incentives
The UAE offers a highly favourable tax environment for fund managers:
- 0% corporate tax for qualifying free zone entities.
- No VAT on designated zone transactions.
- 9% corporate tax on taxable income above the specified threshold.
- 0% withholding tax (WHT) and capital gains tax (CGT). Additionally, an extensive network of double tax treaties strengthens its appeal for international investors.
Setting Up a Fund in the UAE
In DIFC
Fund managers can establish operations through a DFSA-licensed entity or as an external fund manager from an approved jurisdiction. DIFC supports various fund structures, including public funds, exempt funds, and Qualified Investor Funds (QIFs).
In ADGM
ADGM provides a flexible framework for both domestic and foreign fund managers, offering multiple fund types such as public funds, exempt funds, and QIFs. The authorization process involves regulatory meetings, submission of a Regulatory Business Plan (RBP), compliance approvals, and final licensing.
Virtual Asset Activities
To support its growing virtual assets sector, Dubai mandates firms (excluding DIFC-based entities) to secure a Virtual Asset Service Provider (VASP) license from the Virtual Asset Regulatory Authority (VARA). This reinforces the UAE’s commitment to being a leader in digital finance and blockchain innovation.
Conclusion
With its strategic location, progressive regulatory environment, and investor-friendly policies, the UAE is an attractive destination for fund managers looking to capitalize on the wealth and opportunities in the MEASA region. Its financial hubs, tax incentives, and growing investment landscape position the country as a key player in global fund management.