The Foundations in UAE
In the UAE, a greater inflow of individuals can be seen who possess high net worth, as well as an overall increase in investment from investors from all over the world. The interest of individuals and foreign investors has experienced an exponential growth rate due to a high variety of business opportunities and economic growth resulting from wealth management and succession plans in the UAE. The high standard of the legislative framework and the attractiveness of policies for foreigners and immigrants have triggered a positive response from sophisticated international investors.
The local affluent families are supported by UAE Foundations in several ways, such as asset protection, wealth management with succession planning. These numerous benefits of the foundations offered in Dubai to regional families and newcomers to the country help build trust compared to conventional structuring tools. Notably, the foundation culture is supported by ADGM (Abu Dhabi Global Market), which was introduced in 2017 as a free zone foundation. Subsequently, DIFC (Dubai International Financial Center) and the Ras Al Khaimah International Corporate Center (RAKICC) were introduced in Dubai in 2018 and 2019 respectively, as per common law.
In terms of the 5th consecutive record year for registered foundations, the UAE still holds a significant value in foundation registration every working day in 2023.
Compared to the registrations done in 2022, the UAE is now experiencing a significant increase in the number of foundations and is on track to break its own record in just 5 months of 2023. The number of foundations registered in Dubai is approaching 800, and the country expects a growth of 1000 foundations by the end of this year.
As a prominent leader in the Foundations market, Dubai provides safe and sound financial services with flexible legacy and planning mechanisms. A wide range of families with different cultural backgrounds can avail themselves of asset protection plans and robust holdings in Dubai.
Opportunities
In the UAE, foundations allow better wealth management and succession plans with complete asset protection. The real estate market in Dubai, handling bank accounts, investment portfolios, and UAE Foundations are permitted to own land in Dubai under the Memoranda between Registries and Land Departments.
If done in accordance with the law in Dubai, the gifting transfer fee is only 0.125% for DIFC Foundations, payable only once to the Dubai Land Department. On the other hand, the standard transfer fee for conveying property in Dubai is 4%, which is greater than the transfer fee for foundations.
Most of the families living in the UAE are adopting optimal tax policies for the release of assets under the rules applicable to foundations. The UAE Corporate Taxation Law allows families and foundations to adopt a cost-effective way of raising funds and money.
Additionally, from a banking perspective, the wide range of options available for foundations makes it ideal for bank operations and opening new bank accounts for more benefits, as allowed by the UAE Law Department.