Dubai International Financial Centre (DIFC) has been created as the UAE’s response to the world’s major financial centres such as London in Europe, Hong Kong in the Far East, and New York in the United States. However, DIFC has grown over the years to become one of the leading financial centres in the Middle East and Africa region. The process of business setup in DIFC offers the foreign investors an opportunity to leverage from the enormous wealth opportunities in the region.
DIFC is a well-regulated hub for financial institutions, investment firms and other Designated Non-Financial Businesses and Professions (DNFBP). DIFC provides the investors with first-rate infrastructure, modern office spaces, unique business licenses and progressive legislation. Entrepreneurs can seek the assistance of business setup consultants in Dubai to start a business in DIFC. Before applying for a license in DIFC, the investors must understand the following aspects of the free zone:
Regulatory Structure of Dubai International Financial Centre
Investors wishing to know about the process of business setup in DIFC must understand the regulatory structure of the financial free zone. DIFC is being regulated by three entities, which are
- The DIFC Authority (DIFCA) for non-regulated entities
- Dubai Financial Services Authority (DFSA) for financial firms
- DIFC Courts for overseeing arbitration
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Reasons to Start a Business in Dubai International Financial Centre
DIFC has been launched by the government as a secure and efficient free zone platform for businesses and financial institutions to enter the emerging markets in the Middle East and Africa region. The onshore financial centre is strategically located between the East and West, which is an added advantage for foreign investors. By setting up a business in DIFC, the investors are entitled to the following benefits:
World Class Regulatory Environment
The presence of DFSA as one of the regulators has had a positive impact on the growth of the financial services sector in Dubai. DFSA is an independent regulator that issues licenses and regulates the activities of all banking and financial institutions in DIFC. The creation of DFSA was modelled on the regulatory framework of financial centres in London and New York. The DFSA has given the financial institutions an efficient and secure platform of business setup in Dubai.
Unique Legal Framework
By setting up a business in DIFC, the foreign investors get access to a unique legislative system based on the English Common Law. DIFC Courts are the entity responsible for enforcing the laws and justice in DIFC. DIFC has its own independent jurisdiction over all civil and commercial disputes happening in DIFC. The DIFC’s autonomous judicial system is a blessing for foreigners as they don’t need to be perplexed by the complexities of Islamic Law.
100% Foreign Ownership
Foreign investors can have complete ownership of the companies incorporated in DIFC. There is no requirement to appoint a local sponsor while setting up a company in DIFC. Furthermore, the investors can have 100% repatriation of profits as well.
Efficient Tax Regime in DIFC
The UAE is generally known as a tax-free country, which is the top reason why investors across the world prefer to set up a business here. DIFC offers a 40-year guarantee of zero taxes on corporate income and profits. Investors can benefit from the UAE’s wide network of double taxation avoidance treaties with more than 100 countries. Consult with business setup consultants in Dubai to understand further the tax requirements.
Top Business Activities Permitted in DIFC
Permitted business activities are key parameters investors should go over before considering the process of business setup in Dubai free zones. DIFC allows a myriad of activities that are profitable. The following are the main activities permitted in DIFC:
- Private banking
- Investment banking
- Insurance & Reinsurance
- Fund Management
- Professional service providers
- Islamic Finance
- Prescribed companies
- Private equity
- Corporate Offices
- Capital Markets
- Asset Management
- Wealth Management
- Private Equity
- Cafes and restaurants
- Art galleries
Opportunities of Business Setup in DIFC for Start-ups
The landscape of business setup in Dubai is highly conducive for startups, given the abundance of funding and mentoring programs available in the region. DIFC is one of the leading providers of support programs for early-stage startups. The following facilities are available to support startups in DIFC:
- DIFC Innovation Hub
- DIFC Fintech Hive
- DIFC Future Campus
- DIFC Fintech Fund
Innovation License in DIFC
The DIFC innovation license enables the innovators to set up, grow and scale up their innovative businesses. By obtaining the DIFC Innovation License, the entrepreneurs can connect with a community of banks, financial institutions and service providers. The cost of the DIFC Innovation License starts from USD 1,500/year with access to the best coworking and flexible desk spaces. The investors can apply for up to four visas for the first desk. The DIFC Innovation License targets companies focusing on cutting-edge technologies.
Facilities for Starting a Business in DIFC
DIFC provides a wide range of sophisticated commercial office spaces, first-rate business centres, retail spaces etc. The following are the major facilities available for setting up a business in DIFC:
- Commercial Office Space
- Retail Space
- Coworking Spaces
- Business Centre (Serviced Offices)
- DIFC Academy Venues
- Event Spaces
- Data Centres
Unique Feature of Company Formation in DIFC
The process of opening a company in DIFC is starkly different from the process of business setup in Dubai. One key difference is that the investors opening a financial services company in DIFC will not be subjected to the regulations of the UAE’s financial services regulators. However, such companies are subject to the UAE Federal Laws on Anti Money Laundering and Combatting Financing of Terrorism (AML-CFT).
Compliance Requirements in DIFC
Companies that operate in DIFC are subject to the UAE Federal law regarding AML-CFT and Economic Substance Regulations (ESR). The Financial Institutions and DNFBPs operating in DIFC must comply with the AML obligations such as the appointment of a compliance officer, providing AML training for staff and registering in the goAML platform. Similarly, DIFC companies that carry out the nine Relevant Activities must meet ESR requirements such as filing ESR notification, submitting ESR reports and meeting the ES test.
The nine Relevant Activities are banking, shipping, insurance, investment fund management, lease-finance, headquarters, holding company, Intellectual Property (IP) and distribution & service centre. Companies licensed by DIFC are exempt from the Cabinet Decision No 58 of 2020 on Ultimate Beneficial Ownership (UBO). However, they have to disclose the details of UBO as per the DIFC laws.
Choose the Best Business Setup Services in Dubai
The environment of business setup in DIFC is highly rewarding for foreign investors aiming to enter the lucrative financial markets of the Middle East. Running the business from the Middle East’s biggest financial centre is highly advantageous for investors. However, extra care needs to be put on the procedure and laws of business setup in Dubai. These rules can be simplified by hiring the best business setup consultants in Dubai, such as Jitendra Business Consultants (JBC).
JBC is a leading provider of reliable business setup services in Dubai with years of experience in helping out entrepreneurs, startups, SMEs and corporate groups. Our business setup services in the UAE include PRO services, drafting of MoA, visa processing, bank count opening, ESR compliance services, AML compliance services, UBO compliance services etc. JBC is the ultimate solution for all the issues associated with the process of company formation in Dubai.