Have you ever wondered why the UAE remains a millionaire’s favorite country? As global wealth is shifting, an incredible 6,700 millionaires are expected to call the UAE their new home by the end of this year. The UAE as a Premier Destination for UHNWIs stands out, driven by a combination of favorable tax regimes, strategic regulatory adaptations, and a thriving business ecosystem. 

A blend of stability, opportunity, and luxury: the UAE as a premier destination for UHNWIs 

The UAE’s appeal to UHNWIs can be largely attributed to its unique advantages. 

While the broader geopolitical landscape is hard to overlook, discussions about UHNW migration to the UAE often sidestep political commentary. Yet, the UAE’s political stability—especially in contrast to global uncertainties significantly boosts its appeal. Its strategic location, linking Europe, Asia, and Africa, makes it an attractive base for UHNW families seeking to diversify investments and find security in a region increasingly shielded from volatility. 

Furthermore, the UAE boasts a business-friendly ecosystem. Streamlined processes for setting up businesses, numerous free trade zones, and a commitment to innovation create fertile ground for both entrepreneurs and established businesses. This environment allows UHNWIs to expand their ventures, explore new markets, and attract global investment, firmly establishing the UAE as a premier destination for UHNWIs. 

In addition to financial and business incentives, the UAE rises as a hotspot for business, offering a luxurious lifestyle that appeals to the tastes of the ultra-rich. From world-class shopping and Michelin-starred restaurants to extravagant real estate options, the UAE caters to those who enjoy a lavish lifestyle. Importantly, the region is known for its exceptional safety and security, providing a stable environment for families to raise their children. 

How India’s wealth migration elevates the UAE as a premier destination for UHNWIs 

A significant portion of the UHNWIs flocking to the UAE comes from India. The country is witnessing a notable trend of its richest citizens relocating to Dubai and other emirates. According to recent reports, approximately 4,300 millionaires are expected to leave India in 2024, with many opting for the UAE due to its favorable conditions. 

The reasons behind this migration are multi-faceted. The UAE’s lucrative tax benefits stand out as a primary draw. Compared to India, where high income and capital gains taxes can significantly reduce wealth, the UAE provides a compelling alternative for asset protection and growth. 

Moreover, India’s affluent community is increasingly establishing family offices abroad, driven by younger generations—especially those educated overseas—who seek to diversify their investments and access global markets. By setting up a family office in the UAE, they can manage their wealth efficiently while exploring business opportunities in a supportive environment that fosters growth and innovation. 

India’s Gujarat International Finance Tec-City (GIFT City) was envisioned as an ambitious financial hub to attract both international and Indian investors, particularly wealthy individuals seeking a streamlined investment environment.  However, recent regulatory changes have raised concerns about the stability of India’s financial landscape and its impact on capital movement and investment strategies.  

Given this situation, along with a growing number of Indian expatriates viewing Dubai as their second home, the Dubai International Financial Centre (DIFC) is well-positioned to capture increased interest from India’s affluent elite. With its strong reputation for stability and global connectivity, DIFC offers a compelling alternative for investors eager to navigate the shifting financial landscape and capitalize on new opportunities, reinforcing the UAE as a Premier Destination for UHNWIs.  

The UAE as a premier destination for UHNWIs: the DIFC’s strategic impact on global finance 

The UAE’s efforts to attract ultra-high-net-worth individuals (UHNWIs) have really gained momentum, especially with developments in the Dubai International Financial Centre (DIFC). As a leading financial hub, the DIFC now hosts over 400 wealth and asset management firms, from hedge funds to boutique agencies, creating a vibrant financial ecosystem. 

The UAE’s assets under management (AUM) surged by 9% in 2023, outpacing many other financial centers. This impressive growth is primarily fueled by the influx of high-net-worth individuals and family offices attracted to the region’s exciting investment opportunities. 

But the DIFC isn’t just about wealth management; it also provides access to substantial private capital pools and regional sovereign wealth funds. This further establishes the UAE as a premier destination for UHNWIs. 

Wealth management: the key to positioning the UAE as a premier destination for UHNWIs—a vision for the future of global investment 

As the population of UHNWIs continues to grow, the UAE’s wealth management sector is set to evolve. The region is witnessing increased demand for diverse investment options, including commercial real estate, private equity, venture capital, and hedge funds. This demand is paving the way for further innovations in services and technology adoption within the financial sector. 

While there are challenges to consider, such as navigating geopolitical influences and potential market fluctuations like changes in oil prices, the positive trend in the UAE’s economy is noteworthy.  

The country has been steadily shifting away from its oil dependency to diversify its economic base. A key driver of this transformation is the UAE’s powerful and ambitious leadership, which prioritizes swift and effective results. With a clear agenda aimed at achieving excellence, they strive to be global leaders in areas such as artificial intelligence, global investment, quality of life and much more. This forward-thinking approach fosters an environment that not only promotes growth but also positions the UAE at the forefront of innovation and development. Together with regulatory stability, a tax-friendly environment, and ongoing investments in infrastructure, these factors establish the UAE as a premier destination for UHNWIs. 

In 1971, the formation of the United Arab Emirates marked the beginning of an ambitious journey toward transformation and progress. What was once a collection of small trading ports has evolved into a global beacon of innovation and technology, with the UAE at its helm. Today, the country is standing shoulder to shoulder with the world’s renowned hubs like the US and UK, establishing the UAE as a global tech hub for emerging talent.

UAE as a global tech hub: a competitive choice for tech professionals

The findings from the Capital.com survey states that nearly half (45%) of Asian tech professionals expressed willingness to relocate to the UAE, placing it ahead of traditional tech strongholds like Germany and Hong Kong. This shift is crucial as the UAE now competes with established markets from around the world including the US, UK and Singapore.

The UAE’s increasing appeal is gaining traction among tech professionals who previously targeted the global tech hubs. The driving force behind this includes the UAE’s favourable business environment as well as the various government initiatives that ultimately boosts the status of UAE as a global tech hub.

The UAE’s strategic initiatives, such as the #NextGenFDI initiative, illustrate its commitment to attracting tech talent from around the globe. These efforts have not gone unnoticed, with professionals eager to relocate to a nation that meets their personal and career aspirations.

The Government’s Impact: Shaping the UAE as a Global Tech Hub

One of the most significant factors contributing to the UAE’s rise as a tech hub is its government’s unwavering support for the tech industry. From easing business regulations to investing in infrastructure, the UAE has created an ecosystem that nurtures innovation and entrepreneurship.

The UAE’s tech ecosystem is thriving and welcomes projects of all shapes and sizes. With a well-established network of free zones, starting and running a business here is not only straightforward but also tax efficient.

As a pioneer in AI, the UAE took a bold step by appointing the world’s first Minister of State for Artificial Intelligence. Now, Dubai is home to over 130 active AI initiatives, with companies applying AI in diverse fields like healthcare and media. This proactive government support is a key factor in positioning the UAE as a global tech hub.

The Emirates’ Strategic Role in Establishing the UAE as a Global Tech Hub

With the huge progress made in the tech sector, the UAE is expected to become on of the leading tech giants in the world by 2025.

Dubai

The Dubai is one of the leading cities in the world for its digital talent. The Dubai Intrenational Financial Centre (DIFC) had been attracting top talents from around the world and has been providing a favourable ecosystem for Tech businesses especially tech startups.

The incubators and accelerators like FinTech Hive and the Dubai Technology Entrepreneur campus offers facilities to startups, SME and entrepreneurs to easily start and scale their business ventures.

Dubai AI & Web3 Festival

The recently held Dubai AI & Web3 festival, underscored the UAE’s ambition to be at the forefront of technological advancements. The event attracted over 6,800 delegates from more than 100 countries, providing a platform for discussions on the commercial potential of AI and Web3 technologies. The UAE aims to bring in more than 500 companies and create over 3,000 jobs by 2028, reflecting the robust growth trajectory of its tech ecosystem.

“The UAE is a powerhouse for tech startups, offering unparalleled opportunities at every stage of growth. With robust support from the IFC and their dynamic incubators and accelerators, innovation thrives here. Events like AI & Web3 serve as vital platforms for networking and collaboration, igniting new ideas and partnerships.” Said Abdul Mirshan, Lead, Kitaab.ai (UAE-based virtual bookkeeping and accounting firm)

During the festival, the launch of the Dubai AI Licence and the ‘AI as a Service’ initiative highlighted the region’s commitment to attracting businesses and boosting their operations. These initiatives facilitate market entry for companies and cultivate a culture of innovation and collaboration among tech professionals, further solidifying the status of the UAE as a global tech hub.

Abu Dhabi

Abu Dhabi, the UAE’s second most populous city after Dubai, is setting its sights on becoming a tech leader in the region. the Abu Dhabi Global Market (ADGM) a leading IFC in the region, offers the ADGM tech startup license that enables tech companies to establish operations in the UAE quickly and easily.

Hub71, located within the Abu Dhabi Global Market, is celebrated as Abu Dhabi’s premier global technology ecosystem. Supported by the Abu Dhabi government and Mubadala Investment Company, Hub71 provides founders with a dynamic community to scale tech startups across various stages of development. The ecosystem encompasses over 20 business sectors, including fintech, health tech, ed-tech, climate tech, and AI, making it an ideal environment for innovation and growth.

The future of the UAE as a global tech hub: opportunities and innovations ahead

The UAE as a global tech hub is gradually shifting focus away from its non-oil activities, aiming to innovate and diversify its economy. It will undoubtedly attract more talent and drive technological advancements. The future looks promising, not only for the UAE but also for the global tech community that stands to benefit from this dynamic and rapidly evolving ecosystem. For tech professionals seeking new opportunities and challenges, the UAE is no longer just an option; it is a compelling choice that promises growth, innovation, and a bright future.

Whether you’re starting a new venture or reviewing your company’s regulatory adherence, maintaining compliance is essential. In the UAE, company secretarial services are indispensable for managing administrative tasks, regardless of your company’s size. These services help businesses effectively adhere to regulatory requirements, ensuring smooth and successful operations.

Why Are Company Secretarial Services Crucial for Compliance and Smooth Operations?

Company secretarial services are essential in ensuring that your business meets all legal obligations and operates smoothly. These services cover everything from renewing trade licenses and filing annual shareholder meetings to managing audited accounts and coordinating insurance coverage. Regulatory filings for the entities vary according to their jurisdictions but are typically required annually for documents such as annual returns. However, other filings may be required throughout the year depending on changes in company structure, share capital, or director information. Failure to comply can pose significant risks to the company, its shareholders, and its directors, making it crucial to have these services in place for consistent and reliable business management.

Key Company Secretarial Services for Business Efficiency

1. Renew Trade License

Ensuring that your trade license is current is crucial for legal operations. Company secretarial services manage the timely renewal of your trade license, avoiding any potential disruptions to your business activities and ensuring you remain compliant with local regulations.

2. File Annual Shareholder Meetings

Annual shareholder meetings are a legal requirement for many businesses. These meetings provide a platform for shareholders to review company performance, approve financial statements, and make key decisions. Company secretarial services handle the preparation and filing of meeting minutes and ensure that all statutory requirements are met.

3. Arrange Director and Shareholder Signatures

Efficient management of corporate documents often requires the signatures of directors and shareholders. Company secretarial services coordinate these signatures to ensure that necessary documents are executed properly and in a timely manner, minimizing delays in business processes.

4. Manage Audited Accounts

Compliance with financial reporting standards is essential for maintaining investor confidence and meeting regulatory requirements. Company secretarial services oversee the preparation and submission of audited accounts, ensuring that they are accurate, complete, and submitted within the required deadlines.

5. Appoint Directors and Officers

The appointment of directors and officers is a critical aspect of corporate governance. Company secretarial services assist in the nomination, appointment, and registration of directors and officers, ensuring that all roles are filled in accordance with the company’s constitution and regulatory requirements.

6. Produce Audited Financial Statements

Accurate and reliable financial statements are vital for informed decision-making and stakeholder trust. Company secretarial services manage the preparation of audited financial statements, ensuring they reflect the true financial position of the company and comply with applicable accounting standards.

7. Draft Shareholder and Board Resolutions

Shareholder and board resolutions are fundamental for recording important decisions and actions taken by the company. Company secretarial services draft and maintain these resolutions, providing a clear and official record of the company’s governance and strategic decisions.

8. Coordinate Insurance Coverage

Effective insurance coverage is essential for managing business risks. Company secretarial services coordinate with insurance providers to ensure that your company’s insurance policies are up-to-date and adequately cover potential liabilities.

9. Communicate with Authorities

Maintaining clear and open lines of communication with regulatory authorities is crucial for compliance and operational efficiency. Company secretarial services manage these communications, ensuring that all regulatory requirements are met, and any issues are addressed promptly.

MS for Efficient Company Secretarial Services in the UAE

At MS, we streamline your company secretarial needs to boost efficiency and ensure compliance in the DIFC. Our services include renewing trade licenses, filing annual shareholder meetings, managing audited accounts, and coordinating director and shareholder signatures. By handling these essential tasks, we help you maintain regulatory compliance, minimize delays, and focus on growing your business. Trust us to keep your operations smooth and your company in good standing.

The United Arab Emirates is redefining its identity, moving beyond its oil-rich past to become a hotspot for business and innovation. With more and more ambitious entrepreneurs and industry leaders from around the world setting up in the region, the UAE has been acting as a magnet for startups and UHNWI’s.

The UAE rises as a hotspot for business and wondering why?

How do growth factors fuel the fact that the UAE rises as a hotspot for business?

It’s no surprise because the UAE has been a driving force for business setup. From its prime location to world-class infrastructure, it’s a dream come true for global ventures. Let’s explore the factors driving the UAE’s rise as a hotspot for business.

Strategic Geographic Location: The UAE is the second bilateral investor in the continent. Being one of the valuable economic connectors, positioned at the crossroads of Europe, Asia, and Africa, the UAE offers easy access to global markets and efficient logistics. Being a BRICS member, and have signed the CEPA trade deal, various emirates have been showing supercharged growth in recent times.

Economic stability: In the first quarter of 2024, the UAE’s GDP surged to Dh430 billion, showcasing its strong focus on economic diversification and knowledge-based sectors. Adding to this impressive performance, the country achieved record-breaking non-oil trade figures, reaching AED 1.4 trillion ($381 billion). These milestones clearly demonstrate that the UAE is not just resting on its oil-rich past but is actively shaping a dynamic and diverse future in global trade.

Freezone regulatory advantages: Free zones in the UAE offer key advantages over the mainland. You get full foreign ownership without needing a local partner, simplifying setup and giving you complete control. The process is quick and efficient, avoiding unnecessary bureaucracy. Free zones also feature top-notch infrastructure and a range of flexible legal and commercial options, making it easier to tailor your business to your needs.

Safest City index: The UAE is setting new standards in safety and liveability, with Abu Dhabi recently crowned the world’s safest city. Emirates like Ajman, Dubai, and Ras al-Khaimah also excel in global safety rankings, highlighting the country’s commitment to providing a secure and high-quality environment. This focus on safety and exceptional living conditions isn’t just attracting residents—it’s also drawing in businesses and investors from around the globe, eager to benefit from the UAE’s unparalleled standards.

State-of-the-art infrastructure: The United Arab Emirates (UAE) has firmly established itself as a global leader in infrastructure, demonstrating both impressive progress and a strong commitment to continuous growth. With world-class international airports in Dubai and Abu Dhabi, and other infrastructure investments, the UAE ranks fourth globally for infrastructure quality.

Innovation and technology: The UAE has taken the lead in innovation and technology, emerging as a key player in shaping the future of digital economies. The country is at the forefront of the evolving digital landscape, with a strong emphasis on cryptocurrency, Web3, and blockchain technologies. These advancements promise significant benefits, including increased efficiency, transparency, and security for businesses. As a result, the UAE is not only driving growth and innovation in finance but also attracting top-tier talent and businesses from around the world.

UAE rises as a hotspot for business: The strategic role of financial Freezones

Dubai International Financial Centre (DIFC)

For two decades, the Dubai International Financial Centre (DIFC) has been a major player in shaping the financial landscape of the Middle East, Africa, and South Asia (MEASA). Positioned as the leading financial hub in the region, DIFC has earned its reputation as the number one global free zone for greenfield Foreign Direct Investment (FDI) projects.

Here’s why DIFC is a game-changer for the UAE’s business scene:

• Massive Growth: Assets Under Management have surged by 58%, reaching an impressive USD 700 billion.
• Fintech Boom: The fintech and innovation sectors are thriving, with a 33% increase in new firms.
• Business Expansion: Active registered companies have jumped by 24% year-on-year, surpassing 6,000 for the first time in the first half of the year.
• Job Creation: The addition of 820 new businesses has boosted the workforce, creating a wealth of new job opportunities.

DIFC is opening exciting new growth avenues and attracting High Net-Worth Individuals (HNWIs), solidifying Dubai’s role as a central hub for international finance and commerce. As the UAE rises as a hotspot for business the vibrant ecosystem is not only enhancing the country’s global business appeal.

Abu Dhabi Global Market (ADGM)

After H1 2024, the Abu Dhabi Global Market (ADGM) is truly standing out, reinforcing its role as a premier global financial hub and a key factor in making the UAE a top destination for business.

• Huge Growth in Assets: ADGM saw a remarkable 226% increase in Assets Under Management (AUM) compared to last year, reaching new heights and drawing significant attention from global asset managers.
• Booming Business: The number of asset and fund managers at ADGM has risen to 112, with a 20.5% jump in new licenses issued. This surge highlights ADGM’s growing appeal to new businesses and investors.
• Job Creation Surge: The centre’s expansion has led to over 2,500 new jobs, boosting employment and contributing to Abu Dhabi’s economic vitality.

ADGM’s impressive growth and strategic initiatives are making Abu Dhabi an even more attractive place for business setups and investments. Its success is helping the UAE solidify its position as a top destination for global finance and commerce.

The UAE rises as a business hotspot: what’s next in H2 and beyond

Entering the second half of 2024, it’s clear that the UAE is moving through a golden era. It’s not just the tax benefits and exemptions that sparkle the most, but the incredible quality of life and a business environment that are second to none.

The UAE isn’t hitting the brakes anytime soon. From launching new businesses to managing the entire lifecycle of enterprises, the country’s growth is showing no signs of slowing. As the year rolls on, the momentum will only continue to build, further solidifying the UAE’s rise as a hotspot for business and investment.

Amidst global unrest and conflicts, including the ongoing Israel-Palestine crisis, the UAE stands out as a pillar of economic strength and stability.  The country is well-positioned to maintain its momentum in global trade, serving as a crucial link between East and West, as well as North and South. Its remarkable non-oil trade figures further highlight its growing influence and resilience in a time of significant change.

The UAE’s Exceptional Growth in Non-Oil Trade Figures

In the first half of 2024, the UAE achieved record-breaking non-oil trade figures, reaching AED 1.4 trillion ($381 billion). This remarkable performance not only surpasses the annual export figures from before the COVID-19 pandemic but also puts the country on track to achieve AED 3 trillion ($817 billion) in non-oil trade by the end of the year.

• Non-Oil Exports: AED 345.1 billion ($94 billion), reflecting a significant 25% growth.
• Non-Oil Imports: AED 800 billion ($218 billion), showcasing an 11.3% increase.
• Re-Exports: AED 345.1 billion ($94 billion), with a 2.7% increase from the previous year.

The UAE Strengthening Global Trade Relations

As the global trade landscape evolves, it is increasingly shaped by structural changes in the world economy and society. Advances in technology, shifts in manufacturing centers, changing consumer preferences, demographic trends, and geopolitical developments are all driving significant transformations in how and where trade occurs.

The UAE has taken centre stage when it comes to the bilateral trade. One clear example of this is the UAE’s relationship with India. The UAE isn’t just a major trading partner for India; it’s also a vital gateway for Indian exports. This is reflected in the 10% increase in trade between the two countries.

But it doesn’t stop there. The UAE is also strengthening its trade ties with other important partners. Trade with Türkiye has grown by 15%, highlighting a solid economic partnership. Even more impressive is the 41% jump in trade with Iraq, which has now become the UAE’s top destination for exports. This showcases the transformative impact of the Comprehensive Economic Partnership Agreements (CEPA).

UAE’s non-oil trade and diversification

The UAE has long been a leading force in global trade largely due to its abundant natural oil reserves. With the sixth-largest oil reserves in the world, this strength has consistently positioned the UAE as one of the key players in international trade.

However, the UAE is now shifting gears and focusing more on non-oil trade. With the current H1 trade results, the country has set impressive new records and shown significant growth in this area. While it continues to benefit from its oil resources, the UAE is making a full-throttle push into non-oil sectors, demonstrating its ability to diversify and excel across a broader range of industries. It’s a clear sign that the UAE is not just resting on its oil-rich past but is actively shaping a broader, more dynamic future in global trade.

The emirates’ contributions to making the UAE a leading force in global trade are substantial. Abu Dhabi has broken a 10-year record for non-oil GDP in Q1 2024, driven by growth in sectors such as construction, finance, transport, manufacturing, and telecommunications with key contributions from Abu Dhabi Global Market (ADGM).

Meanwhile, Dubai continued its steady economic growth in Q1 2024, with positive performance across sectors including transportation, finance, real estate, and information and communication. The Dubai International Financial Centre (DIFC) delivered exceptional results in H1 2024, reinforcing Dubai’s role as a hub for innovation and business growth.

UAE’s trade vision: how the emirate’s aims for AED 4 trillion by 2031

As we look to the future, the UAE has set an exciting goal: reaching AED 4 trillion ($1.1 trillion) in annual foreign trade by 2031. Given the impressive progress we’ve already seen in 2024, it’s clear that this target is well within reach. The UAE is committed to expanding its trade network and building even stronger international relationships, which is driving its continued economic success. With these strategies in place, the UAE is well-positioned to achieve its ambitious goals and thrive in the years ahead.

In 2016, Apple Inc. found itself at the center of a high-stakes tax controversy that captured global attention. The tech giant faced scrutiny from the European Commission over its Transfer Pricing practices and tax arrangements with Ireland. The investigation revealed that Apple had been allocating a substantial portion of its profits to Irish subsidiaries, benefiting from a favorable tax rate that was considerably lower than those in other jurisdictions. This strategy, while legal at the time, raised questions about profit shifting and tax base erosion.

The case was a landmark moment, underscoring the relation between Multinational Enterprises (MNEs) and international tax regulations. It led Apple to overhaul its Transfer Pricing policies to align with the OECD’s BEPS guidelines, ensuring greater transparency and compliance with global standards.

Fast forward to today, and the global tax landscape is evolving once again with the OECD’s Pillar Two GloBE rules introducing a global minimum tax rate of 15%. For MNEs operating in the UAE, understanding how these new rules intersect with UAE Federal Corporate Tax is not just important—it’s essential.

As MNEs operating in the UAE confront the evolving global tax landscape, understanding the intersection of OECD Pillar Two GloBE (Global Anti-Base Erosion) rules and UAE Federal Corporate Tax is crucial. These rules, part of the Base Erosion and Profit Shifting (BEPS) project, set a global minimum tax rate of 15% to combat profit shifting and tax base erosion. For MNEs in the UAE, the close association between Transfer Pricing rules and UAE Federal Corporate Tax brings both opportunities and challenges.

The Interplay Between Transfer Pricing Adjustments and UAE Federal Corporate Tax

In the UAE, Transfer Pricing adjustments are vital for ensuring that transactions between related parties reflect arm’s length pricing, in line with both UAE Federal Corporate Tax and international standards. The introduction of Pillar Two further adds a layer to this landscape:

Timing of Transfer Pricing Adjustments

• Post-Year-End Adjustments: MNEs in the UAE often make adjustments after the financial year-end to align their results with Transfer Pricing policies. Under Pillar Two, these adjustments must be booked in the fiscal year to which they pertain or the year in which they were made. This requirement aligns with the UAE’s Federal Corporate Tax regulations, which also demand accurate reflection of financial results in tax returns.
• Low-Tax Jurisdictions: Historically, the UAE’s favorable tax environment has been seen as a low-tax jurisdiction. Under Pillar Two, there is increased scrutiny on Transfer Pricing adjustments in such jurisdictions. The UAE’s Federal Corporate Tax framework, which adheres to the arm’s length principle, must be carefully integrated with the GloBE rules to avoid potential disallowance of adjustments and double taxation risks.
• Double Taxation Risks: Adjustments made after filing the GloBE Information Return (“GIR”) can complicate dispute resolution. For UAE-based MNEs, this means navigating potential double taxation if income is reallocated from the UAE to higher-tax jurisdictions. The UAE’s corporate tax regime and its alignment with global standards play a critical role in managing these risks.

Strategies for Managing Transfer Pricing Adjustments in the UAE

To address the challenges posed by Pillar Two and ensure compliance with UAE Federal Corporate Tax regulations, MNEs should adopt the following strategies:

1. Creating a Robust Transfer Pricing Policy

• Alignment with UAE Federal Corporate Tax: Ensure Transfer Pricing policies are consistent with UAE regulations and international standards. The UAE Federal Corporate Tax rules emphasize the arm’s length principle, which should be reflected in the global Transfer Pricing policy to avoid discrepancies with tax authorities.
• Regular Monitoring: Regularly update Transfer Pricing policies and documentation to align with both UAE Federal Corporate Tax requirements and Pillar Two rules. This practice supports compliance and mitigates risks associated with post-year-end adjustments.

2. Timing of Adjustments

• Proactive Adjustments: Make Transfer Pricing adjustments contemporaneously with transactions to reduce discrepancies between financial accounts and tax returns. For UAE-based MNEs, timely adjustments are crucial for aligning with both local tax regulations and Pillar Two requirements.

3. Alignment with Financial Reporting

• Collaboration with Financial Reporting Teams: Ensure that Transfer Pricing adjustments are accurately reflected in consolidated financial statements. Accurate reporting in line with UAE Federal Corporate Tax and GloBE rules is essential for determining the correct GloBE ETR.

4. Seeking Advance Certainty

• Advance Pricing Agreements (APAs): Utilize APAs to gain certainty on the arm’s length nature of transactions. In the UAE, bilateral or multilateral APAs can help mitigate disputes and ensure that Transfer Pricing adjustments are recognized by UAE tax authorities and other jurisdictions.

The close association between Transfer Pricing rules and UAE Federal Corporate Tax underscores the importance of a well-coordinated approach for MNEs. By aligning Transfer Pricing policies with UAE regulations, managing the timing of adjustments, ensuring accurate financial reporting, and seeking advance certainty through APAs, MNEs can navigate the complexities introduced by OECD Pillar Two effectively. Embracing these strategies will help MNEs comply with both local and global tax requirements, ensuring a smooth alignment with the new international tax standards and minimizing potential risks.

The UAE has frequently been in the spotlight, but its latest headlines are dominated by the recently updated Anti-Money Laundering (AML) framework.

In the UAE, dirty money has been flowing under the radar for years. As we know that modern financial crimes require updated solutions, the country has been holding its anti-money laws in a tight grip. But have you wondered why the UAE has updated the Anti-Money Laundering (AML) and counter-terrorism financing (CFT) framework now?

Why the New Changes in UAE AML Laws?

The UAE is stepping up its game in the battle against financial crime, especially money laundering and terrorism financing. The UAE has seen a dramatic increase in AML Violation fines, reaching Dh249.2 million last year alone. These new regulations are part of a broader push to strengthen the country’s financial defences and align with global standards, especially after the UAE was removed from the Financial Action Task Force’s grey list earlier this year. This intensified approach underscores the UAE’s commitment to maintaining a secure and transparent financial system.

What’s new in the revised AML regulations?

1. Strengthening Compliance with International Standards

The UAE’s new legislation comes almost six months after the country was removed from the Financial Action Task Force’s (FATF) grey list—a list of countries with deficient AML and CFT measures. The recent amendments aim to further solidify the UAE’s compliance with global standards and recommendations. By aligning its framework with international treaties and guidelines, the UAE seeks to enhance its reputation as a secure and trustworthy financial centre.

2. Enhancing Coordination and Oversight

One of the key goals of the new law is to improve coordination among various entities involved in the fight against financial crimes. The creation of new committees and a General Secretariat is designed to streamline efforts, ensuring that Financial Institutions (FIs), Designated Non-Financial Businesses and Professions (DNFBPs), and other relevant bodies work together more effectively. This enhanced collaboration is expected to improve information sharing and simplify reporting processes, making it harder for financial crimes to go undetected.

3. Committee under the new framework

The UAE has established two major committees under the new law:

• The National Committee for Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations: This committee will be responsible for developing and implementing comprehensive AML and CFT strategies.
• The Supreme Committee for the Oversight of the National Strategy for AML and CFT: This committee will oversee the National Committee’s activities, issue guidelines, and ensure that strategies are effective and aligned with international standards.

4. Creating a General Secretariat

A new General Secretariat has been set up to support the committees. Led by a Secretary-General who will also be Vice-Chairperson of the National Committee and a member of the Supreme Committee, the Secretariat will implement decisions and ensure smooth communication between the committees.

5. Improving Reporting and Evaluation

The new law introduces measures to enhance the reporting and evaluation processes. It mandates the oversight of the Mutual Evaluation Report, which assesses the UAE’s compliance with international AML and CFT standards. This focus on rigorous evaluation reflects the UAE’s commitment to not only adhering to global practices but also to continually improving its financial crime prevention measures.

Impact of new AML standards on Financial Institutions and Other Entities

1. Increased Compliance Demands

Financial institutions and DNFBPs will face stricter oversight and heightened reporting requirements. They must update their compliance programs to meet the new standards, including enhanced coordination and prompt reporting of suspicious activities.

2. Strengthened Financial Security

The updated framework aims to strengthens the defenses against financial crimes, contributing to a more secure and stable financial environment. This enhancement is likely to attract international businesses and investors seeking a reliable and protected financial system.

3. Continuous Monitoring and Adjustment

Entities must remain vigilant and adapt their practices in response to the new regulations. Regular updates to compliance strategies and internal controls will be crucial to keeping up with the evolving regulatory landscape.

How are IFC’s setting the benchmark in combating against Money laundering

The UAE’s updated anti-money laundering (AML) regulations now set a strong framework across the entire country, including the leading financial centres like Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC). While both free zones follow the federal AML rules, they also have their own unique requirements. For instance, DIFC, under the Dubai Financial Services Authority (DFSA), has extra rules for real estate developers and requires UAE-resident AML officers. On the other hand, ADGM, regulated by the Financial Services Regulatory Authority (FSRA), focuses on stricter Know Your Customer (KYC) practices and specific sector guidelines.

The UAE Reinforcing the Future of Financial Security with New AML Standards

The UAE’s new anti-money laundering laws represent a significant advancement in the country’s efforts to combat financial crimes. By strengthening its legal framework, improving coordination among key players, and aligning with international standards, the UAE is reinforcing its position as a leading global financial hub. These changes underscore the country’s commitment to maintaining a secure and transparent financial system and enhancing its role in the global fight against financial crime.