DIFC AUTHORITY’S INCENTIVE STRATEGY
The Dubai International Financial Centre (the “DIFC”) and the Dubai Financial Services Authority (the “DFSA”) have developed a strategy in order to encourage and support the growth of the local DIFC fund management industry. The supportive and secure legislative and regulatory environment is the reason behind why the DIFC has been chosen by approximately two hundred (200) wealth and fund management firms and has seen an increase in interest in funds domiciled in the DIFC from four percent (4%) last year to thirty three (33%).
SUPPORTING FUND MANAGERS
The DIFC’s support for fund managers is through:
- Strong legislative and regulatory framework for investment products;
- Access to the largest concentration of Islamic wealth;
- Engagement with investment opportunities across the region;
- Advanced solutions for institutional investors and sovereign wealth funds;
- Entry to rapidly growing emerging markets;
- Exposure to the regions vast pool of wealth for fund raising and seed capital;
- Unique and established common law jurisdictions; and
- Support from a network of tax and legal advisers.
As of January 2017 and in order to provide incentives to all new fund managers to establish and maintain a business in the DIFC, the DIFC Authority (the “DIFCA”) has made certain changes to the business set up fees (the “Incentive Scheme”).
Under the Incentive Scheme, the applicants in terms of a reduction in the set up costs will benefit from the following:
- Waiver of USD 8,000 for the DIFC Authority application fee; and
- Waiver of USD 12,000 for the annual commercial license for two (2) years (i.e. upon incorporation and upon renewal); and
- Fifty percent (50%) reduction in DIFC leasing costs.
CONJUCTION WITH THE DFSA
The current incentive strategy by the DIFCA is in conjunction and parallel to the decision by the DFSA (as of February 2017) to reduce the regulatory capital from USD 500,000 to USD 70,000 for Qualified Investment Funds and Exempt Funds and USD 140,000 for Public Funds.
There has been no indication as to the specific time-frame for the incentives as it is highly unlikely that the reduction and waiver of fees will be permanent. The DIFCA has provided that clients are well advised to take advantage of the current incentives at their earliest convenience.
lecocqassociate (DIFC) Ltd. specializes in the incorporation and structuring of financial and non-financial institutions with cost efficient solutions. It regularly advises and assists clients in attaining various DFSA licenses.
This newsletter is for information purposes only. It does not constitute professional advice or an opinion. Please contact us for any questions.