Traditionally, the United Arab Emirates (UAE) has been a very attractive living and working destination for professionals. For high-earning expats, the local tax laws can be especially attractive. There is no income, capital gains, gifts or inheritance tax to worry about locally. The burgeoning economy of the last decades attracted a mix of white-collar and blue-collar workers from around the world. In fact, over 200 nationalities now live in the UAE, and in Dubai alone 80% of the population is foreign born. With 240,000 British expats on-site, the United Kingdom boasts the highest contingent of foreigners in the UAE. Most of these expats are working in high-paying white-collar jobs.
In addition to the expats, the very wealthy have taken notice of the many advantages the UAE offers. Thanks to its high quality of life, first-class tourism attractions, international connectivity, world-class health care system and reforms to its financial and business legislation, the UAE, and Dubai in particular, have become magnets for ultra-high-net-worth individuals.
The Deloitte report, “Introducing Dubai: A destination for private and corporate wealth,” describes Dubai as a safe haven in a region that is mired in instability and conflict, which is especially attractive to citizens of member states of the Cooperation Council for the Arab States of the Gulf, also colloquially known as the Gulf Cooperation Council (GCC). Interestingly, the same report points out that Dubai has fast become “an alternative jurisdiction for wealthy high-net-worth families and their investments from around the world.” Knight Frank, one of the world’s largest global property consultancies, ranks Dubai among the top twenty cities, which matter to ultra-high-net-worth individuals (HNWI).
Legal Frame Works Geared Towards Growth
According to the Golf News’ Money section, the UAE’s HNWI population was
55,700 individuals in 2016. Knight Frank’s Global Wealth Report expects a 60% increase in the HNWI population by 2026.
This is all good news and can be attributed to a concerted long-time effort of the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC) to establish the UAE as a financial hub for the Middle Eastern, African and South Asian markets.
According to the aforementioned Deloitte’s report, some of the financial and economic reforms that make the UAE increasingly attractive for international HNWI are:
- A legal frame work within the ADMG and DIFC based on common law as opposed to Sharia law, which normally governs civil and criminal matters in the UAE;
- A legal framework that governs Single Family Offices;
- A wills registry for non-Muslims, which governs inheritance related matters within the DFIC in Dubai; and
- The possibility for foreigners to own 100% of a business entity within certain free zones and special economic zones.
How Can Wealth Managers Benefit?
Wealth Managers can tap into a wide range of business opportunities in the UAE running the gamut from financially affluent white collar communities to HNWI. Advisors with access to a diverse portfolio of investment opportunities ranging from transparent, fully-regulated insurance and saving products to innovative mutual funds, as well as with sophisticated family office solutions will be best poised to capture clients in this dynamic and rewarding marketplace. Organizations like MIGAM global cannot only provide these solutions, but also the service and experience to execute on cross-border transactions and local opportunities.