Doing business in Dubai International Financial Centre in 2022
Dubai International Financial Centre (DIFC) is an ‘onshore’ UAE financial centre with an independent civil and commercial legal framework. DIFC companies benefit from i) freedom of capital and profit repatriation ii) exemption from corporate taxes for 40 years and iii) 100% foreign ownership.
DIFC Business activities
- Regulated activities in DIFC include i) banking ii) investment iii) asset and wealth management and iv) finance;
- Non-regulated and non-financial businesses, such as i) retail and convenience stores ii) restaurants and iii) art galleries, can also be registered. Refer to the complete list of business activities below:
Areas of business
Banking Brokerage Fund management Private banking Capital Markets Asset management Investment banking Insurance, reinsurance & captives Wealth management Private Equity Islamic finance
Financial activities permitted in DIFC are divided into 5 Categories, each with different Government fees and capital requirements.
Category 1 Category 2 Category 3A Category 3B Accepting Deposits Dealing in Investments as Principal (Not as Matched Principal) Dealing in Investments as Principal (Only as a Matched Principal) Providing Custody (Only if for a fund) Managing a PSIAu Providing Credit Dealing as agent Acting as the Trustee of a Fund
Government fees and capital requirement
Financial Services (in US$) Registration
(Annual Recurring Fee)
Data Protection Fee Category 1 & 5 $8,000 $12,000 $1,000 Category 2 $8,000 $12,000 $1,000 Category 3A&3 C $8,000 $12,000 $1,000 Category 3B $8,000 $12,000 $1,000 Category 4 $8,000 $12,000 $1,000 Category 4 (Crowdfunding platform) $8,000 $12,000 $1,000
Areas of business
Brokers Consultancies Service Providers Product Providers Labor Recruitment Brokerage Office Services Computer Consultancies Advertisement Designing & Producing Antiques & Rare Collections Repaire Leasing Property Brokerage Agents Facilities Management Consultancy Antiques & Rare Collections Repaire Auction Hall Feasibility Studies Consultancies Art Gallery Baby Food Trading Financial Analysis & Consultancy Auctions Organizing Beauty & Personal Care Equipment Trading Human Resources Consultancies Award Rendering Program Beauty & Personal Care Requisites Trading Information Studies & Consultancies Beauty Salon Training Center Body Building Club Internet Consultancy Building Cleaning Services Books Binding Management Consultancies Building Maintenance Books, Newspapers & Publications Trading Marketing Research & Consultancies Businessmen Services Caffeteria Network Consultancies Car Park Rental & Management Calligraphers Project Development Consultant Cards & Envelops Printing Car Rental Quality & Standardization Consultants Carpets & textiles mending Carpets Trading Sourcing & Procurement Consultant Carpets Cleaning Coffee Shop Tourism and Recreation Consultants Cloth Pressing Services Computer & Data Processing Requisites Trading College Computer Electric Accessories Trading Communication Engineering Services Computer Equipment & Requisites Trading Community College Computer Software Trading Compliance & Risk Management Confectionary & Chocolate Trading Computer Graphic Design Services Cutlery & Silverware Trading Computer Software House Dates Trading Conferences & Seminars Organizing Distribution of Advertising Materials & Samples Cost Control & Risk Management Services Dried Vegetables & Fruit Trading Customer Care Centre Educational Aids Trading Data Entry Services Electronic Precision Instruments Trading Design & Artwork Services Flowers & ornamental Plants Trading Dieting & Weight Control Services Food & Beverages Trading Documents Clearing Services Gifts & Jewellery Box Making Documents Copying Services Gifts Trading Documents Transport Grocery Store Dry Cleaning Services Handbags & Leather Products Trading Education & Training Computer Software Health Food Trading Education Institute Ice Cream Shop Educational Facilities Management Services Ice Cream Trading Educational Technologies Research & Development Illustrated Magazines & Catalogues Trading Electrical Fitting Contracting Imitation Jewellery Trading Electronic Chips programming Invitation & Greeting Cards Trading Electronic Management Jewellery Trading Employment Agency Juice & Soft Drinks Shop Event Management Mini Store Fabrics, textiles & readymade garments screen printing Mobile Phones Trading Fashion Designing Novelties Trading Five Stars Hotel Nuts Trading Four Stars Hotel Oriental Carpets Trading Foreign Language Institute Paintings & Frames Trading Full Service Postal Agency Para Pharmaceutical Products Trading Fund Administration Fund Administration General Clinic Pearls & Precious Stones Trading Gents Cosmetic & Personal Care Perfumes & Cosmetics Trading Gents Haircutting & Hairdressing Salon Pharmacy Gents Spa Club Readymade Garments Trading Gents Tailoring Restaurant Gents Wears Tailoring & Embroidery Workshop Restaurant & mini store Gift Wrapping service Roastery Government Liaison Office Sandwich Shop Hotel Apartments Rental Sculpture & Beautification Elements Works For Private Shows Hotel Consultants Selling Commodities By Automatic Vending Machines Hotel Management Shoe Trading Interior Decoration Smoking Requisites Trading Internal Communication Network Installation & Maintenance Snack Food Trading Internet Content Provider Soap & Hair Care Products Trading Internet Services Spectacles & Contact Lenses Trading IT Infrastructure Stationery , Drawing & Writing Instruments Trading Jewellery repairing Suitcases & travel requisites trading Ladies Cosmetic & Personal Care Sunglasses trading Ladies Gown's tailoring Supermarket Ladies Haircutting & Hair Dressing Telephones & Telecommunications Equipment Trading Ladies Physical fitness club Textile Trading Ladies Oriental Bath Tobacco & Cigarettes Trading Ladies Tailoring Tobacco Trading Laundry Services Trees Seedings, ornamental plants & annual flowers trading Legal Translation Used Jewellery trading Letters & Post Items Delivery Vegetables & Fruit Trading Management Services Watches & Clocks & Spare Parts Trading Managing Office Marketing Management Meditation centre Men physical fitness club Nursery Office Of International Organization On Demand Labors Supply Services Operations & Security Control Center Parcels Delivery Plastic Cards Printing Poly Clinic Portal Portal Building Promotional Gifts Preparing Property Guard & Surveillance Services Proprietary Investment Company Proprietary Investments Public Networking Services Public Relations Management Real Estate Management Supervision Services Restaurants Management Self-Owned Property Leasing & Management Services Shoe Making Shoe Polishing Shoe Repairing Social Club Specialized Professional Institute Sports & Recreational Club Sub- Postal agency Testing Center Three Stars Hotel Tour and Travel Agency Tourism Guidance Services Translation Services Travel agent Typing & Photocopying Services University Valet Parking Services Watches & Clocks Repairing Web-Design
Non-financial businesses requiring DFSA registration
- Non-financial firms which fall under the category of Designated Non-Financial Business or Profession (DNFBP) need to register with DFSA. Registration takes two months;
- Business activities that fall under the DNFBP category are: i) Real estate developers and agents ii) dealers in precious metals and/or stones iii) dealers of products with saleable price equal to or greater than US$15,000 iv) law firms, notary firms and other legal businesses v) accounting, audit or insolvency firms vi) company service providers and vii) single-family offices.
Advantages of DIFC company registration
- As part of an economic stimulus plan in light of the COVID-19 pandemic, DIFC is currently waiving annual licence fees for new companies, and offering a 10% discount on renewal fees for existing licences. Furthermore, DIFC offers Clients the option of paying fees by instalments;
- Companies operating in DIFC can also postpone their lease periods and cancel their registration fees for a period of six months;
- DIFC has introduced a new Innovation Licence for all start-ups, entrepreneurs and technology firms. The annual licence fee is US$1,500;
- A DIFC company is the ideal vehicle for financial institutions to access the Middle East’s growing demand for asset management services. As of 2019, the value of activities within DIFC was US$700 billion. Furthermore, in 2019 DIFC’s total wealth and asset management industry was worth US$424 billion;
- DIFC is an established financial services ecosystem, with a critical mass of global banks, law firms, insurance companies and asset managers which also supports start-ups and established firms, as well as a deep pool of qualified talent;
- There is no corporation tax, or tax on capital or assets for 50 years;
- DIFC is regulated by Dubai Financial Services Authority (DFSA), which issues licences and regulates the activities of all banking and financial institutions in DIFC;
- 100% foreign ownership is permitted;
- A DIFC company requires just one shareholder;
- There are no restrictions on capital repatriation for a DIFC company;
- There are no restrictions on how many foreigners a DIFC company can employ;
- Though DIFC company registration has high capital requirements, capital waivers are available for DIFC branches of regulated financial institutions with their head office in a recognised regulatory jurisdiction;
- DIFC has its own civil and commercial laws and regulations and has developed a complete code of law governing financial services regulation.
Disadvantages of DIFC company registration
- High capital requirements. Depending on the licence category, base capital varies from US$10,000 to US$10 million;
- Effective 30 April 2019, all DIFC entities are required to employ local staff and lease a physical office;
- All companies registered in the UAE must i) create and maintain a register of their ultimate beneficial ownership (UBO) and ii) submit UBO data to the relevant registrar or licensing authority.
DIFC rules and regulations
DIFC has an independent regulatory environment including:
- An independent judicial authority, governed by the Dispute Resolution Authority (DRA), which has jurisdiction over all disputes arising in DIFC;
- DFSA, which regulates, supervises and monitors all banking and financial institutions;
- DIFC Authority, which develops and administers laws and regulations for non-financial businesses;
- A DIFC company must have a registered office to which all communications and notices are addressed, and where the company’s principal business activities take place;
- A DIFC company requires a minimum of two directors, each of whom must be an individual. Neither director needs to be resident in Dubai;
- A DIFC company must keep accounting records for at least 10 years;
- A DIFC company’s accounts must be audited annually.
Steps to register a financial business in DIFC
Healy Consultants Group PLC will project manage the A to Z of our Client’s DIFC company formation. Unfortunately, our Client will need to travel to Dubai for one day before the license is issued and bank account opened. Securing a license for DIFC takes approximately eight months as follows:
Pre-incorporation steps – 1.5 months
- Consultation phase: Prior to starting the DIFC company incorporation process, our Client explains their existing and proposed business activities and business goals, as well as their requirements for the new entity. Healy Consultants Group PLC and our Client plan the optimal structure for the entity, and agree on i) engagement fees payable ii) potential licensing requirements and iii) details of directors and share allocation;
- Planning phase: Our Firm takes all information provided to plan the process in detail, including i) Dubai business incorporation ii) multi-currency corporate bank account opening and iii) securing applicable licenses. This phase sets Client expectations and seeks to minimise disruption until project completion. Our deliverable is a step-by-step project plan;
- Business plan, Letter of Intent (LoI) and initial assessment by the Authorities: With the information supplied by the Client, our Incorporation Team i) drafts a detailed business plan ii) drafts an LoI and iii) requests a meeting with DIFC Authority and DFSA. During this first meeting, the Authority will informally review the application and consider the suitability of the applicant and licence category for which the application is made. A list of required documents is supplied to Healy Consultants Group PLC;
- Document preparation: Our Dubai Incorporation Team gathers all documents required to submit a quality application to DIFC.
Incorporation steps – 6 months
- Document submission: Healy Consultants Group PLC lodges the quality incorporation application online;
- In-Principle approval: Following a detailed review of the business plan, application and documents, DIFC Authority i) confirms name reservation and ii) issues an In-Principle Approval Certificate. Note that it is usual for the authorities to revert multiple times during this pre-approval stage, requesting additional documents and information. Consequently, the process usually takes a minimum of four months. Once In-principle approval is issued, it is valid for three months;
- Document attestation: We supply our Client a complete list of documents to be attested at the UAE embassy in the country of origin. We assist our Client to submit them in a timely manner;
- Entity registration: The attested documents, along with the In-Principle Approval Certificate, are submitted to the Registrar of Companies (ROC). The ROC issues a provisional Certificate of Incorporation;
- Bank account and deposit of capital: Our Banking Team assists our Client to open a Dubai corporate bank account for their business within five weeks. Unfortunately, our Client must travel to Dubai for a one-hour interview with the bank officer before the account is opened. Immediately after the corporate bank account number is issued, our Client deposits the paid-up share capital;
- Office premises: Simultaneously with the step above, we assist our Client to locate office space and sign a 12-month lease agreement. This is necessary before the license is issued. Fortunately, DIFC offers a wide range of office options, from co-working space to business centres, retail space, and commercial office space;
- License issuance: Within one week of Healy Consultants Group PLC submitting to DIFC and DFSA i) a certificate of capital deposit ii) signed lease agreement and iii) payment slip for the payment of office rental fees, DIFC Authority issues the commercial license. Our Client can now conduct business in the UAE.
Post incorporation steps
- Additional registrations: Now that the company is fully incorporated, we can register the entity for VAT and apply for employee visas;
- Registration completion: Following the receipt of all necessary approvals and documents, Healy Consultants Group PLC couriers a full company kit to our Client, including original corporate documents, unopened bank correspondences, and a Client feedback survey to ensure that all Client expectations were met during the entire engagement period;
- Statutory compliances: Our Client must appoint a Dubai-qualified auditor within one month of registration and submit quarterly VAT reports and prepare annual audited financial statements. Depending on the business category, additional financial reporting may be needed.
Best uses of a DIFC company
- DIFC is an excellent environment for young tech firms to grow, because of the access to capital, talent and established networks;
- FinTech firms can access accelerator schemes such as the FinTech Hive Initiative;
- Payments, robo-advisory, blockchain and KYC platforms;
- GCC fund management;
- Family offices;
- Law and accountancy practices;
- Non-financial firms offering services to the DIFC financial services community, such as consulting firms or translators;
- The estimated total engagement fee for a DIFC company engaged in financial services is US$56,700;
- Please refer to our invoice for a detailed fees breakdown. This fee excludes the DFSA application fee and paid-up share capital requirements (both mentioned in business activity section above);
- The estimated total engagement fee for a DIFC company engaged in non-financial services amounts to US$45,500. Please refer to our invoice for a detailed fees breakdown.