The United Arab Emirates have emerged as one of the most tax -friendly countries in the world, making it very competitive in the world market. Nowhere was this more clear the financial sector, because the VAE is now for numerous high-profile fintech companies.
The business-friendly climate in the country has made it incredibly useful for brookerage companies and online trade finishs to set up their activities in the VAE. Access to very competent workforce from all over the world makes it all the more convenient for companies to be in the UAE in the VAE, in particular in the free zones of Dubai, and benefit from the favorable regulatory and tax regimes.
There are serious reasons why the UAE has emerged as one of the most attractive destination for fintech companies and how the country uses this function for the world market that we will be, will discuss in further details below.
Fintech regulations in the VAE
Although the VAE is generally considered a commercial country, the few regulations are strictly maintained, so that a fair playing field is levied for hundreds of companies that are boring in stock agents, asset management and investment services.
Multiple regulatory authorities Government Financial Licenses and Legal Requirements in the VAE, which are different in therms of the areas of the financial services they government, as well as the free economic zones under their jurisdiction.
Dubai Financial Services Authority
The Dubai Financial Services Authority is an independent regulator of financial services that supervises compliance with companies in a wide range of financial services, including banking, insurance, securities trade, asset management, etc.
The DFSA provides Licens, financial superities Sigms and impos sanctions for misconduct within the DIFC. The regulatory body is known for its proactive approach to the fintech sector and the protection of consumers to adapt to global best practices.
Account Secregation, KYC and AML requirements, which operate under a valid DFSA license and prohibited for prior knowledge trade, are all usual requirements for companies that act in securisties within the DIFC.
Securities and Commodities Authority (SCA)
The Securities and Commodities Authority, or the SCA, has the task of supervising the licenses and regulating securities trade and capital markets in the VAE. This also includes online trading platforms, such as shares and Forex brokers.
The two primary focus of the SCA are:
- Virtual assets -regulation – Rule of the activities of virtual asseters (VASPs), including license requirements for arch exchanges and custodans
- Cooperation with VARA – The SCA works together with the virtual assets Regulatory Authority (VARA) to set up a uniform regulatory framework for virtual assets in the VAE
Abu Dhabi Global Market (ADGM) – Financial Services Regulatory Authority (FSRA)
The FSRA supervises financial service providers within the global market zone of Abu Dhabi, including:
- Guidelines for a legal framework for private financing platforms -These guidelines regulates crowdfunding activities, determining requirements for capital -and risk analysis and investment protection
- Consulty of FIAT-referred tokens-in 2024, the FSRA has issued a consultation document with a regulatory framework for tokens with FIAT references, aimed at integrating stablecoins into the financial system
Tax in the VAE
Although the regulations in the VAE are based on international best practices, the low tax on the country is much more attractive for both traders and investors, as well as financial service providers.
The tax system of the VAE is well structured and concluded with international standards, such as the minimum corporation tax agreement, which acquires international cooperation with regard to the tax on multinational companies.
Historically, most companies operated in the VAE without paying business tax, with the exception of oil and gas companies and foreign banks, which were taxed under special regulations.
However, as part of its dedication at the basic erosion and profit shift from the OECD (BEPS) and to improve its global competitiveness, the VAE introduced federal tax taxes, which became entirely in force on 1 June 2023.
Under the new tax regime:
- A business tax of 9% applies an equivalent income of more than AED 375,000
- Inome under this threshold remains tax-free to support small and medum-siss companies (SMEs)
- Free zone entities can continue to benefit from 0% tax rates, provided that they meet certain resources requirements and do not do any behavioral matters with the VAE of the mainland directly
As we have already mentioned, the VAE that you have introduced in 15% minimum tax on multinational companies with a turnover of more than EUR 750 million.
There is no tax on the tax on dividends, interest or royalties, and no capital gain tax (unless there is a business activity that falls under the corporation tax regime).
Such an approach to corporation tax means that the VAE remains competitive at the global stage, where most companies, including those who are furious to facilitate online trade, pay only 9% of corporation tax, which consider lower than most advanced economies worldwide.
In addition, the VAE is an international lifestyle hub and millions of expats from all over the world have primary or secondary homes in Dubai, which ensures a flourishing customer base of persons who actively trade and invest, which is attractive for brokerage companies and liquidity providers -the position of the UAE in the position of the leaders in terms of terms of terms of terms of terms of terms of terms of terms of terms of terms of the terms of the terms of the terms of termination.
Conclusion
The United Arab Emirates is one of the most vibrant financial hubs in the world, which is powered by a common elevation of regulations, low taxation and a large pool of international talent that is mainly something in Dubai and Abu Dhabi.
The business-friendly climate, compliance with international best practices and a mix of things and leisure company makes the VAE an attractive recusation for fintech companies to set up their services and to offer customers with and outside the country.
The new corporation tax regime, which lifts at 9% corporation tax on MUST companies in the VAE, as well as the OECD Minimum Corporate Profit Tax Initiative, ensure that the VAE UBE is to collect funds for improved infrastructure and service in the international agreements.
