DIFC UAE: Foundation, Legal Landscape, Setup Processes, and Benefits

Dubai International Financial Center (DIFC) UAE is the most demanded place for companies to set up their business. It is famous for its sound legal system, with easy setup processes. It also offers many attractive advantages. In this guide, we outline what DIFC UAE is and the legal framework that supports it. You will know how to set up a business here; and the benefits of choosing a DIFC-free zone. Also, we will explore how the DIFC foundation law supports businesses compared to setting up businesses in Dubai mainland.

What is DIFC UAE

DIFC UAE is an economic free zone in Dubai. It provides a friendly environment as it comes under a category known as a “free zone” Business. They can operate with full foreign ownership and enjoy tax exemptions. Also, the DIFC Free Zone will attract all financial institutions, banks, and insurance companies. Moreover, wealth management firms and other financial sector businesses benefit from it. Additionally, it supports technology companies, law firms, and start-ups.

The companies in DIFC are assured to conduct business with confidence. This is because of a world-class legal system. The laws of DIFC are based on English Common Law. Through this law, international businesses can easily operate within the state.

The legal landscape in DIFC UAE

Legal frameworks available under the umbrella of DIFC UAE are one of the major attractions. DIFC businesses operate under different laws than those that exist in other parts of Dubai. Some key points about the legal landscape include:

DIFC Courts

The DIFC is an independent court for dealing with commercial disputes and cases. The application of English Common Law makes the system somewhat familiar and reliable for international companies.

DIFC Foundations Law

DIFC foundations law was set up to give businesses a flexible and secure way of managing their assets. It enables the companies to form foundations. Also, these are used for wealth management, succession planning, or asset protection.

Regulation

The Dubai Financial Services Authority, or DFSA, regulates financial services within the DIFC. Also, it makes sure that the businesses operate with standards and practices across international jurisdictions.

Legal Services

There are several major law firms and in-house lawyers for large groups that operate from DIFC. These lawyers consult large companies regarding DIFC’s legislation and regulations.

Opening a Business in DIFC UAE

Setting up a business in the DIFC Free Zone is very easy for any business. Here is the step-by-step process of opening a business in the DIFC:

Select a Business Activity

Before registering a company, you need to select the business activity. DIFC is open to a host of businesses; they include finance, law, technology, and consulting.

Register Company

Register your company with the DIFC Authority. You need to submit copies of your passport for every shareholder, your business plan, and proof of address.

Get the Right Licenses

Depending on your activity, you would require a different kind of license. DIFC issues licenses for some activities like financial services, legal services, and consultancies. You will need a physical place within the DIFC Free Zone to set up your company. You can also rent a private office or even rent a co-working space.

Following the regulations

Companies are supposed to follow the guidelines set by the Dubai Financial Services Authority. For example, one needs to get approval and fulfill a defined set of financial criteria put forth by the Dubai Financial Services Authority.

Bank Account

Finally, businesses must have an account in the UAE. Most international banks operate from the DIFC. It is easy to choose the appropriate bank according to the requirements.

If you do not know how the process of setup occurs, get some help from business setup experts in Dubai. These professionals help entities in the setup process. Also, they ensure that whatever you do is correct.

Benefits of Setting Up in DIFC UAE

The benefits of a DIFC Free Zone are numerous. Here are the main advantages:

100% Foreign Ownership

Fully foreign-owned companies have an opportunity only in the DIFC. Moreover, fully foreign-owned are not allowed in mainland companies. International investors are attracted to the DIFC for this reason.

No Tax on Profits

Businesses do not pay a tax on profit for the next 50 years. So, it gives a huge benefit over other places.

Asset Protection

The DIFC foundation law can be used to help businesses protect their assets. It can also be designed for wealth management, generation planning, or protecting your assets against risks.

Easy Business Setup

The DIFC setup is a smoother, faster, and easier process than setting up in the Dubai mainland. This also saves time and effort on the part of companies looking to establish themselves in Dubai.

World-Class Legal System

The DIFC enforces the English Common Law in its courts. Therefore very easy for businesses to have simple resolutions of legal problems. This is very helpful in so far as international companies familiarise themselves with this system.

Ease of Access to International Markets

The DIFC UAE offers a gateway to markets in the Middle East, Africa, and South Asia. Companies can reach new customers and grow their business by setting up the DIFC Free Zone.

DIFC Foundation: An Asset Protection Tool

DIFC Foundation is one of the unique structures designed to help businesses and individuals manage their wealth and protect their assets. Here’s everything you need to know about DIFC foundations:

Flexible Structure

DIFC foundations can serve various purposes, such as holding assets and managing investments or planning for family wealth transfer.

Legally separate entity

The foundation means that the assets held under the name of the foundation do not belong to the founder and his assets in any way.

Asset protection

Assets in DIFC foundations cannot be seized in cases involving lawsuits and creditors. Also, a foundation can be used to manage business assets, thereby distributing its interest based on the wishes of the founder.

DIFC Foundations Law

The DIFC foundation law provides a clear legal framework for the administration of foundations. Therefore, foundations respect international standards. So, this makes them suitable for effective wealth management and succession planning.

Comparing DIFC Free Zone with Business Setup in Dubai Mainland

There are differences between the business set up in the DIFC Free Zone and Dubai mainland. Quickly, compare here:

• Ownership: Foreign ownership is allowed fully at 100%. In Dubai mainland, even for a business, a 51% local sponsor is essential to own the business.
• Tax Benefits: The profits are taxed in DIFC. However, no taxes exist in Dubai mainland on the profits except for all businesses whose owner is not a resident of that state.
• Legal Framework: The DIFC follows the English Common Law. However, Dubai’s mainland follows the UAE federal law. The legal system in DIFC is more familiar to international companies.
• Business Activities: The DIFC is more or less known as a financial services and professional firm. However, on the mainland, a variety of business activities is possible.

The company establishment process in DIFC is smoother than that on the mainland. So, Dubai business setup consultants will facilitate negotiations in all these processes.

Role of Business Setup Experts in Dubai

Business setup in Dubai can become much easier for companies not previously entered the region through business setup experts. They are dealing with services that can help businesses get up. Also, they make them run quickly and follow all the rules. They will guide you on whether to select the DIFC Free Zone or set up a business in Dubai mainland.

• Consultants Services: Get services for business setup consultants in Dubai. They guide you on the best location to set up your company. Be it DIFC, DMCC, or mainland, they will guide you on the proper choice.
• Document Handling: The consultants take the burden of paperwork off your back. Also, they ensure all the documents are in place.
• License and Registration Support: They assist in obtaining licenses and permits necessary to start an enterprise. It includes getting approval from the Dubai Financial Services Authority for financial institutions.
• Office Setup: They can locate an office space that meets the needs of DIFC on your behalf.
• Legal Support: The consultants will be able to connect you to some of the best law firms who have core competencies with foundations law, and asset management, amongst other legal areas.

How to Select the Right Business Setup Experts in Dubai

If you are setting up in DIFC UAE, then there is a need to choose the right business setup expert. Here are some things to look for:

• Experience: Choose experts who have experience in setting up businesses in the DIFC Free Zone. They must know about DIFC foundations law and other regulations.
• Services: Services offered should range from consulting and document handling to legal assistance and office leasing.
• Reviews of Clients: Reviews or testimonials from other businesses are also good evidence of reputation and quality of services for the customers.
• DIFC and DMCC: The Dubai business setup company has experience in DIFC as well as in DMCC. Moreover, a business owner who will set up his business in multiple free zones finds their experience very helpful.

Conclusion

There are various benefits to establishing a company in DIFC UAE. Especially for financial institutions, law firms, and tech companies. DIFC foundations law provides businesses with an ideal means of asset protection. Moreover, its basis on English Common Law creates a strong infrastructure for business operations.