Dubai, renowned for its business-friendly environment, has made significant strides in becoming a preferred jurisdiction for family businesses. KBH houses seasoned DIFC practitioners. KBH’s legal acumen coupled with Dubai’s commitment to fostering family business growth positions us as the ideal partner for navigating complex family business challenges. Given our recent involvement in a DIFC litigation where we successfully managed to discharge a freezing order in a family dispute underscores our commitment to achieving favorable outcomes for our clients. In this article we are excited to share some insights into how Dubai is shaping its landscape to accommodate family enterprises and foster their sustainable growth.
Historically known for its absence of personal and corporate income taxes, Dubai recently made headlines by adopting one of the world’s lowest corporate income tax rates at 9%. This step aligns with the OECD’s Global Tax Deal and showcases Dubai’s commitment to international standards.
Effective from June 1, 2023, this corporate tax rate primarily applies to trading income, while passive income remains exempt. Notably, this provision doesn’t encompass entities incorporated within UAE’s free zones, a popular choice for international family businesses. Companies falling below BEPS Pillar Two thresholds are also excluded from this tax regime.
Dubai’s allure for family businesses extends beyond favorable tax structures. The emirate has streamlined the process and cost of establishing businesses, offering straightforward avenues for residency that facilitate the relocation of both families and employees. Geographically strategic, Dubai boasts daily flight connectivity to global destinations. Its reputation for safety, world-class healthcare, education, and abundant dining and entertainment options further bolsters its appeal.
The pursuit of sustainable family businesses has also prompted proactive initiatives. The Dubai International Financial Centre (DIFC) took a significant step by launching the Family Wealth Centre in March. This center aims to address key challenges faced by family businesses and ultra-high net worth individuals, encompassing areas like digitization, governance, cultural dynamics, and succession planning.
The DIFC Family Wealth Centre adopts a three-pronged approach involving family business certification, adviser accreditation, and education. Certification entails a fee and offers various levels, from AA to AAA* certification. The latter, awarded to businesses with exemplary environmental, social, and governance practices, demonstrates Dubai’s dedication to holistic sustainability.
To facilitate the journey towards certification, the center maintains an accredited adviser registry, comprising seasoned professionals who guide family businesses through the certification process. The center’s commitment to education includes regular events focusing on pertinent family business topics. Furthermore, family businesses can access DIFC’s common law courts, arbitration, mediation services, and related service providers through the center.
Crucially, the center’s offerings are accessible to family businesses globally, extending beyond the boundaries of the DIFC. Tarek Hajjiri, CEO of the DIFC Family Wealth Centre, emphasized that Dubai’s pro-business environment, favorable tax laws, and dedication to family businesses’ sustainability make it an enticing jurisdiction for relocation and wealth management.
While attracting family businesses is a vital step, ensuring their longevity demands strategic planning. Addressing challenges such as ownership transition and decision-making among stakeholders across generations requires proper legacy and succession planning. The DIFC Family Wealth Centre stands as an innovative solution, addressing these concerns on a governmental level.
Conclusion
In a recent significant milestone, KBH, successfully navigated a challenging family dispute within the DIFC litigation framework. This achievement included the successful discharge of a freezing order, showcasing our commitment to safeguarding the interests of family enterprises amidst complex legal proceedings. Dubai’s evolving landscape, characterised by its innovative initiatives like the DIFC Family Wealth Centre, complemented by the DIFC Courts underscores its dedication to nurturing family businesses. By offering tailored certifications, professional guidance, and educational resources, Dubai is providing family enterprises with the tools they need to thrive in a rapidly changing business environment. Our role in discharging the freezing order aligns seamlessly with Dubai’s vision to create a business ecosystem that fosters the sustainable growth of family businesses, reinforcing the emirate’s reputation as an attractive hub for such enterprises.
KBH
At KBH, we comprehend the intricacies of family dynamics within the realm of business disputes. Our expert legal team boasts extensive experience advising high net worth individuals and ultra-high net worth individuals. With a focus on managing complex disputes, our expertise covers various scenarios, from guiding UHNWI through family business exits to representing family wealth offices in litigation.
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Floor 9, South Tower, Emirates Financial Towers, Dubai International Financial Centre PO Box 506546, Dubai, United Arab Emirates
Copyright © 2023 All rights reserved.