Recently, the United Arab Emirates (UAE) has become the preferred destination for high-net-worth individuals (HNWIs), ultra-high-net-worth individuals (UHNWIs), and their families from all over the globe.
In 2022 alone, an estimated 5,000 millionaires and billionaires immigrated to the UAE, which marked the fastest net inflow of millionaires in the world and exceeded the expectations set in the Henley & Partners Global Citizens Report published in September 2022, which took a global perspective on private wealth migration trends.
In addition, the UAE has a large number of family businesses, owned by both nationals and expatriate residents, which contribute to the country’s economic development. In the near future, it is projected that families in the UAE and the broader Middle East region will transfer AED 3.67 trillion to the next generation over the next decade.
This large transfer of wealth will require specialist support, including expert and private wealth lawyers in Dubai, who can assist families in planning for succession, asset protection, and wealth transfer.
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Inside the Tax System
At present, the United Arab Emirates does not have any personal income tax or capital gains tax of any kind for individuals, whether they are nationals or residents. They do not have any wealth taxes, estate taxes, inheritance taxes, or taxes on gifts for residents.
The UAE did, however, implement a value-added tax (VAT) on January 1st, 2018, which then added a level of indirect taxation.
Most recently, it introduced a corporate tax on June 1, 2023, that is charged at 9% on taxable profits over AED 375,000. All of this indicates a slow transition for the UAE into diversifying its tax structure while trying to retain the attraction of individuals and companies.
As a result, individuals who live there are beginning to seek out expert advice from UAE wealth managers regarding financial planning assistance, including UAE wealth managers Islamic finance investment options to help with investing in Sharia-compliant investment opportunities.
Understanding the Legal System with Private Wealth Lawyers in Dubai
Because the UAE’s legal system is based on Islamic Sharia, it pursues both criminal and civil justice according to its principles. All the codified legislation in the UAE includes a blend of Islamic law and civil laws that have drawn heavy influence from the Egyptian and French legal systems.
However, certain emirates, Dubai and Abu Dhabi, for example, created free zones based on a common law system to attract HNWIs and their families who are internationally mobile. The major free zones include the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM). The DIFC, established in 2002, permitted a foreigner to own 100% of a DIFC entity, pre-dating the federal law, which permitted 100%.
At present, it has a wide array of local and international private client and wealth law service providers, including stockbrokers, private wealth lawyers in Dubai, accountants, business advisers, auction houses, NASDAQ Dubai, and the Dubai Mercantile Exchange.
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DIFC and ADGM: Pioneering Family Wealth and Sharia-Compliant Investment Solutions
Both the DIFC and ADGM function under common law, each with its own courts to hear civil and commercial cases, and also maintain a Wills &Probate Registry for non-Muslims. The DIFC also has strict anti-money laundering rules, modeled on best practices from regulatory bodies in London and New York, to strengthen its position on the international financial stage. It was also the first jurisdiction to define a family office or a single-family office (SFO) in law.
Most recently, it launched the DIFC Family Wealth Centre, facilitating global family businesses, high-net-worth individuals (HNWIs), and ultra-high-net-worth individuals (UHNWIs) to come together in one hub and access education, training, and guidance to optimize their portfolios through networking, accreditation, and access to wealth managers in the UAE that align with Sharia-compliant UAE wealth managers Islamic finance investment options.
Conclusion
In conclusion, the UAE is increasingly becoming a worldwide hub for HNWIs, UHNWIs, and family-owned businesses due to its favorable tax climate and legal framework based on Islamic Sharia, while free zones like the DIFC and ADGM operate under common law as a way of attracting global careers.
Families use more and more private wealth lawyers in Dubai, wealth managers in the UAE on Islamic finance investment options, and Khairallah Law Firm, considered the best law firm Dubai, to navigate succession planning, asset protection, and roadmaps for Sharia-compliant investment strategies during a multi-trillion AED wealth transfer projected over the next decade.
These trends position the UAE as a leading destination for private wealth management and family office services.
Having said that, contact Khairallah Advocates & Legal Consultants and benefit from our free 30-min legal consultation.
*Disclaimer: our blogs, law updates, and FAQ’s are freely distributed for educational purposes and to showcase recent updates and regulations in the UAE’s framework.
If you have any questions and need assistance, contact us at our number or book an appointment online.
