Dubai hub expands its prescribed company regime to attract more global capital

DIFC, one of two financial services hubs in the UAE, is making key regulatory changes that could attract new types of firms at a time when capital flight is a major concern in the wake of the Iran war. The amendments would position the financial hub as a regional alternative to popular offshore jurisdictions, but with a regulated, tax-transparent framework.

IN CONTEXT- Other regional players are making a run at the “safe haven” pitch that has long defined the UAE’s image as a welcoming hub for capital and talent. Turkey has been ramping up “safe haven” messaging in the last few weeks and is fast-tracking an ambitious tax incentives package that would slash taxes for services and manufacturing exporters, transit trade players, and foreign firms wanting to set up shop in the Istanbul Financial Center.

DIFC is looking to open up its prescribed company (PC) regime — a low-cost, lightly regulated holding structure pitched as a regional answer to Cayman or BVI SPVs — to make the regime globally accessible. A new consultation paper (pdf) proposes scrapping remaining eligibility restrictions tied to ownership, purpose, or geographic nexus, and allowing any applicant to set up a PC. Currently, you need to demonstrate a qualifying purpose (like a structured financing) or a nexus to DIFC (like being a GCC citizen or being controlled by a DIFC-registered entity).

The trade-off: Most PCs would have to appoint a DFSA-regulated corporate service provider to handle filings, maintain records, and act as the main compliance interface with the registrar. Existing PCs that don’t qualify for exemption get six months to comply or face fines of up to USD 20k and potential loss of PC status, meaning conversion into a fully licensed DIFC entity with higher fees and office requirements.