Citywealth quotes Jonathan Burt on how foundations and tax transparency in the UAE are changing wealth structures

The UAE has entered a decisive new phase in private-wealth planning. A wave of new federal laws, strengthened DIFC and ADGM courts, and a sharper focus on cross-border succession are transforming how ultra-high-net-worth families protect assets, register wills and structure their global estates.

With rising migration from the UK, Europe, Asia and Latin America, the DIFC and ADGM have reached a point of critical mass, emerging as trusted centres for estate planning, corporate structuring and next generation wealth management.

Jonathan Burt, Private Client Partner, speaks to Citywealth and shares his thoughts on how foundations and tax transparency are changing wealth structures:

There has been the introduction of corporation tax in the UAE which subjects business profits to tax at 9%. The UAE government also recently introduced the possibility for a foundation to apply to be treated as fiscally transparent. This works well if the principal activity is related to investments and has helped to clarify the tax treatment of Foundations. If the foundation’s activities are passive in terms of receiving investment income and real estate income, the beneficiaries are exempt from tax if the structure is transparent.

"It has also been important that the option for tax transparency was extended to wholly owned subsidiaries. This has helped to provide an option for individuals who manage and control an overseas company from the UAE. If the company is transferred to a Foundation, then it is possible for that entity to be treated as fiscally transparent too.

"Generally, we are seeing DIFC Foundations being used to plan the succession of significant UAE trading businesses. This means that the Foundations are becoming more sophisticated in their application, and there is more focus on corporate governance and succession planning.

"The government introduced DIFC Foundations in 2018, so they are quite recent. I am continuing to see interest in setting up structures in jurisdictions which have a track record and a history of reliability. 

Read the full article in Citywealth here.