The number of foundations set-up in the UAE is expected to triple this year, according to Yann Mrazek, managing partner, M-HQ.
Mrazek was speaking at the inaugural Arabian Business Money Forum during a panel discussion entitled ‘Securing your wealth in a changing world’.
And he said an increasingly popular way to do this was through the creation of foundations – an incorporated legal entity, which can be used to hold assets and play an integral part in wealth structuring and succession planning.
He said: “I think what has happened in this country, with Abu Dhabi Global Market and the DIFC emerging, it has given a lot of confidence to people to use tools that have existed in other jurisdictions and became freely available here.
“You can think of holding structures, you can think of trusts, you can think of foundations, and all of these have been important to this jurisdiction with reasonable success – a lot of success if we talk about foundations because they are easy to understand for families, they are easy for them to operate by themselves and clearly, people have been responding.”
Mrazek explained that more than 80 percent of single-family offices registered in the UAE are held directly by patriarchs and/or family members, exposing the shares and underlying assets to risk, providing further evidence of the potential of foundations.
As there are no shareholders or owners and there is no requirement to have beneficiaries, foundations can be used as an ultimate holding vehicle that separates underlying assets from an individual’s personal wealth and therefore falls outside their estate for inheritance tax purposes.
Dubai International Financial Centre (DIFC) launched its foundation regime in 2018, while Abu Dhabi Global Market launched a year earlier in 2017.
Mrazek revealed that there have been more foundations set-up in the UAE in the last three years than in Jersey over the last 11 years.
“Why? Because there was a huge gap, there was a need, and they addressed that need,” he said.
And he added that 60 percent of these structures have been implemented over the last year as a result of the global coronavirus pandemic.
“We expect this number to triple this year in 2021, thanks to confidence and word of mouth,” he said.
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