Where to set up your fund: A comparative guide for fund managers
Where to set up your fund: A comparative guide for fund managers
Author:
Josephine Koh
Read time:
7 minutes
Published date:
August 20, 2024
Choosing the right jurisdiction depends on your fund's goals, investor base, and regulatory preferences. Here is a breakdown of six non-U.S./Europe regions favored by fund managers:
For fund managers deciding where to establish funds outside the U.S. and Europe, the choice of jurisdiction is crucial. This guide provides a comparison of six locations: Cayman Islands, Abu Dhabi Global Market (ADGM), Dubai International Financial Centre (DIFC), Singapore, Australia, and Gujarat International Finance Tec-City (GIFT City).
Each of these jurisdictions offers unique advantages:
- Tax efficiency in the Cayman Islands
- Strategic access to the Middle East in ADGM
- Combination of regulatory robustness, tax efficiency, and dynamic investor base in DIFC
- Robust investor base in Singapore
- Established regulatory environment in Australia
- Favorable regulatory and tax structures in GIFT City coupled with emerging market potential
The table below summarizes the key attributes of each location:
| Location | Regulatory environment | Taxation | Reputation | Investor base |
|---|---|---|---|---|
| Cayman Islands | Flexible, clear, and business-friendly for investment funds | Tax-neutral status with no taxes on income, capital gains, or profits | Premier offshore financial center known for transparency and reliability | A global range of investors |
| Abu Dhabi Global Market (ADGM) | Robust framework under English common law | Zero corporate and personal income tax for all investors | Growing reputation backed by UAE's commitment to financial stability | Mainly investors from the Middle East, particularly Gulf Cooperation Council (GCC) countries |
| Dubai International Financial Centre (DIFC) | Transparent and reliable legal system based on English common law | 0% tax rate on profits, capital gains, and income for a renewable period of 50 years. No withholding taxes on dividends, interest, and royalties | Premier financial center known for strong regulatory framework, standards, and innovation | Diverse investor base, including sovereign wealth funds, institutional investors, family offices, and high-net-worth individuals from Middle East, Africa, and South Asia |
| Singapore | Rigorous yet supportive framework by MAS (Monetary Authority of Singapore) | No capital gains or dividend income taxes from investments, with other tax incentives available | Known for political stability, strong legal system, and regulatory integrity | Global and diverse base of investors. |
| Australia | Well-established framework overseen by ASIC (Australian Securities & Investments Commission) | Comprehensive tax regime with incentives, although complexities exist | Solid regulatory integrity and market sophistication | Broad spectrum including institutional investors and superannuation funds |
| Gujarat International Finance Tec-City (GIFT City) | Special economic zone with a business-friendly regulatory framework | Favorable tax regime with exemptions and incentives | Emerging as a robust financial and IT services hub | Attracts domestic and international investors seeking opportunities in India and South Asia |
Cayman Islands
The Cayman Islands is a top destination for offshore investment funds, offering a flexible and business-friendly regulatory framework. Its legal system operates under English common law. The Cayman Islands Monetary Authority (CIMA) ensures compliance with financial standards aligned with international anti-money laundering (AML) and counter-terrorism financing regulations.
Regulatory environment
The Cayman Islands has a straightforward and flexible regulatory regime tailored specifically for investment funds, making it a favorite among global investors.
Taxation
One of the major draws of the Cayman Islands is its tax-neutral status. Funds domiciled here aren't subject to direct taxes on income, capital gains, or profits.
Reputation
The Cayman Islands has a long-standing reputation as a premier offshore financial center, recognized for its transparency and reliability.
Investor base
Cayman Islands funds appeal to a diverse range of institutional investors, high-net-worth individuals, and family offices.
Abu Dhabi Global Market (ADGM)
ADGM, an international financial center in Abu Dhabi, United Arab Emirates, is gaining momentum as a leading investment hub.
Regulatory environment
ADGM operates under English common law and has a regulatory framework designed to ensure compliance with international financial standards.
Taxation
ADGM offers tax benefits, with zero corporate and personal income tax for entities operating within its jurisdiction.
Reputation
Although ADGM is relatively new compared to other financial centers, its reputation is growing, attracting international interest.
Investor base
ADGM provides access to investors in the Middle East and North Africa, particularly from Gulf Cooperation Council (GCC) countries.
Dubai International Financial Centre (DIFC)
Located in Dubai, UAE, DIFC is a leading financial hub with a robust legal and regulatory framework.
Regulatory environment
DIFC operates under a distinct legal system based on English common law, guaranteeing compliance with international standards.
Taxation
DIFC provides significant tax advantages, including a 0% tax rate on profits and no withholding taxes on dividends.
Reputation
DIFC has established itself as a premier financial center, recognized for regulatory excellence.
Investor base
DIFC offers access to a diverse investor base, including sovereign wealth funds and family offices from the MEASA region.
Singapore
Singapore is known for its stable regulatory environment and favorable tax regime.
Regulatory environment
Singapore's regulatory framework is rigorous yet supportive, ensuring compliance to protect investors.
Taxation
There is no capital gains tax on investment gains in Singapore, adding to its appeal.
Reputation
Singapore has earned a reputation for political stability and strong regulation.
Investor base
Singapore offers access to a global and diverse investor base, ideal for tapping into the Asia-Pacific market.
Australia
Australia maintains a well-established regulatory framework for fund management activities.
Regulatory environment
Australia's regulatory regime ensures investor protection and market integrity.
Taxation
While Australia has a comprehensive tax regime, complexities exist based on fund structure.
Reputation
Australia is known for its solid regulatory integrity and political stability.
Investor base
Australia attracts a diverse investor base, capitalizing on its large superannuation system.
Gujarat International Finance Tec-City (GIFT City)
GIFT City is emerging as a financial and IT services hub in India.
Regulatory environment
GIFT City operates under a special economic zone with its own simplified regulations.
Taxation
Entities in GIFT City enjoy various tax benefits, including exemptions from capital-gains tax.
Reputation
GIFT City is rapidly gaining recognition for its robust infrastructure and transparent regulatory practices.
Investor base
GIFT City appeals to a wide range of investors, attracting both domestic and international businesses.