DIFC and Luxembourg sign MoU to make markets more accessible

This is a technical pact so that our agencies at the financial centres work closely Luc Frieden, Luxembourg Finance Minister. (AP)

The Dubai International Financial Centre (DIFC) and Luxembourg signed a memorandum of understanding (MoU) yesterday to ease the access of markets for companies operating in the UAE and Luxembourg.

The MoU follows a double tax treaty between the UAE and Luxembourg that came into effect on January 1 this year. The MoU was inked in the presence of the Crown Prince of Luxembourg Prince Guillaume and the Governor of DIFC Ahmed Humaid Al Tayer.

"This is a technical agreement so that our development agencies at the financial centres work more closely together," said Luxembourg's Finance Minister Luc Frieden speaking to journalists after the MoU was signed.

Frieden said that the MoU and the taxation treaty will help it attract foreign capital from the UAE. Luxembourg already has treaties to avoid taxation with other GCC countries such as Saudi Arabia, Bahrain, Qatar and Kuwait. Officials who were a part of the team sponsoring yesterday's events had earlier told Emirates Business that the visit of Prince Guillaume and the events were a part of Luxembourg's efforts to attract investments into Luxembourg registered funds.

While there are about 600 Luxembourg registered funds in Bahrain, the number are about 15 in the UAE.

Frieden said that investments from the Middle East into Luxembourg has risen in the past two years. One of the reflections of the rising interest among the region's investors in Luxembourg comes in the rising number of Shariah compliant funds in Luxembourg.

"There are 31 Shariah-compliant funds worth about €5 billion (Dh26.5bn) listed in Luxembourg today. And we expect the number to rise," said Frieden.

The DIFC Governor Ahmed Humaid Al Tayer said the double taxation treaty that came into effect earlier this year has made Luxembourg an important gateway into Europe for investors from the UAE.

"Our economies and financial markets have many complementarities, which present untapped opportunities for linkages and partnerships," he said speaking at the seminar following the signing of the MoU.

Meanwhile, in what could bring competition to moves by Luxembourg and other countries to attract funds from the UAE, officials at DIFC said yesterday that the financial centre plans to "substantially" reduce the costs involved in listing a fund at DIFC.

The move they said will help give a boost to the largely untapped funds raising potential in the UAE.

"We are bringing down the costs and are are reducing difficulties in listing at the DIFC. This comes as a result of a survey carried out by the Dubai Financial Services Authority (DFSA)," said Chirag Shah, the Executive Director (Strategy) at DIFC.

These funds will cater to a number of categories –from mutual to real estate funds – and will be regulated by the DFSA, said DIFC.

 

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