Where to set up your fund: A comparative guide for fund managers

For fund managers deciding where to establish funds outside the U.S. and Europe, choosing the right jurisdiction for your fund is crucial. This guide provides a comparison of six other locations favored by fund managers: Cayman Islands, Abu Dhabi Global Market (ADGM), Dubai International Financial Centre (DIFC), Singapore, Australia, and Gujarat International Finance Tec-City (GIFT City). 

Choosing the right jurisdiction depends on your fund's goals, investor base, and regulatory preferences. Each of these six jurisdictions offers unique advantages: 

• Tax efficiency in the Cayman Islands

• Strategic access to the Middle East in ADGM

• The combination of regulatory robustness, tax efficiency, and dynamic investor base in DIFC

• The robust investor base in Singapore

• Australia's established regulatory environment

• GIFT City's favorable regulatory and tax structures coupled with its emerging market potential

The table below summarizes the key attributes of each location:

Read on to learn more about  each of the locations highlighted in the table above.

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, and 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. The emphasis on business-friendly policies and ease of setup contributes to its appeal.

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, attracting international investors seeking tax efficiency.

Reputation

The Cayman Islands has a long-standing reputation as a premier offshore financial center, recognized for its transparency and reliability. The robust regulatory environment, overseen by CIMA, is designed to meet global standards, ensuring investor confidence.

Investor base

Cayman Islands funds are widely used by a diverse range of investors, including institutional investors, high-net-worth individuals, and family offices. This global recognition enhances the jurisdiction's appeal to fund managers and investors alike.

Abu Dhabi Global Market (ADGM)

ADGM, an international financial center in Abu Dhabi, United Arab Emirates, is gaining momentum as a leading investment hub. It offers a robust regulatory framework with a focus on investor protection and market integrity.

Regulatory environment

ADGM operates under English common law and has a regulatory framework designed to ensure compliance with international financial standards. The UAE's ongoing efforts to improve AML regulations contribute to ADGM's growing reputation. The ADGM’s Financial Services Regulatory Authority (FSRA) oversees the regulatory framework, ensuring compliance with international standards. 

Taxation

ADGM offers tax benefits, with zero corporate and personal income tax for entities operating within its jurisdiction. This makes it an attractive choice for funds targeting Middle Eastern investors.

Reputation

Although ADGM is relatively new compared to other financial centers, its reputation is growing. The UAE's commitment to AML and financial stability is attracting international interest, reinforcing ADGM's position as a reputable financial center.

Investor base

ADGM provides access to investors in the Middle East and North Africa, particularly those from Gulf Cooperation Council (GCC) countries. This geographic focus makes it a strategic choice for funds seeking capital from the region.

Dubai International Financial Centre (DIFC)

The Dubai International Financial Centre (DIFC) is a leading financial hub in the Middle East, Africa, and South Asia (MEASA) region. Located in Dubai, UAE, this financial hub offers a world-class business environment with a robust legal and regulatory framework, making it an attractive destination for fund managers.

Regulatory environment

DIFC operates under a distinct legal system based on English common law, providing a transparent and reliable legal environment. The Dubai Financial Services Authority (DFSA) oversees the regulatory framework, ensuring compliance with international standards. The DFSA’s rigorous regulatory regime covers licensing, registration, and ongoing supervision of funds, promoting investor protection and market integrity.

Taxation

DIFC provides significant tax advantages, including a 0% tax rate on profits, capital gains, and income for a renewable period of 50 years. Additionally, there are no withholding taxes on dividends, interest, and royalties, making DIFC a highly tax-efficient jurisdiction for funds.

Reputation

DIFC has established itself as a premier financial center with a strong reputation for regulatory excellence and innovation. Its commitment to transparency, AML, and combating the financing of terrorism (CFT) aligns with global best practices, enhancing investor confidence. DIFC’s strategic location in Dubai also offers access to a thriving business ecosystem and a gateway to the MEASA region.

Investor base

DIFC provides access to a diverse investor base, including sovereign wealth funds, institutional investors, family offices, and high-net-worth individuals from the Middle East, Africa, and South Asia. This diverse investor pool, coupled with Dubai’s status as a global business hub, makes DIFC an attractive choice for fund managers seeking to tap into regional and international capital.

Singapore

Singapore stands out as a robust financial hub in Asia, offering a stable regulatory environment and a favorable tax regime. The Monetary Authority of Singapore (MAS) maintains strict oversight, ensuring compliance with regulations to protect investors.

Regulatory environment

Singapore's regulatory framework is rigorous yet supportive, with licensing, registration, and ongoing compliance requirements. MAS's commitment to transparency and market integrity makes Singapore an attractive choice for fund managers.

Taxation

Singapore's tax system is favorable for both domestic and international investors. There is no capital gains tax on investment gains, and certain types of income enjoy exemptions or reduced tax rates. This tax efficiency adds to Singapore's appeal as a fund domicile.

Reputation

Singapore has earned a reputation for political stability, sound regulation, and a strong legal system. Its commitment to combating financial crime and adhering to global best practices ensures investor trust.

Investor base

Singapore offers access to a global and diverse investor base, from institutional investors to high-net-worth individuals and sovereign wealth funds. Its strategic location and multicultural environment make it an ideal hub for accessing the Asia-Pacific market.

Australia

Australia is known for its well-established regulatory framework and strong legal system, overseen by the Australian Securities and Investments Commission (ASIC). It provides a stable environment for fund management activities.

Regulatory environment

Australia's regulatory regime aims to ensure investor protection and market integrity. Fund managers must comply with licensing, registration, and ongoing regulatory requirements, ensuring transparency and confidence among stakeholders.

Taxation

Australia's tax regime for funds and investors is comprehensive but complex. Funds are subject to income and capital-gains taxes, with specific treatment depending on the fund structure. However, certain tax incentives and concessions are available, and professional advice can help optimize tax efficiency.

Reputation

Australia enjoys a solid reputation for regulatory integrity and market sophistication. Its political stability and commitment to global standards contribute to investor confidence, making it an attractive destination for fund managers.

Investor base

Australia offers a diverse investor base, attracting institutional investors, high-net-worth individuals, pension funds, and retail investors. Its large superannuation system provides a significant pool of capital, enhancing its appeal to fund managers.

Gujarat International Finance Tec-City (GIFT City)

GIFT City, or Gujarat International Finance Tec-City, is quickly emerging as a prominent financial and IT services hub in India, attracting both domestic and international businesses. Situated in Gujarat, India, it offers a strategic location with world-class infrastructure and a conducive regulatory environment tailored for financial services, technology companies, and international investment funds.

Regulatory environment

GIFT City operates under a special economic zone with its own regulatory framework, primarily overseen by the International Financial Services Centre Authority (IFSCA). This authority provides a simplified and business-friendly environment with regulations aligned with global best practices. The presence of an international arbitration center within GIFT City also enhances its appeal, providing clear and efficient dispute resolution mechanisms.

Taxation

One of the most attractive features of GIFT City is its favorable tax regime. Entities operating within GIFT City enjoy various tax benefits, including exemptions from capital-gains tax and lower corporate tax rates. Additionally, there are incentives for setting up operations and investing in infrastructure, which significantly enhance tax efficiency for funds and businesses.

Reputation

Though relatively new compared to more established global financial centers, GIFT City is rapidly gaining recognition for its robust infrastructure, ease of doing business, and transparent regulatory practices. Its development is part of India's broader strategy to enhance its financial services sector and provide an alternative to traditional financial hubs like Singapore and Hong Kong.

Investor base

GIFT City appeals to a wide range of investors, including international investment funds, venture capital, and private equity firms looking to tap into the burgeoning Indian and South Asian markets. The investor base is diverse, ranging from international institutional investors to Indian corporates and high-net-worth individuals, providing a solid foundation for funds seeking to establish a presence in India.

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