The DIFC has announced that a new Law of Security is proposed that would repeal and replace the current Law of Security, DIFC Law No. 8 of 2005. It would also repeal the DIFC Financial Collateral Regulations 2019 and the DIFC Securities Regulations 2019 would be updated.
The new Law of Security would significantly amend and enhance the law concerning secured transactions in relation to movable assets in the DIFC, bringing the regime closer in line with aspects of international best practice. The proposed Law of Security is substantially based on the UNCITRAL published the Model Law on Secured Transactions (2016). It would also provide clarity in relation to innovative asset classes, such as digital assets.
Broadly, the new regime sets out general rules relating to “Security Rights” over “Movable Assets” generally, and certain specific rules for specific types of assets. Movable Assets comprise tangible and intangible assets (such as equipment, inventory, goods, receivables, financial collateral (including money deposited in bank accounts) and negotiable instruments. Aspects of the law also apply to fixtures within the jurisdiction of the DIFC. There are general rules and asset-specific rules relating to the effectiveness of Security Rights, priority, rights and obligations and enforcement. Generally, a Security Right will be effective against third parties if a Financing Statement is registered in the DIFC Security Registry and/or if the secured creditor is in possession of the asset. Existing provisions concerning the DIFC Security Registry, filing and registration are largely retained.
A transitional period of one year is proposed. This would mean that a prior Security Right that was made effective against third parties under the current Law of Security would remain effective against third parties for a specified transitional period after entry into force of the new Law of Security, even if the conditions for third-party effectiveness under the new law have not been satisfied.
The DIFC has also announced a proposed new Digital Assets Law. The proposed Digital Assets Law would regulate digital assets, such as cryptocurrencies, non-fungible tokens (NFT), stablecoins and security tokens, and seeks to provide a comprehensive framework in DIFC for digital assets.
The Law of Security – Consultation Paper No. 5 of 2023 and The Digital Assets Law – Consultation Paper No. 4 of 2023 have been posted for an extended 40-day public consultation period with the deadline for providing comments ending on 5 November 2023.
Under the Corporation Tax Law (Federal Decree-Law No.47 of 2022 on the Taxation of Corporations and Businesses) (“Corporation Tax Law”), free zone entities may continue to benefit from the existing tax incentives for the remainder of the tax holiday period specified in the relevant free zone law, provided that they meet certain conditions required to be treated as a “Qualifying Free Zone Person” in accordance with the Corporation Tax Law.
Where a free zone entity is treated as a Qualifying Free Zone Person, a 0% rate will apply to qualifying income. A 9% rate will apply to income that is not qualifying income of a Qualifying Free Zone Person. Cabinet Decision No.55 of 2023 on Determining Qualifying Income for the Qualifying Free Zone Person for the Purposes of the Corporation Tax Law and Ministry of Finance Ministerial Decision No.139 of 2023 regarding Qualifying Activities and Excluded Activities the Purposes of the Corporation Tax Law set out which free zone entities may be eligible to claim qualifying income as zero rated, and what income falls within Qualifying Activities and Excluded Activities.
In July 2023, the UAE Ministry of Finance consulted on the determination of Qualifying Activities and Excluded Activities, with the public consultation setting out examples relating to both Qualifying Activities and Excluded Activities. It is expected that as an outcome of the public consultation, the UAE Ministry of Finance will issue further guidance in this area.
17 十月 2023
The third quarter of 2023 saw a number of legal developments in the Gulf Cooperation Council (GCC) region (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates). This edition of our GCC Quarterly Review summarises a selection of the major developments in that period, with links to further reading where available.
26 七月 2023
The second quarter of 2023 saw a number of legal developments in the Gulf Cooperation Council (GCC) region (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates). This edition of our GCC Quarterly Review summarises a selection of the major developments in that period, with links to further reading where available.
16 五月 2023
The first quarter of 2023 saw a number of legal developments in the Gulf Cooperation Council (GCC) region (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates). This edition of our GCC Quarterly Review summarises a selection of the major developments in that period, with links to further reading where available.
2 二月 2023
The last quarter of 2022 saw a number of legal developments in the Gulf Cooperation Council (GCC) region (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates). The latest edition of our GCC Quarterly Review summarises a selection of the major developments in that period, with links to further reading where available.