Dubai: Luxembourg for Finance and the Dubai International Financial Centre (DIFC) signed a memorandum of understanding yesterday to promote industry development and regulatory cooperation.
The memorandum aims to promote cooperation and development in a wide range of areas including market access, financial regulation and infrastructure, training and industry development for firms located in the two jurisdictions.
"Today's event represents the opportunities that new partnerships can bring even in a challenging global environment," said Ahmad Humaid Al Tayer, Governor of the DIFC, during his speech, the first since his election as governor in November.
Exchanging information
Luc Frieden, Luxembourg's Minister of Finance who signed the agreement on behalf of Luxembourg for Finance, described the memorandum as "a tool" for the two centres to meet regularly, exchange information and discuss business opportunities.
Located in the heart of Europe, Luxembourg is the largest investment fund centre in Europe and the second largest in the world after the United States.
"We have a reputation for being safe, stable and a business-friendly environment," Frieden said. "And this is what people [in this region] are looking for."
Dr Nasser Saidi, Chief Economist at the DIFC, described the agreement as part of a natural process.
"We already have agreements with Hong Kong and Paris and now we have one with Luxembourg," he said.
"What these agreements will do is that they will enhance cooperation between the financial centres. This is natural because we want to have an exchange of information for the banking and financial industry.
"We're moving to what I call a spiderweb model," he said.
"You need to maintain relations with financial centres globally as they expand to stay informed of technological advances, regulatory changes [and] developments in the industry itself."
Double taxation
A treaty to avoid the double taxation of companies was signed last year and went into effect on January 1.
"In April last year, the Luxembourg parliament ratified the double taxation tax treaty between Luxembourg and the UAE. This has made Luxembourg an attractive gateway into Europe for investments from the UAE," Al Tayer said.
Both Al Tayer and Frieden expressed optimism for the future.
"The crisis can never take away what has been built up over 30 years," said Frieden.
"We all lost money in the crisis, but in the long term, regional financial centres have a bright future."
Al Tayer said that the DIFC's key focus area for going forward will be international collaboration. "We will strive to increase harmonisation among markets, among financial markets, and among jurisdictions, regulators and central banks," he said.
