ADGM, the International Financial Centre in Abu Dhabi, worked with PwC to analyse the wide and expanding double tax treaty (DTT) network that ADGM companies conducting aircraft finance and leasing activities from ADGM would have access to. The extensive analysis compares the UAE DTT network and corporate tax positioning to the traditional global hubs for aviation finance, namely Ireland, Singapore, Hong Kong and Cayman Islands.
“The Middle East has a vibrant aviation landscape with expanding airports and growing fleets to address global demand well into the next decade. The aviation industry is one of the key economic sectors of Abu Dhabi and the UAE. As an IFC, ADGM continues to actively support and facilitate the industry’s demand for efficient financing and leasing arrangements for our domestic airlines. International players can tap on ADGM’s proven platform as their launch pad into the region’s fast-growing economies and access the exciting business opportunities and growth,” said Dhaher Bin Dhaher Al Mheiri, Chief Executive Officer of the Registration Authority.
Based on the report, the UAE has an extensive network of tax treaties, with 83 in force and a further 32 in various stages of negotiation, signature or ratification. The UAE has a wider network than the comparison jurisdictions and clear comparative advantages with particularly strong coverage in Central Asia and Africa as well as especially strong treaties with the burgeoning aviation markets of India and Indonesia. The commercial case for aircraft financing and leasing businesses to be based and established in Abu Dhabi Global Market is compelling.
Over the next 20 years Asia, the Middle East and Africa are forecast to be the highest growth aviation markets, with Abu Dhabi centrally positioned to these markets. The UAE is also noted to have impressive aviation credentials, with two of the world’s top airlines and a further two ambitious low-cost carriers. With aircraft debt and leasing funds emerging as an attractive and better-understood asset class, Abu Dhabi, with its abundance of wealth, also presents an attractive market to raise capital.
As an established broad-based IFC, ADGM is well prepared to support the aviation industry and aviation financing community in achieving their business strategies and growth plans for the Middle East and wider region. It has an attractive and robust ecosystem comprising world-class business infrastructure, comprehensive suite of corporate tools and direct access to global professional services, such as leading international law firms and accounting agencies that have anchored their offices at ADGM.
In catering to the exacting needs of the aviation industry, ADGM has put in place a modern and responsive jurisdiction that continuously presents innovative solutions and financing structures for businesses to realise their plans. International aviation finance businesses, including lessors, banks, advisory firms, recognise the strategic advantages of incorporating their regional presence in ADGM to be closer to their regional clients and business opportunities. With a highly competitive special purpose vehicle (SPV) regime, benchmarked against the world’s leading jurisdictions, ADGM also serves as an attractive domicile for the structuring of aircraft transactions (with the first aviation leasing transactions successfully concluded).
In addition to a wide and favourable DTT network, ADGM registered companies benefit from ADGM’s full English common law environment, zero-per cent corporate tax exemption until 2063, no foreign ownership restrictions, no limits on repatriation of profits and no withholding taxes, as well as access to our independent courts and financial services regulator. ADGM has been actively developing a thriving community of businesses and professional services to serve the local and regional markets in the aviation finance and leasing sector.
ADGM is committed to becoming an aviation financing and leasing hub in this region. The PwC report aims to enable companies and investors to identify clear opportunities that can enhance the operational and tax efficiency of their businesses in the aviation finance industry. The industry can continue to rely on ADGM’s established platform to expand its global presence as ADGM seeks to continue to engage and work closely with our community of firms to improve business conditions and access to opportunities.
To share a more in-depth understanding of ADGM’s aviation platform and services, ADGM will be meeting international aviation leaders and industry players at the upcoming annual Aviation Economies Growth Frontier Industry Conferences in Dubai, Hong Kong and Dublin.