Family businesses in the region need to move away from investing heavily in traditional sectors such as real estate, logistics and hospitality, and instead, consider diversifying into digital assets, e-commerce and new sectors like financial investments, according to Abdulla bin Touq, UAE Minister of Economy.
“Irrespective of their size, family businesses make a significant contribution to the nation’s economic development and help in job creation,” the minister said at the launch of the DIFC Family Wealth Centre on Wednesday.
“This is happening at a time when the UAE has stepped up its efforts to solidify family businesses as key partners in the country’s sustainable development over the next 50 years.”
Family-owned businesses are key drivers of the UAE economy, accounting for a substantial number of jobs, and they boost economic activity through their supply chain ecosystems.
Last year, the UAE launched the Thabat Venture Builder programme that aims to double family-owned businesses' contribution to the nation's gross domestic product to $320 billion by 2032 by preparing them for the future economy.
The programme aims to transform 200 family business projects into major companies by 2030 with a market value exceeding Dh150 billion ($40.84 billion) and annual revenue of Dh18 billion.
The Dubai International Financial Centre (DIFC) announced the creation of the Family Wealth Centre last August, in a push to double the sector’s contribution to the economy by 2030.
It is expected to bring family businesses and ultra-high-net-worth individuals (UHNWI) — people with a net wealth of $30 million or more — from the UAE and the broader Middle East, Africa and South Asia region and beyond to DIFC, and provide access to a range of support services to enable legacy and succession planning.
The centre will open at a time when about Dh3.67 trillion in assets will be transferred to the next generation in the Middle East over the next decade.
Family businesses face many challenges, including digitalisation, longevity of succession planning, sustainability-related issues, technological advancement and intergenerational shift, Mr bin Touq said.
“It is estimated that only 20 per cent of wealth managed by family businesses reach the third generation in the Middle East”, he said.
“These realities confirm the importance of this centre and similar entities as platforms that bring together the sector’s stakeholders to discuss common challenges.”
Family businesses contribute about 80 per cent to the region’s GDP and employ 40 per cent of the workforce, according to Essa Kazim, governor of DIFC.
However, family businesses are facing challenges, such as increasingly complex regulations in the countries where they hold assets, he said.
“Globally, we are experiencing the biggest intergenerational wealth transfer in modern history. Being a relatively young nation, many family businesses here are experiencing this transfer for the first or second time,” Mr Kazim said.
“This brings complexity because they may not have the experience or established processes in place to manage the transfer of their wealth in a manner where the decision-making entities that hold their business and private wealth remain aligned with the family governance principles.”
About 87 per cent of high-net-worth individuals in the Middle East indicated in a survey that they believe their family businesses are set up for efficient wealth transfer to the next generation. Yet only 24 per cent have effective succession planning in place in a manner that properly preserves wealth for future generations, Mr Kazim said.
If intergenerational wealth transfer is not properly planned, the probability of it being lost by the third generation is very high, he said.
Through certification and accreditation schemes operated by the Family Wealth Centre, family businesses and their advisers will be given examples of best practices and standards in respect of family governance and succession planning.
The DIFC has built a legislative framework to assist families in establishing structures for their succession planning. This includes the foundation law, trust law, DIFC Companies regime and the recently enacted Family Arrangements Regulations, Mr Kazim said.
The financial hub enacted DIFC Family Arrangements Regulations to enable more family-owned businesses to start operating from its Family Wealth Centre.
The new regulatory framework will govern how the UAE's regional and global family-owned businesses, and UHNWI and private wealth offices, operate from the financial hub.
DIFC’s existing family offices have the choice to move to the new centre and take advantage of tailor-made services and extra privacy benefits it offers.
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Company Fact Box
Company name/date started: Abwaab Technologies / September 2019
Founders: Hamdi Tabbaa, co-founder and CEO. Hussein Alsarabi, co-founder and CTO
Based: Amman, Jordan
Sector: Education Technology
Size (employees/revenue): Total team size: 65. Full-time employees: 25. Revenue undisclosed
Stage: early-stage startup
Investors: Adam Tech Ventures, Endure Capital, Equitrust, the World Bank-backed Innovative Startups SMEs Fund, a London investment fund, a number of former and current executives from Uber and Netflix, among others.
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