In 2024, the UAE continues to attract financial professionals and personal investors from around the globe. ADX trading volume has increased by a factor of four since 2020, and Forex in the Gulf has seen similar growth. With its strong tax incentives and bustling business environment, it’s becoming all the more relevant to understand the UAE investment landscape in 2024.
The legal framework
The UAE is unique in its legal framework, often raising the question of whether forex trading itself is legal. It is legal to trade using local brokers, so long as they are properly regulated.
The Securities and Commodities Authority (SCA) and the Central Bank are the two main regulators, both of which oversee trading activities and financial law compliance. The UAE also has financial-free zones, such as the Abu Dhabi Global Market (ADGM), of which each zone has its own regulatory body.
However, the benefit of brokers negotiating their way through various bodies is that it results in a robust and secure environment for residents. For customers, it’s a matter of finding platforms that are regulated by one of the many reputable bodies.
A growing number of Shariah-compliant platforms
Halal investments are hugely important in the UAE, and it’s possible to use an MT4 platform for traders in accordance with Sharia law. There are both local and offshore options that offer swap-free accounts.
There is no need to find a company that is only directed towards Islamic customers, as some (though, not all) of the larger brokers accommodate different types of accounts. This means that those accustomed to MT4 and the like needn’t make a compromise.
Advantages of trading in UAE
The UAE has many advantages as a jurisdiction to trade in. Arguably the biggest is the tax-free income on forex profits. Neither income tax, stamp duty, or capital gains tax applies to forex trading activity, making it one of the few tax-free places to trade in.
This is particularly important in 2024, with President Biden proposing a hike in capital gains tax in his second term. It’s not just the US that has high capital gains taxes either, and the gap between the UAE’s taxes on investments and the rest of the world’s only continues to widen.
USD news is UAE news
Dealing in dirham is very similar to dealing in USD, as this is the currency the dirham is pegged to. This means that not only should traders be up to date on economic affairs affecting the UAE, but just as importantly the affairs impacting the US and USD, as this has a direct impact on the exchange rate of the dirham.
For example, when looking at economic policy in 2024, both the Federal Reserve statements and the Central Bank of the UAE should be read carefully — particularly with expectations of rate cuts by the Fed. If the US continues to have above-target inflation, this will impact the dirham too, which is likely the currency your FX account is denominated in.
Overall, the UAE is a strong environment for traders to thrive in, with many laws aimed to entice them from abroad. As we progress into the year, there’s an increasing expectation of monetary policy changes, and a growing tax incentive relative to nations like the US.
