Monday – Friday | 09:00 – 18:00
Knowledge Series · GIFT City & IFSC

Setting Up a Fund Manager in GIFT City, DIFC or ADGM

ATB Knowledge Series · 13 min read · Published October 2026

A fund management company serving India or Gulf investors usually sits in one of three centres: GIFT IFSC, regulated by the International Financial Services Centres Authority (IFSCA); the Dubai International Financial Centre (DIFC), regulated by the Dubai Financial Services Authority (DFSA); or Abu Dhabi Global Market (ADGM), regulated by its Financial Services Regulatory Authority (FSRA). Each licenses the manager separately from the funds it runs, sets its own capital and people rules, and taxes the manager’s own income under a different regime. The right base follows from where the strategy, the investors and the team are. None of the three is better in the abstract.

What this insight covers

This insight is about the manager only: the licence, capital, people, substance and tax of the company that manages the money. Two fund-level points are outside it. A GIFT City feeder investing into an overseas master is covered in master-feeder structures with a GIFT City feeder. The choice of fund vehicle is covered in ADGM, DIFC and GIFT City structures, which compares the three centres by purpose; the wider comparison of the three centres for cross-border structures generally (legal system, tax, access to India) is in GIFT City vs DIFC vs ADGM. The structures page also covers DIFC’s variable capital company, which an Authorised Firm may not use to establish a Fund without express DFSA permission (Reg. 3.2.1, DIFC Variable Capital Company Regulations 2026).

The fund management company licence in each centre

GIFT IFSC DIFC ADGM
Regulator IFSCA DFSA FSRA
What the manager obtains Certificate of registration as a Fund Management Entity (FME) (Reg. 3(1), FM Regulations 2025) DFSA licence for the Financial Service of Managing a Collective Investment Fund Financial Services Permission (FSP) covering Managing a Collective Investment Fund
Tiers or categories Authorised FME; Registered FME (Non-Retail); Registered FME (Retail) (Reg. 3(4)) Prudential Category 3C for fund managers (DFSA fund FAQ, 1 June 2022); the current PIB was not reviewed Prudential category; managing a fund sits in Category 3C (FSRA guide, May 2025). From 16 Sep 2026: Sub-Threshold Fund Manager, Institutional Fund Manager, Institutional Fund Asset Manager
Legal form Company, LLP or branch; Retail FME not an LLP or branch (Reg. 5(1)) Not covered here Not covered here
Rules in change Two amendments in 2026 (in force 30 Jan and 10 Sep 2026) Consultation Paper No. 173 on funds (closed 7 Sep 2026); DFSA rule-making instruments, including one for the PIB module (No. 438 of 2026), come into force on 1 Jan 2027 Funds framework enhancements finalised 16 Sep 2026; transition to 31 Mar 2027 for venture capital and foreign fund managers

GIFT IFSC: three FME categories

An entity may not operate as a fund manager in an IFSC without a certificate of registration as an FME (Reg. 3(1)). The category decides what it may do (Reg. 3(4)):

  • Authorised FME: venture capital schemes, and a single family’s family investment fund.
  • Registered FME (Non-Retail): restricted schemes (private funds for accredited or high-ticket investors), portfolio management including multi-family office, and privately placed REITs and InvITs, plus everything an Authorised FME may do.
  • Registered FME (Retail): retail schemes, ETFs and public REITs and InvITs, plus all of the above.

A branch is available only to an FME already regulated in India or abroad for similar activities (Reg. 5(1)). A Retail FME needs at least four directors, half of them independent (Reg. 5(4)). A foreign manager that does not want its own FME can instead have a Registered FME launch a scheme on its behalf, if the manager is registered or regulated in its home country for fund management, portfolio management, investment advisory or similar activity, and the Registered FME holds IFSCA authorisation for third-party fund management (Regs. 107A–107C). For the wider GIFT City setup, see India: GIFT City.

DIFC: a DFSA licence

The DFSA’s funds page expects a domestic fund manager to show “adequate systems and controls to manage the type of Fund you propose to establish”, and its board, senior management and key control staff must meet suitability and integrity criteria. The DFSA’s fund FAQ of 1 June 2022 says Prudential Category 3C applies to fund managers of a Qualified Investor Fund, Exempt Fund or Public Fund (Q27); its 2013 PIB Q&A also places managing a Collective Investment Fund in Category 3C. The current PIB text was not reviewed. The DFSA also has an External Fund Manager route, with its own conditions, such as appointing a DFSA-licensed Fund Administrator or Trustee. Consultation Paper No. 173 (7 July 2026) proposes removing that route and “simplifying authorisation requirements for investment managers”. These are proposals; no final rules were found. The DIFC page covers the centre more generally.

ADGM: an FSRA permission

The FSRA describes itself as “an activities-based regulator”, so “a firm need only apply for a Financial Services Permission” for the activities it carries on (Getting Started Guide, May 2025). On 16 September 2026 the FSRA published enhancements to its framework for funds and fund managers. They introduce “streamlined regulatory frameworks for Fund Managers of smaller Funds” and for managers of funds targeting exclusively institutional investors, with a transition period to 31 March 2027 for some existing manager categories. The new categories are:

  • Sub-Threshold Fund Manager (STFM): closed-ended funds, not available to retail clients, up to USD 200 million aggregate committed capital.
  • Institutional Fund Manager (IFM): Qualified Investor Funds or equivalent, USD 5 million minimum subscription per investor, no natural-person unitholders.
  • Institutional Fund Asset Manager (IFAM): an asset manager providing investment management to institutional-only funds.

The transition applies to venture capital fund managers and foreign fund managers (ADGM announcement; FSRA declaration forms). The final rule text is not reviewed here. See also ADGM.

Capital requirements for a fund manager

GIFT IFSC DIFC ADGM (FSRA guide, May 2025)
Base figure Net worth: Authorised USD 75,000; Non-Retail USD 500,000; Retail USD 1,000,000 (Second Schedule) DFSA FAQ, 1 June 2022: higher of USD 70,000 or the Expenditure Based Capital Minimum (EBCM) for a QIF or Exempt Fund manager; higher of USD 140,000 or EBCM for a Public Fund or Credit Fund manager; higher of USD 500,000 or EBCM if the firm also manages other portfolios; nil for venture capital fund managers Category 3C, managing a fund: USD 250,000, or, where that is the only regulated activity, USD 150,000 for a Public Fund or other fund available to retail clients and USD 50,000 for any other fund
Other measures Retail FME on the alternative track-record route: net worth of at least USD 2 million (Reg. 6(2)(a)(ii)) EBCM as above; not otherwise verified Expenditure Based Capital Minimum: 13/52nds of annual audited expenditure (3B/3C without client assets); 18/52nds where client assets are held
How held At all times; a branch may hold it at parent level; in addition to capital for other activities (Reg. 8) Not verified Not covered here
New categories (16 Sep 2026) Not applicable Not applicable As proposed in CP No. 12 of 2025; final rules not reviewed: STFM base capital USD 50,000, no EBCM; IFM higher of USD 50,000 and 6/52nds of annual audited expenditure; no mandatory Finance Officer for either
Status Current consolidated text (10 Sep 2026) 2022 FAQ; the current PIB was not reviewed Full-scope figures pre-date the 16 Sep 2026 amendments, not verified

In GIFT, an FME whose net worth falls short may not launch new schemes or take on new clients until it is restored (IFSCA circular, 16 Feb 2024). Under IFSCA’s fee circular of 2 March 2026 (corrected 13 March 2026; applies from FY 2026-27, i.e. 1 April 2026), the fees are an application fee of USD 2,500, a registration fee of USD 5,000, 7,500 or 10,000 by category, and an annual fee of USD 3,000 per FME (Fee Circular 2026, Schedule I, Part 2(A)).

For the DIFC, the figures above come from a 2022 DFSA FAQ and are not current rule text. A DFSA rule-making instrument for the PIB module (No. 438 of 2026) takes effect on 1 January 2027, and whether it changes these figures was not confirmed.

Cost heads. Setting up a manager involves regulatory fees (application, registration, annual), capital or net worth, people, premises, audit, compliance and reporting. Capital is not an expense, but it ties up funds. No comparative cost figures are given because none are sourced.

Key people and substance

GIFT IFSC DIFC ADGM
Key roles Principal officer; compliance officer for Registered FMEs; a fund-management KMP for Retail FMEs before the first retail scheme or ETF (Reg. 7(1)–(3)); another fund-management KMP once AUM (excluding fund-of-funds schemes) is at least USD 1bn at a financial year end (Reg. 7(4)) Senior Executive Officer, Compliance Officer, AML Reporting Officer and Finance Officer (DFSA authorisation page, undated) The guide refers to the Senior Executive Officer, Compliance Officer, Money Laundering Reporting Officer and Finance Officer; each director needs approval for the Licensed Director function
Residence or location KMPs “based out of IFSC” (Reg. 7(5)); portfolio proposals initiated by a person based in the IFSC office (Reg. 7(7)) Senior Executive Officer, Compliance Officer and AML Reporting Officer must be UAE-resident: “The first three positions require the individuals responsible to be resident in the UAE” (same undated page; rule number not reviewed). No residence requirement is stated for the Finance Officer Senior Executive Officer and Compliance Officer must be resident in the UAE (FSRA guide, May 2025, p. 10); the Finance Officer may sit in another group entity or the head office
Combining roles Not covered here Not covered here SEO and Compliance Officer cannot be the same person; Compliance Officer and MLRO may be
Premises “Dedicated, secured” office accessible only to authorised persons (Reg. 10(2)) Activities carried on from a place of business in the DIFC Physical presence on Al Maryah Island or Al Reem Island; no set premises size

On outsourcing, the FSRA guide says it would entertain proposals to outsource the Compliance Officer and MLRO roles. A 2026 UAE joint AML guidance (ADGM FCCP Notice No. 69 of 2026) says a licensed financial institution “must not outsource the role of the CO/MLRO nor the entire Compliance Function under any circumstances”. The guide pre-dates that notice, so the current position should be checked.

GIFT KMPs need a relevant qualification and, by default, five years’ experience in an “eligible institution” in IFSC, India or abroad (Reg. 7(5)). All applicants and their officers must be “fit and proper” (Reg. 9). Two 2026 IFSCA circulars add obligations:

  • Certification. KMPs and other employees discharging core fund management activities must complete a specified course (Reg. 7(6); circular of 1 April 2026): the ICSI course “Regulatory Framework for Fund Management in IFSC: AIFs and Retail Schemes”, or the ICAI course of 10 August 2026. The deadline was extended to 31 December 2026 (circular of 29 September 2026).
  • Website. From 1 December 2026 every FME must maintain a website or webpage with prescribed disclosures, and must intimate its URL to IFSCA on or before 1 December 2026 (circular of 26 August 2026, paras 7 and 9). A new FME gives the URL within thirty days of registration.

UAE tax adds its own substance test. A Qualifying Free Zone Person must carry on its core income-generating activities in a Free Zone or a Designated Zone, with adequate assets, “an adequate number of qualified full-time employees” and adequate operating expenditure. Those activities may be outsourced within a Free Zone or a Designated Zone if the person supervises them adequately (Cabinet Decision No. 100 of 2023, Art. 8).

Tax on the fund management company’s own income

This section is about the manager’s fees and profits, not the funds.

India: the s. 147 deduction

An IFSC unit may deduct 100% of income from its approved business activities for any 20 consecutive tax years out of 25, at its option (s. 147(1), (2)(b), (3)(c), Income-tax Act 2025). An FME holding an SEZ Letter of Approval will usually be a “Unit”. Points to model:

  1. Anti-splitting. A unit commencing operations on or after 1 April 2026 gets the deduction only if it is not formed by “splitting up or reconstruction or reorganisation or transfer of a business already in existence in India” (s. 147(5)). Where an Indian manager moves a team or mandates into GIFT, the test depends on its facts.
  2. Rate on s. 147(3) income. Section 218 taxes income of that nature, where included in total income, at 15%. It does not itself say “after the deduction period”. The Memorandum explaining the Finance Bill 2026 and the Budget Speech annex both state the intention that “the business income of these units from IFSC after the expiry of period of deduction will be taxed at rate of 15%” (Memorandum, p. 48; Budget Speech 2026-27, Annexure to Part B, item 4(vi)).
  3. MAT and AMT. For a company that is an IFSC unit deriving its income solely in convertible foreign exchange, minimum alternate tax is computed on book profit at 9% (s. 206(1)(b)(i)); alternate minimum tax for such a unit is also 9% (s. 206(2)(b)(ii)(I)). Finance Act 2026 (s. 59(a)(i)) cut the general MAT rate from 15% to 14% but left the 9% IFSC rate unchanged. No guidance found addresses how MAT or AMT at 9% interacts with the deduction years.
  4. Filing. An accountant’s report in Form No. 35 and a copy of the IFSCA registration go with the return (s. 147(4); Rule 69, Income-tax Rules 2026).

UAE: the Qualifying Free Zone Person regime

A Qualifying Free Zone Person pays 0% on Qualifying Income and 9% on other taxable income (Federal Decree-Law No. 47 of 2022, Art. 3(2), Ministry of Finance consolidated English text, not an official translation). To qualify it must maintain adequate substance, derive Qualifying Income, not have elected under Article 19 to be subject to Corporate Tax, and comply with Articles 34 and 55 (Art. 18(1)).

  • Qualifying activities. Ministerial Decision No. 229 of 2025 lists “Fund management services” and “Wealth and investment management services” (Art. 2(1)(g), (h)). Its definition of fund management services covers activities “subject to the regulatory oversight of the Competent Authority in the State” (Art. 2(3)(g)). “Competent Authority” as defined in the Decision includes the DFSA and the FSRA (Art. 1).
  • Counterparty. The 0% rate is conditional, not automatic. Income from a Free Zone Person counts as Qualifying Income only where that person is the beneficial recipient and the activity is not an Excluded Activity. Income from a Non-Free Zone Person counts only for a Qualifying Activity that is not an Excluded Activity (Cabinet Decision No. 100 of 2023, Art. 3(1)(a)–(b), 3(2)).
  • De minimis. Income from activities outside a Qualifying Activity, such as fees for services outside the regulated fund management scope, is non-qualifying revenue. It must not exceed 5% of total revenue or AED 5,000,000, “whichever is lower” (MD 229, Art. 3; Cabinet Decision No. 100 of 2023, Arts. 3(1)(d), 4).
  • Carried interest. The Decisions read do not mention carried interest or performance fees, so whether they count as income from fund management services is not resolved by them.
  • Audited accounts. Required (MD 229, Art. 5(1)). A person failing a condition loses the status from the start of that tax period and for the next four (Art. 5(2)).
  • Free zone status. The DIFC was established as a financial free zone by Federal Decree No. 35 of 2004 (Art. 1), and ADGM says it was established as a Financial Free Zone by Federal Decree No. 15 of 2013. ADGM’s Registration Authority has issued guidance for ADGM companies that are or wish to qualify as QFZPs (August 2025). The manager’s own position depends on its facts.
  • Manager of a UAE fund. Where a UAE fund relies on Qualifying Investment Fund status, Cabinet Decision No. 34 of 2025 can bring part of the fund’s income into a resident manager’s taxable income (Art. 2(2)(a)). This is relevant where manager and fund are both UAE resident.

The India nexus

Most managers comparing these centres have an India link: an Indian sponsor, Indian investors, an India strategy, or a team in India.

  • India strategies. A GIFT restricted scheme may invest in instruments and entities “in IFSC, India or foreign jurisdiction” (Reg. 34(1)).
  • Indian promoters. IFSCA’s setup workflow lists “ODI-Capital and Funds Infusion (when required after IFSCA In-Principle approval)” among the steps, so an Indian parent’s capital into a GIFT FME goes through the overseas investment route where required. A UAE manager owned from India raises the same FEMA question; see FEMA advisory.
  • GIFT manager of an offshore fund. The Income-tax Act 2025 carries forward a safe harbour under which an eligible fund’s management through an eligible fund manager in India is not, by itself, a business connection of the fund (s. 9(12)). The conditions are in Schedule I. The current text of Schedule I should be checked.
  • UAE manager with people in India. If investment decisions or senior management for a UAE manager are in practice taken in India, the question is whether the company could be treated as resident in India, or have a permanent establishment there. These questions turn on facts and treaty terms, and this insight does not analyse them.

Choosing by purpose

Purpose What points to a centre What to check first
Managing India-focused strategies for Indian and non-resident investors GIFT FME: schemes may invest in India (Reg. 34(1)); s. 147 deduction; GIFT feeder route for Indian corporate money (master-feeder) FME category and net worth; KMPs based in IFSC; s. 147(5) if moving an Indian business
Raising and managing money from Gulf and other Middle East investors DIFC or ADGM manager under DFSA or FSRA licence; QFZP regime on qualifying fund management income Current capital figures under the DFSA and FSRA rulebooks; key individuals’ residence; QFZP substance and de minimis
Both A GIFT FME for India schemes and a UAE manager for the Gulf, each licensed for what it does Clear allocation of decisions and fees; the India-nexus points above
Proprietary or family platforms One line: these raise different questions, and the structures page covers them Outside this insight

Common questions

What is a fund management company in GIFT City called?

A Fund Management Entity (FME), registered with IFSCA as an Authorised FME, Registered FME (Non-Retail) or Registered FME (Retail) (Reg. 3(4)).

How much capital does a fund manager need in ADGM?

Under the FSRA’s May 2025 guide, USD 50,000 for a manager whose only regulated activity is managing any other fund (not a Public Fund or one available to retail clients), USD 150,000 for a Public Fund or retail-available fund, and USD 250,000 otherwise. These figures pre-date the 16 September 2026 amendments, which add categories with lower proposed capital (as proposed in CP No. 12 of 2025, STFM USD 50,000 with no EBCM; IFM the higher of USD 50,000 and 6/52nds of annual audited expenditure). Final rules were not reviewed.

What is the DFSA capital requirement for a fund manager?

A 2022 DFSA FAQ gives the higher of USD 70,000 or EBCM for a QIF or Exempt Fund manager, USD 140,000 or EBCM for a Public Fund or Credit Fund manager, and USD 500,000 or EBCM if the firm also manages other portfolios. Venture capital fund managers: nil. The current PIB was not reviewed, and a PIB instrument (No. 438 of 2026) takes effect on 1 January 2027.

Is fund management a qualifying activity for UAE free zone tax?

It is a Qualifying Activity, but the 0% rate is not automatic. Ministerial Decision No. 229 of 2025 lists fund management services and wealth and investment management services (Art. 2(1)(g), (h)), and fund management qualifies where it is under DFSA or FSRA oversight (Art. 2(3)(g)). The manager must still meet all QFZP conditions, including substance and the counterparty and de minimis tests. Carried interest is not addressed in the instruments read.

Does a GIFT City fund manager need staff in GIFT City?

Yes. KMPs must be “based out of IFSC” (Reg. 7(5)), and portfolio proposals must be initiated by a person based in the IFSC office (Reg. 7(7)).

Sources

  1. IFSCA (Fund Management) Regulations, 2025, as amended up to 10 September 2026 (consolidated), Regs. 3–10, 34, 107A–107C, Second Schedule. IFSCA, 14 Sep 2026. ifsca.gov.in
  2. Maintenance of net worth by FMEs. IFSCA, 16 Feb 2024. ifsca.gov.in
  3. Fee structure (IFSCA-DTFA/1/2026). IFSCA, 2 Mar 2026. ifsca.gov.in Corrected by corrigendum IFSCA-DTFA/2/2026, 13 Mar 2026 (official URL not located).
  4. Workflow for setting up in IFSC on the SWIT portal, v1.0. IFSCA, 7 Jul 2026. ifsca.gov.in
  5. Income-tax Act, 2025 – Section 147 (as amended by Act No. 4 of 2026). Income Tax Department. incometaxindia.gov.in
  6. Income-tax Act, 2025 – Sections 218 and 206. Income Tax Department. incometaxindia.gov.in ; incometaxindia.gov.in
  7. Income-tax Act, 2025 – Section 9 (sub-s. (12)). Income Tax Department. incometaxindia.gov.in
  8. Finance Act, 2026 (No. 4 of 2026), ss. 47, 59, 60. Gazette of India Extraordinary, 30 Mar 2026.
  9. Income-tax Rules, 2026, Rule 69. CBDT, 20 Mar 2026. incometaxindia.gov.in
  10. Key Features of the DFSA Funds Regime (web page, undated, read 27 Oct 2026). DFSA. dfsa.ae
  11. Authorisation (web page, undated). DFSA. dfsa.ae
  12. Q&A on the new PIB module (Jan 2013). DFSA. dfsa.ae
  13. DFSA proposes significant updates to its Collective Investment Fund framework (Consultation Paper No. 173). DFSA, 7 Jul 2026. dfsa.ae
  14. Notice of amendments to legislation. DFSA, 11 May 2026. dfsa.ae
  15. Financial Services Regulatory Authority Getting Started Guide. ADGM, May 2025. assets.adgm.com
  16. Regulatory Update – ADGM FSRA Finalises Enhancements to its Funds Framework. ADGM, 16 Sep 2026. adgm.com
  17. Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses, consolidated English text (not an official translation). UAE Ministry of Finance, Jan 2026. mof.gov.ae
  18. Cabinet Decision No. 100 of 2023 on Determining Qualifying Income for the Qualifying Free Zone Person. UAE Ministry of Finance, 25 Oct 2023. mof.gov.ae
  19. Ministerial Decision No. 229 of 2025 Regarding Qualifying Activities and Excluded Activities. UAE Ministry of Finance, 28 Aug 2025. mof.gov.ae
  20. Cabinet Decision No. 34 of 2025 on Qualifying Investment Funds and Qualifying Limited Partnerships. UAE Ministry of Finance, 27 Mar 2025. mof.gov.ae
  21. Corporate Tax Guide: Free Zone Persons (CTGFZP1). Federal Tax Authority, May 2024. tax.gov.ae
  22. Federal Decree No. 35 of 2004 to Establish Financial Free Zone in Dubai. Hosted by DFSA. dfsa.ae
  23. Federal Legislation (ADGM as a Financial Free Zone). ADGM. adgm.com
  24. Guidance on Financial Statements for ADGM Qualifying Free Zone Persons. ADGM Registration Authority, Aug 2025. assets.adgm.com
  25. Frequently Asked Questions For The DFSA’s Collective Investment Funds Regime. DFSA, 1 Jun 2022 (hosted on a DFSA web-storage bucket, not dfsa.ae). 365343652932-web-server-storage.s3.eu-west-2.amazonaws.com
  26. Declaration - Sub Threshold Fund Managers or Institutional Fund Managers; Declaration - Institutional Fund Asset Managers (forms, undated). FSRA, ADGM. assets.adgm.com ; assets.adgm.com
  27. Consultation Paper No. 12 of 2025 (Funds Review). FSRA, ADGM, 24 Nov 2025. assets.adgm.com
  28. Joint AML/CFT/CPF Guidance on the CO/MLRO Function in the UAE (Supervisory Sub-Committee; ADGM FCCP Notice No. 69 of 2026). ADGM. assets.adgm.com
  29. Specification of Certification Course for KMPs/Employees under the IFSCA (Fund Management) Regulations, 2025 (IFSCA/13/2026-Capital Markets/1). IFSCA, 1 Apr 2026. ifsca.gov.in
  30. Extension of timeline for completion of Certification Course by KMPs and employees of FMEs (F. No. IFSCA-AIF/127/2026-Capital Markets/1). IFSCA, 29 Sep 2026 (also refers to the ICAI course circular of 10 Aug 2026, F. No. IFSCA-PLNP/80/2024-Capital Markets/10082026; official URL not located). ifsca.gov.in
  31. Requirement for Fund Management Entities (FMEs) to maintain a website or webpage (IFSCA-SOF/2/2026-Capital Markets). IFSCA, 26 Aug 2026. ifsca.gov.in
  32. Memorandum explaining the provisions in the Finance Bill, 2026. Ministry of Finance, 1 Feb 2026. indiabudget.gov.in
  33. Budget Speech 2026-27, Annexure to Part B. Ministry of Finance, 1 Feb 2026. indiabudget.gov.in

Disclaimer: This article is general information, not tax or legal advice; rules change, so check the current position and take advice on your facts before acting.

Keep Reading

More practical commentary from the ATB Knowledge Series.

All insights
From Reading to Advice

How does this apply to your structure?

This article is general commentary — your situation is specific. When the position needs a clear answer for your business, talk to our team.

Get in touch