VIFC entrants need to build flexible structures as framework takes shape

After nearly a year of implementation, the VIFC's readiness is seeing some notable steps forward despite ongoing developments in sophisticated financial activities. Investors are closely monitoring the conditions for participation, licensing procedures, and practical application of regulations. Many businesses are now considering the VIFC as part of their long-term investment strategies, not just short-term incentives.

Some investors are choosing to establish holding companies at the VIFC rather than using familiar offshore structures, especially for large-scale projects. This additional structuring option could centralize management and attract international capital, depending on specific regulations. However, issues like the relationship between VIFC businesses and projects outside the center, coordination between membership and investment procedures, and the application of risk management, anti-money laundering, and innovation activities regulations are attracting investor attention.

For fintech models like digital assets and blockchain, businesses prioritize clarity on permitted activities, the supervisory framework, and the implementation roadmap. A common mistake businesses make is focusing too early on incentives without clarifying their business objectives and the practical value of establishing a presence at the VIFC.

Businesses preparing their applications should first clarify their objectives and demonstrate a substantive presence, including management activities, personnel, decision-making processes, and business functions. The executive authority and relevant ministries should establish a mechanism for advance discussions on complex cases, streamline procedures for law-abiding businesses, and promote consistent interpretation across the VIFC ecosystem.

KPMG acts as a bridge between businesses and regulators, consolidating issues, benchmarking against international experience, and contributing to policymaking.

Businesses should begin preparation for the VIFC now, assessing its suitability for their investment strategies, developing flexible structuring options to adapt to future policy changes, and maintaining early dialogue with authorities and organizations. Early preparation often positions organizations better to understand the emerging operating framework and seize opportunities quickly as mechanisms are further developed.