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A company in a zero-taxed country, but is that enough to be taxed 0?

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Omen744

New member
I'm not from US, Canada, UK, Australia, Europe

If I set up a company in Dubai and won't live there, what'll be a benefit of the fact that UAE is a zero tax country? Zero taxes apply only to those who spend at least 183 days per year in UAE, no?
 

Sols

Staff member
Mentor Group Gold
Unless you live in a tax haven or in a country with extremely outdated tax laws, there is no benefit to having an offshore company.

In nearly all cases if you are the only real director/controlling person of the company, the company becomes tax resident where you live and has to pay tax just like a local company.
 

Fred

Dubai Expat
Mentor Group Gold
Commercial Service
I'm not from US, Canada, UK, Australia, Europe

If I set up a company in Dubai and won't live there, what'll be a benefit of the fact that UAE is a zero tax country? Zero taxes apply only to those who spend at least 183 days per year in UAE, no?
Beside of the already mentioned - the UAE can be useful if you are a digital nomad or a low tier passport holder.

With the Company Formation that grants you the residence visa you are able to open the local UAE banks without the need of renting an apartment the whole year - the only requirement is to keep the residence visa active with coming to the UAE every 180 days.

My point here is not the tax - it's the possibility to have a real physical business and personal bank account and some kind of financial center even when you are travelling around the whole year or living on AirBnb or whatever. In practice it works that you aren't tax liable anywhere if you have a UAE residence and travel around as you stay nowhere long enough or rent something for the whole year to really get tax liable but all this fails when it comes to banking - banks require an address.

The UAE doesn't work with postcode system and is therefore some kind of workaround - if setup right.

For the tax everything is already mentioned if you want to receive the tax residence certificate you have to stay your 183 days and rent an apartment esspecially in the first year after the first year you receive from practice experience even with less then the 183 days the tax residence certificate.

Additional interesting part of the UAE is that you get a residence by investment trough the Company Formation - so no CRS reporting fo your financial statement is triggered.

All in all the UAE can give you more freedome if used right - even without staying 183 days there - in times things are changing rapidly.
 

Omen744

New member
In nearly all cases if you are the only real director/controlling person of the company, the company becomes tax resident where you live and has to pay tax just like a local company.
How will a local government find out about my UAE company if UAE doesn't exchange information automatically?
 

Omen744

New member
With the Company Formation that grants you the residence visa you are able to open the local UAE banks without the need of renting an apartment the whole year - the only requirement is to keep the residence visa active with coming to the UAE every 180 days.
Sold!

First I think I'd obtain a freelance visa, open a personal bank UAE account and see how it goes for a half a year or so. Later, possibly I'd open a company and a business bank account.

Can a freelance visa be converted into a company later on? Or will I have go through all the procedures and pay the whole cost of opening a company all over again?
 

Fred

Dubai Expat
Mentor Group Gold
Commercial Service
How will a local government find out about my UAE company if UAE doesn't exchange information automatically?
UAE is part of CRS since 2018


When you setup your bank accounts with the residence visa - the Onshore Company Formation grants you - is used to open the local UAE banks the banks consider you fully as a local UAE resident and therefore not CRS reporting is triggered.

It's called residence by investment

Combine this with no public company registers and you will be right with asking yourself the question you did above.

On the one hand it's not legit to setup this with the UAE by staying the whole year in the home country and on the other hand there is not much the home country can do to find out something about it as no public company register and no CRS reporting triggered.

It's like always theory vs. practice.
 

Fred

Dubai Expat
Mentor Group Gold
Commercial Service
Sold!

First I think I'd obtain a freelance visa, open a personal bank UAE account and see how it goes for a half a year or so. Later, possibly I'd open a company and a business bank account.

Can a freelance visa be converted into a company later on? Or will I have go through all the procedures and pay the whole cost of opening a company all over again?
That's exactly not the way to go.

The freelance visa was introduced in 2018 and till today the banks doesn't like to open a personal bank account that conducts business because they don't have a compliance team that is dealing with this bank accounts.

You can open a personal account without mention anything about business but 99% the account get shut down after receiving business transactions.

Beside of that there are some HMRC horror stories people got caught because of the bank accounts in there personal names used for business purpose.

You can use your residence visa you received from the freelance visa so you don't need to get a residence visa through the company.

Honestly it would be a trash setup because you simply overpay.

Just go with a Company that grants your residence visa and business bank account in the name of the company. That setup isn't even double the cost of the mentioned Freelance solution that isn't working well in practice anyway.
 

Omen744

New member
The freelance visa was introduced in 2018 and till today the banks doesn't like to open a personal bank account that conducts business because they don't have a compliance team that is dealing with this bank accounts.

You haven't understood. I didn't say that that I'd be condacting business using my personal UAE account for that.
 

azb1

Mentor Group Gold
I still do not get it
Can someone put light on difference between person and business transactions ?
How bank can figure out it is business transactions or personal?

Sorry in advance for my ignorance .
 

Fred

Dubai Expat
Mentor Group Gold
Commercial Service
Everything beside of salary or investment you receive to personal account will be considered as business transactions.

You haven't understood. I didn't say that that I'd be condacting business using my personal UAE account for that.
Get it.

Yes like you mentioned before you pay for the freelance visa as well as later for the company + your residence visa is connected to the freelance license so in case the freelance license isn't renewed you have to do the whole visa process again as then the Dubai Company will grants you the residence visa.
 

daxbr

Active Member
"

A company in a zero-taxed country, but is that enough to be taxed 0?"​

Not good enough, always better to get subsidies. ;)
 

Omen744

New member
Everything beside of salary or investment you receive to personal account will be considered as business transactions.
How can it be? You mean that any money, apart from salary and investment, *from ouside of UAE* would be deemed as business transactions?
What if a UAE resident sent me some money, say $500, or even 1-3k usd? Maybe he owed it to me, maybe he made a gift -- there can be a gazillion of potential situations where 2 individuals would send money to each other.
 

Fred

Dubai Expat
Mentor Group Gold
Commercial Service
How can it be? You mean that any money, apart from salary and investment, *from ouside of UAE* would be deemed as business transactions?
What if a UAE resident sent me some money, say $500, or even 1-3k usd? Maybe he owed it to me, maybe he made a gift -- there can be a gazillion of potential situations where 2 individuals would send money to each other.
Too much theory.

If you receive frequently 10's of thousands of $ to a personal bank account - what you do if you consider the UAE as a valid option for your business - they ask you about the transactions and shut down the account because they suspect personal account abusing for business activity.

This is triggered by the Frequence and Volume of the transfers.

Forget abou 1-3k USD transfers - nobody cares in the UAE - why want somebody with receiving 3k USD per month moving to Dubai and even then if the money is coming regular and not claimed as salary they ask questions.

If you go with a Freelance License you have to provide a history of business you did in the past and have some qualifications for - they don't just issue a Freelance License without any track record in the business activity you want to apply for. So anyway it doesn't work if somebody is thinking that a Freelance License can be a cheaper solution to get a Residence Visa without any trackrecord in business field the Gov provides a Freelance License for.
 

Omen744

New member
If you receive frequently 10's of thousands of $ to a personal bank account - what you do if you consider the UAE as a valid option for your business - they ask you about the transactions and shut down the account because they suspect personal account abusing for business activity.
Right. Too frequently, tens of thousands. But previously you said a diffeernt thing

Everything beside of salary or investment you receive to personal account will be considered as business transactions.
 

Fred

Dubai Expat
Mentor Group Gold
Commercial Service
Right. Too frequently, tens of thousands. But previously you said a diffeernt thing
Cherry picking.

I think the point of my post and the experience I wanted to share with you - is clear.
 

azb1

Mentor Group Gold
Business bank account with higher turnover also raise the question in the eye of bank .What is the difference for personal and business account ?
So what is the catch ?
 

Fred

Dubai Expat
Mentor Group Gold
Commercial Service
Business bank account with higher turnover also raise the question in the eye of bank .What is the difference for personal and business account ?
So what is the catch ?
10.000 usd is high turnover for personal account for business account not really. In general you can have much higher turnover with business account.
 
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