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DMCC and UAE

omaozeko

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Hi there,

I am a UK resident, and looking at various ways of optimising taxes.

I am invoicing non UK companies for consulting and thinking about setting up a DMCC company in the UAE free trade zone. I would get tax residency and a local bank account, which means that in the eyes of the UAE there is no reporting to be done to the UK as I am a local resident (by going once every 6 months). I will still be reporting the income to the UK and pay taxes locally, but I want that flexibility of being offshore if I decide to move overseas.

Why is this a terrible idea? What could go wrong?

Thanks,
 
If you remain tax resident in UK and continue to report income to UK then no issues.

However why spend in excess of $20,000 to do this and gain no tax advantage. You are talking about company setup with visa plus apartment rental etc which is all needed to open a local account. Unless you know how to open a local business bank account for company easily as a non-resident.

Why is this a terrible idea?

Waste of money for no gain

What could go wrong?

You don't decide to move. Then its like buying a holiday home you never use.
 
If you remain tax resident in UK and continue to report income to UK then no issues.

However why spend in excess of $20,000 to do this and gain no tax advantage. You are talking about company setup with visa plus apartment rental etc which is all needed to open a local account. Unless you know how to open a local business bank account for company easily as a non-resident.



Waste of money for no gain



You don't decide to move. Then its like buying a holiday home you never use.

What if you only declare a certain amount back in the UK but leave the rest in the UAE? Given you are tax resident there so there is no CRS / no reporting applicable.
 
What if you only declare a certain amount back in the UK but leave the rest in the UAE? Given you are tax resident there so there is no CRS / no reporting applicable.

Well you committed tax fraud as you are also tax resident in UK where you are subject to tax on worldwide earnings unless you are a non-dom. HMRC is not stupid and your the perfect candidate for them to sodomize with your level of understanding of cross border taxation....lol.

P.S You can be tax resident in more than one country you know.
 
I guess it probably wouldn’t be discovered automatically, but if one of your customer is audited, then HMRC may very well ask who’s behind that UAE company. And your client will be happy to explain that it was you, a UK resident, who working for them from their London office.
That’s probably the most realistic risk.
 
DMCC is one of the most reputable, developed FZ in the UAE but it is not cheap and highly regulated. You need to consider accounting, audit and other ongoing costs also if you want to close the company there is a very long/expensive liquidation process. There are lots of discounts for business packages right now(because of covid19) but expect min $15k per year for ongoing years.

Another problem is ESR started in the UAE. You need to demonstrate a relationship with the UAE. It depends on the business but expect some proof like manager's residency and utility bill, office space, employees etc...
 
If your turnover is less than 300k USD/EUR/GBP per year - I guess it's probably not worth it.

Setting up things in UAE might not be that simple and can take some time.
It took us about 6 months to get our bank account approved.
You're also required to visit UAE once in 6 months to preserve your visa.

I just got back from Dubai couple days ago...
If you have any specific questions feel free to PM me...
 
Experience With a DMCC Company

Dear Offshore Corp Talkers,

I setup a DMCC company, and here is my report.

Introduction

I moved a company to DMCC, which had previously been based in some odd country in The Americas. Armed with my $500 corporate shield in a country I had never been to, I took the next natural step - I opened an account with Peter Schiff's Euro Pacific Bank, then in St. Vincent.

I had no idea that there might be issues with this down the line. The company is legit, and even well known and respected! But I wanted to play digital nomad and pay no tax, with no idea the banking cartel was coming for me.

Last year I came very close to loosing the lion's share of my life's earnings when Peter Schiff kicked me out and I had no other home. I only got the money out in the nick of time before Peter liquidated me. I've only I'd been privy to @Martin Everson 's posts.

My fair fiat saved, I did meagre research and quickly began the process of setting up a DMCC company.

DMCC is based in Jumeirah Lake Towers (JLT), which is adjacent Marina, and like a cheaper, quieter version of it. It's a nice area, but if you buy an apartment there, the interiors aren't that good.


It is the location of the Uptown development, which is part of JLT. I think they are having another crack at the world's tallest building there.

Opening Remotely

Reading that getting a bank account in UAE has become more difficult (due to the banking cartel), I decided to incorporate in Dubai, and the DMCC (Dubai Multi Commodities Centre), which is said to be the most prestigious and best. I was also told this was the only free zone, which can be opened remotely, since I was not a UAE resident.

I opened with Local Consultants DMCC (Business Setup in Dubai | Company Formation in Dubai, UAE | Emirabiz), who have transparent pricing. They were good overall and were always quick to reply to emails, but I didn't feel they wrapped it up too well. I have a flexi-desk (an alleged share in an office I have never been to), but they never told me anything about that. When I asked about opening a bank account, they didn't seem to want to help, just gave me a link to a bank and I think they might have not given me all the required documents as they should have.

You can try and incorporate and get you visa yourself, but I would recommend going with them or another agent. I spoke to a guy who used the DLS consultancy that advertises on this this and from what he said they were better. I don't think it would be difficult to do yourself, but you will be left doing a lot of research and faffing about.

Opening remotely required I make one or two calls with a DMCC rep., sign a few forms, and hand over a few details. I was surprised there was no deeper querying. No query was made as to why I had been "based" in a backwater country known for corruption. This stage took about a week. After that I would have been ready to proceed with a visa.

I think the agent's fee for incorporation was about $3,000.

Arriving in UAE + Incorporating

I arrived in UAE during the plandemic. I was taken by the agent for my medical test and then to have my hand-prints and photo taken. I was surprised that no one ever asked me what I am doing, if I have a criminal record. Nothing. After about ten days I had the visa and the incorporating process was continued.

The first thing you will want to do is get a UAE SIM, which you can getat the airport. I think the cheapest is a Virgin one. I got one that has 6GB / month for about $135 / year. I don't believe you will be able to proceed without a UAE SIM.

It seems all UAE employees or resident need health insurance. I just got a cheap one (care up to $50K) from Noor Takful for about $300 / year. But going forward I may switch to Marsh, who have some good options. This was another aspect the agent failed on. They told me to get insurance from one of two sites, but neither had the option to do so for new residents. After spending a few hours going round in circles, the agent told me to email the insurer and it was soon complete.

Soon the company was registered and I received the incorporating documents. These were copies. When applying for a bank account you may need to get stamped and certified copies.

The DMCC has a portal, which makes it easy to manage most aspects of the business. If you need to renew or order something, you can initiate it on there; and within 1-2 working days you will get the result. You will likely need to order a company stamp from here.

I found The DMCC and other government entities to be very streamlined and easy to deal with.

You might also need a PO box, as I have seen required fields with a PO box field. I just bought a personal one for about $100 / year. Order one from the Emirates Post site and then pick up the key from your selected post office.

Opening Bank Accounts

DMCC companies require bank accounts. You are meant to have opened one within 90 days of registration, which I doubt many people will be able to fulfil. There was a request to submit a confirmation of account opening or bank statement with the minimum capital in, but I didn't submit it for about four months. After I submitted it I never heard anything about it again.

DMCC companies are required to keep a minimum balance in their bank. This varies, but is usually 50,000 AED, which is about $13,500.

Opening an account in UAE is difficult. Many small companies had their account terminated in recent years, because the cartel has made the cost of compliance too high. There are only 3-4 banks that are specifically tailored for small business. Seach for - UAE SME bank.

The best to apply with is Mashreq NeoBiz. This is a "branchless" version of Mashreq (one of the largest banks). However, I did go to a Mashreq branch to get a bank statement and it was provided. This bank account was opened very quickly after I got all my documents. No KYC. I think it was opened with about a week. The downside of Mashreq and NeoBiz is that they require you either have a personal address in UAE or a real office (not a shared/flexi-desk). I had neither, and had to sign a letter saying I would have one within 90 days, and if I didn't by then they would close the account. I think you might be able to get away with having an internet bill you pay in a friend's house or a long-stay contract with a hotel that you could maybe get out of. NeoBiz is like a normal bank. I have seen it incorrectly refereed to as an EMI. NeoBiz has accounts in AED and major currencies. I have had no issues using it. Though I have ported all the money in via domestic bank transfers from Payoneer and Wise; and also some payments that were received locally in AED. No KYC requests.

I also signed up for RAK Bank account. This was the mother of all KYC mountains. I also have a personal account with them, which was the most cumbersome of my personal accounts. I think this took two visits to their office, and XX emails fishing out all manner of documents with explanations. A lot of this was due to me moving in some large sums from the old company. At no point did they query why I was based in a backwater or if it was an offshore company etc. They just wanted to see the money flows. Thankfully I stripped every report I could out of Peter Schiff's shaky Caribbean bank, because by the time I was setting up this account Peter had locked me out. They obviously went through these very thoroughly as I was queried on a few things that were difficult to understand. They also made me crack out the brokerage reports that were attached to the account, and didn't query why this Caribbean piece of paper company with a bank account in Puerto Rico had made 400% on Canopy Growth Corp (TSE:WEED)! I thought the KYC would not end. They sent me a request for more details, which I did not understand. I said I don't understand. The next email I got was to tell me my account was open. I've not had any issues or KYC requests, with large sums being dripped in over a few months from Wise and Payoneer.

Both these accounts come with a cheque book, card, online and mobile banking. The NeoBiz website is a bit of a slop shop, while the RAK Bank one is quite nice but slow.

N.B. Wise does not work in UAE and you can only use Payoneer if you have a UAE business bank account. If you incorporate in a free zone that does require an account, you can try Bankera (EUR only) and Curencie (whatever it's called in Hong Kong) and Airwallex. You should be good for all of those.

I also opened a shed load of financial accounts for myself and the company in this period. Multiple crypto exchange accounts for the company. This was all heavy work and I spent five months working all day every day non-stop. Setting up in UAE should probably be a permanent decision. It's not going to be quick.

Renewal

The agent contacted me asking if I wanted them to renew the company for me. I did it myself and it was easy enough. Every year you will need to keep your lease up to date. You can do this in the portal and I was surprised to find my lease is only $300 / year. Usually they are 10X that. You also need a new establishment card, which costs about $500; update your business details; update your insurance (from $300+) and renew your licence. The licence is generally something like 25,000 AED (about $7,000), but if you pay it forward five years then it's 20% off. DMCC companies also require an annual audit, the price of which will vary. You will need to keep your visa up to date too. I think that's about $1,000-1,500 every three years.

Costs

It cost about $17,000 to setup, but then it only costs about $7,000 / year to maintain (if you renew the licence for 5 years) + inclusive of health insurance, PO box, phone.

Verdict

DMCC is a good business hub. I haven't endeavoured to and am not staying in UAE, but you could likely find some good contacts here. I have been on some of their webinars. One of which was quite interesting as the head of The DMCC said:

"Cryptо is here to stay... Some parts of the world don't want to have anything to do with it. And other parts of the world cannot survive without it... What is most attractive to me is it is a better alternative (in my opinion) to the IMF and World Bank... There is a lot of convicted felons, convicted banks involved in that industry [legacy banking], while crypto is just pure..."

Subversive stuff. I feel at home.
 
@4br Welcome to Dubai!

That's for sure something out of the practice you can read here and I can only recommend everyone that just want to pay half of the cost @4br paid without any Audit requirements - to approach us.

All the best @4br in Dubai and feel free to approach us should you ever require some local support.
 
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@4br Great post! What would you change/improve or do differently from time/cost/hassle perspective? Any tips and tricks are welcome.

$7,000 / year for renewal is not too much to me, but it's also quite a lot. I didn't include the audit in that, which will take it to $8,000 or more. I'd prefer that was a more usual cost for a corporate shield, < $100.

But there isn't really many places where you could do this. I was also briefly considering Vanuatu. But when you tell people you are based there, alarm bells will start ringing, and that country is a banking pariah. A similar situation if you are based in Cayman. Given my last situation of having a company in South America, with a bank account in the Caribbean and an address in Eastern Europe has run it's course. With what is going on you want to be onshore in a good jurisdiction. Offshore is over in my opinion. While UAE is more in the ranks or Hong Kong and Singapore. I briefly looked at other places in The Middle East, but UAE was the most accessible. I was initially considering The Isle of Man or The Channel Islands, but both are closed or effectively closed. Plus, the only more affordable Channel Island is Alderney with a population of 2,000. But you will probably end up paying more taxes in The Channel Islands or The Isle of Man, unless you are retired.

I see @Fred has popped up. I spoke to someone who incorporated with him in Dubai Silicon Oasis. They were very happy with the service. But from what I am reading on the prices, with all costs, Dubai Silicon Oasis would cost the same as what I am paying. Owing to my flexi-desk being < 1,000 AED and the Silicon Oasis one being 14,000 AED. What setup are you suggesting would be half the price?

I also heard that residents will be able to create their own mainland companies without a local director who controls 51%> of the company. I don't know what the costs for that is.

These fees are obviously some kind of a tax, which they have to get from somewhere, but it does make it unattractive to small businesses. But when you compare with other factors, UAE is probably the best deal you can get.

There is no point int trying to wriggle around trying to save a few $K a year by downgrading to Umm Al Quwain Freezone.

-----------------------------

With that said, another interesting options is to buy one of the properties in Ras al Khalimah, that has a 12 year visa and business licence thrown in.




But it seems they may be going at a large premium now. A year ago, you could get a small studio for maybe something like $70K + the visa and the licence.

That would be a very nice deal. The only issue would be getting a bank account, but I think Mashreq NeoBiz would handle it, and you can use an EMI.

-----------------------------

The only thing I would change would be in relation to property. Having a property is useful, rather than being a nomad, as financial institutions are not keen on people who don't really have an address.

I tired to buy something cheap in Al Hamra, with the intention to rent it out. But I found that it seems real estate agents will show you and let you bid on properties they have already sold. I place an offer and the next day I was told someone else has bought it. I didn't have enough time to buy another, so I just rented one, which I will probably spend one month in over the year, just for an address.

If you just want to buy something cheap, you can get places for close to 200,000 AED (about $55K) in Sharjah, Ajman or Al Hamra, and then rent them out. For 500,000 AED+ you can get a studio in JLT or Marina, fix it up and then have someone manage it as a vacation rental.

Not sure what I'm going to do with this, as I'd like to either get a fountain view, 2 bedroom in Burj Khalifa or something of a similar value in Marina. But I'd prefer to wait a bit with that. Either of those should provide enough vacation rental income for you to live off.

So, starting the process of buying a property as soon as you have a visa would also be useful.
 
@4br

You endup paying 8k USD first year and 5k ongoing including all our services - no audit requirements etc.

Your information about DSO is outdated since almost a year regarding the pricing.

If you paid 5 years upfront you paid cross 50-60k$ for the setup - keep in mind most people can't effort this at once.

Keep in your mind Dubai is in permanent price competition and only DMCC ignores it because they say we are DMCC.

Anyway you have simply the right attitude and I'm sure considering everything especially in the longterm you will for sure not regreat to have moved your Belize venture to Dubai.

All the best thu&¤#
 
You endup paying 8k USD first year and 5k ongoing including all our services - no audit requirements etc.

That seems to be what you client said to me, but I did not remember the exact prices. I would switch, but I don't want the months of dealing with financial institutions again.

For anyone incorporating in UAE, that no audit requirement is a big bonus. The days of living off my Belize company's debit card as if there was no difference between it and me are over cry&¤
 
Owing to my flexi-desk being < 1,000 AED and the Silicon Oasis one being 14,000 AED.
The Flexi Desk price is half of that (at least that's what I'm paying at DSO).

Audit is also not a big of an issue as I'm paying that 1.500 AED+VAT and some of the ppl I know pay 3,500 AED+VAT.
Having an Audit is good and bad. It's actually good in my case since some of the banks (outside of UAE) ask for these Audits...

DMCC is probably one of the best zones to be so paying $8k setup / $5k renewal is probably not such a bad deal IMO (but it's still about twice as expensive as DSO).
So all depends on the needs, budgets and personal preference in the end.
 
The only thing I would change would be in relation to property. Having a property is useful, rather than being a nomad, as financial institutions are not keen on people who don't really have an address.

I tired to buy something cheap in Al Hamra, with the intention to rent it out. But I found that it seems real estate agents will show you and let you bid on properties they have already sold. I place an offer and the next day I was told someone else has bought it. I didn't have enough time to buy another, so I just rented one, which I will probably spend one month in over the year, just for an address.

If you just want to buy something cheap, you can get places for close to 200,000 AED (about $55K) in Sharjah, Ajman or Al Hamra, and then rent them out. For 500,000 AED+ you can get a studio in JLT or Marina, fix it up and then have someone manage it as a vacation rental.

Not sure what I'm going to do with this, as I'd like to either get a fountain view, 2 bedroom in Burj Khalifa or something of a similar value in Marina. But I'd prefer to wait a bit with that. Either of those should provide enough vacation rental income for you to live off.

So, starting the process of buying a property as soon as you have a visa would also be useful.
Are you saying, if you buy a cheap property and rent it out, you can still use it's address for your residency purposes (banks etc.) without actually living there? How come that properties in Ras al Khalimah come with a 12-year visa and business licence? Usually it's only 3-year visa (property worth 1m AED) or 5-year visa (property worth 2m AED).
 
The Flexi Desk price is half of that (at least that's what I'm paying at DSO).

Audit is also not a big of an issue as I'm paying that 1.500 AED+VAT and some of the ppl I know pay 3,500 AED+VAT.
Having an Audit is good and bad. It's actually good in my case since some of the banks (outside of UAE) ask for these Audits...

Are you at liberty to disclose who does your audit?

Are you saying, if you buy a cheap property and rent it out, you can still use it's address for your residency purposes (banks etc.) without actually living there? How come that properties in Ras al Khalimah come with a 12-year visa and business licence? Usually it's only 3-year visa (property worth 1m AED) or 5-year visa (property worth 2m AED).

Yes. You just need to give them the deed of ownership. UAE is generally quite easy on addresses. Most banks will sign you up with ah hotel room, no proof.

Only a few of the RAK properties come with a visa and company; and only in Al Hamra Village. It seems most of them are gone as they originally started at 290,000 AED.

I guess they really wanted to try and juice some people into Al Hamra VIllage.
 
Hi there,

I am a UK resident, and looking at various ways of optimising taxes.

I am invoicing non UK companies for consulting and thinking about setting up a DMCC company in the UAE free trade zone. I would get tax residency and a local bank account, which means that in the eyes of the UAE there is no reporting to be done to the UK as I am a local resident (by going once every 6 months). I will still be reporting the income to the UK and pay taxes locally, but I want that flexibility of being offshore if I decide to move overseas.

Why is this a terrible idea? What could go wrong?

Thanks,
Hire a decent attorney to go to Canada (Quebeq) and open an offshore company. You will have zero tax as long as your business or income earnings are outside of Canada and your company has non-resident status. The governing law is under the Canada Business Corporations Act (CBCA). I would suggest you let the attorney open the company under his name (attorney company name) and have your attorney grant you a power of attorney, that will superseed his function.
 
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Are you at liberty to disclose who does your audit?
The accounting firm that handles our bookkeeping does that for us. DTEC recommended them to us once we where setting up. I've asked for couple more companies for a quote but they were the best in terms of pricing. I don't want to share the details in public, but can in pm/email.

Yes. You just need to give them the deed of ownership. UAE is generally quite easy on addresses. Most banks will sign you up with ah hotel room, no proof.
And they do not check if it's rented out?
What if they ask you for the utility bill and it's in another name (tenen'ts name) ?

Only a few of the RAK properties come with a visa and company; and only in Al Hamra Village. It seems most of them are gone as they originally started at 290,000 AED.

I guess they really wanted to try and juice some people into Al Hamra VIllage.
Still, it's a great deal if you want to move to UAE...
Maybe be also good for retirement...
Would like to know who are the people that actually live there... (never been to RAK myself)
 

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