Does the new UAE CT applies to day tradings

[Bill D]

I am interested in relocating in UAE as a crypto/stock day trader, however i don't know if it's suitable with the new rules.
UAE is set to implement CT of 9% from mid 2023, they released this month a new consultation document trying to explain better who will be subject to that.

However it is not clear to me if you are day trading, cryptos, or stocks, your own funds, as your center of operation will be within uae, will you undergo the new CT of 9% on these operations trading your own funds ? And are you allowed to do that without a specific license/company registration ?


If yes what are the alternativ to UAE ?
(It seems that in UAE you would be able to avoid tax up to 375 000 aed and you could add to that a reasonable monthly salary.
however if it requires you to audit+pay 9% on the trades above that, with hefty fines up to 50% of the gains, it would make it not interesting to live in the Dubai.)

 

[JackAlabama]

I am interested in relocating in UAE as a crypto/stock day trader, however i don't know if it's suitable with the new rules.
UAE is set to implement CT of 9% from mid 2023, they released this month a new consultation document trying to explain better who will be subject to that.

However it is not clear to me if you are day trading, cryptos, or stocks, your own funds, as your center of operation will be within uae, will you undergo the new CT of 9% on these operations trading your own funds ? And are you allowed to do that without a specific license/company registration ?


If yes what are the alternativ to UAE ?
(It seems that in UAE you would be able to avoid tax up to 375 000 aed and you could add to that a reasonable monthly salary.
however if it requires you to audit+pay 9% on the trades above that, with hefty fines up to 50% of the gains, it would make it not interesting to live in the Dubai.)

No one knows at this point and a lot of things will, can and do change in the very short period of a year.

 

[rowena]

I am interested in relocating in UAE as a crypto/stock day trader, however i don't know if it's suitable with the new rules.
UAE is set to implement CT of 9% from mid 2023, they released this month a new consultation document trying to explain better who will be subject to that.

However it is not clear to me if you are day trading, cryptos, or stocks, your own funds, as your center of operation will be within uae, will you undergo the new CT of 9% on these operations trading your own funds ? And are you allowed to do that without a specific license/company registration ?


If yes what are the alternativ to UAE ?
(It seems that in UAE you would be able to avoid tax up to 375 000 aed and you could add to that a reasonable monthly salary.
however if it requires you to audit+pay 9% on the trades above that, with hefty fines up to 50% of the gains, it would make it not interesting to live in the Dubai.)

Day trading can be considered a professional activity and subject to CT tax. It is still uncertain. The worst case you use your FZ for day trading to avail 0% CT.

with hefty fines up to 50% of the gains

I don't think it is true. Where did you see this?

 

[calnana]

This is one of the views that some of us subscribed to a few weeks/months ago. They make crypto activities require a license or a permit (registration with the virtual assets regulatory authority) then slap everyone with CT.
Still not clear if this will be the case for individuals, but ....

I mean... look at that juicy article 16 Law No. (4) of 2022 Regulating Virtual Assets in the Emirate of Dubai

 

[Bill D]

Day trading can be considered a professional activity and subject to CT tax. It is still uncertain. The worst case you use your FZ for day trading to avail 0% CT.

Even your own personnal funds ? Are they really gonna distinguish a day trader doing 10000 transaction a year, people running high frequency trading bots doing 100M transaction a year, and the small investor doing 10 transaction per year ?

Also are you sure that a FZ would be exempt, knowing that most brokers are now licensed in uae, that you center of operation would itself be from UAE (your flat), above that it would be exempt, it seems to me, only if the license perfectly match with the activity that you want to exempt, so it would need to be licensed for both crypto and stock trading, is that even possible and bankable ?

I don't think it is true. Where did you see this?

Saw that from a youtuber consultant

This is one of the views that some of us subscribed to a few weeks/months ago. They make crypto activities require a license or a permit (registration with the virtual assets regulatory authority) then slap everyone with CT.
Still not clear if this will be the case for individuals, but ....

I mean... look at that juicy article 16 Law No. (4) of 2022 Regulating Virtual Assets in the Emirate of Dubai

From that article 16, it seems that as of now only the provision of such services will require VARA but not the trading of your own balance, despite the last sentence of that article means it could change without notice

 

[khara]

Is there any update on the topic now that CIT is in full force?
If you day trade under your own name, would that liable for corporate tax?

 

[Thomas67]

Is there any update on the topic now that CIT is in full force?
If you day trade under your own name, would that liable for corporate tax?

For this question I invite you to visit the website tax.gov.ae (or ask in their chat to an agent). They have a list of documents/manuals related to the Corporate Tax Law, including when applied to natural persons. 1m AED as threshold for the Turnover (not clear how they define it for trading).

I'm more concerned about the requirement of a license even in the case of trading on personal savings.

 

[Konstanz]

For this question I invite you to visit the website tax.gov.ae (or ask in their chat to an agent). They have a list of documents/manuals related to the Corporate Tax Law, including when applied to natural persons. 1m AED as threshold for the Turnover (not clear how they define it for trading).

I'm more concerned about the requirement of a license even in the case of trading on personal savings.

Can you please give source about license for trading on personal savings?

 

[sergeylim88]

@Konstanz take a look at 109 on page FAQs

 

[Konstanz]

@Konstanz take a look at 109 on page FAQs

I think this is for passive income. Many people / lawyers misinterpret what is day trading (active trading each day or week) between long term investments.
Passive investments to gain dividends, sell shares yes will remain non taxable, but if you trade on speculative manner this can be taxed 9% income tax

 

[Tom85]

If you day trade under your own name, would that liable for corporate tax?

I asked that question on reddit

https://www.reddit.com/r/dubai/comments/182n8l7

Tax consultants and lawyers from EY and PWC think day trading on personal account won't be taxed.

 

[backpacker]

I asked that question on reddit

https://www.reddit.com/r/dubai/comments/182n8l7

Tax consultants and lawyers from EY and PWC think day trading on personal account won't be taxed.

Read again the Reddit you posted! A conclusion can not be drawn from the Reddit post.
Things are still too vague.

 

[Konstanz]

I asked that question on reddit

https://www.reddit.com/r/dubai/comments/182n8l7

Tax consultants and lawyers from EY and PWC think day trading on personal account won't be taxed.

I expect UAE to leave just passive personal income not taxed, but active income taxed CIT

 

[TheCryptoAnt]

guys cmon stop doing drugs, NO country on the face of this planet sees you trading shares with your own money and says that you are 'engaging in business activities' and as a result you are subject to CIT.

At most, it goes from CGT to PIT, which does remain tax-free in the UAE

 

[Konstanz]

guys cmon stop doing drugs, NO country on the face of this planet sees you trading shares with your own money and says that you are 'engaging in business activities' and as a result you are subject to CIT.

At most, it goes from CGT to PIT, which does remain tax-free in the UAE

Actually you are wrong. There are such laws in European countries. Active trading means you do personal business

 

[PhantomOf ThePits]

guys cmon stop doing drugs, NO country on the face of this planet sees you trading shares with your own money and says that you are 'engaging in business activities' and as a result you are subject to CIT.

At most, it goes from CGT to PIT, which does remain tax-free in the UAE

Googling for one minute you could have found that for example:
https://en.wikipedia.org/wiki/Capital_gains_tax
In some countries, such as New Zealand and Singapore, professional traders and those who trade frequently are taxed on such profits as a business income

Switzerland and Malta and Belgium for example also



There's a lot of countries with tax free cap gains, once you're considered professional trader, you pay income taxes and social charges on top

 

[Sols]

guys cmon stop doing drugs, NO country on the face of this planet sees you trading shares with your own money and says that you are 'engaging in business activities' and as a result you are subject to CIT.

If you do it in what's deemed a commercial or professional capacity, there are several jurisdictions that may try to consider it a business and apply CIT. The average retail investor isn't affected.

 

[TheCryptoAnt]

Actually you are wrong. There are such laws in European countries. Active trading means you do personal business

and as a result get taxed on it as income, instead of capital gains. No Corporate income tax as you have no clients/its your own money.

There's a lot of countries with tax free cap gains, once you're considered professional trader, you pay income taxes and social charges on top

Which is exactly what I said. PERSONAL INCOME, not business.

If you do it in what's deemed a commercial or professional capacity, there are several jurisdictions that may try to consider it a business and apply CIT. The average retail investor isn't affected.

Can you provide some examples pls? With clear rules on what turns your own trading into 'business income', instead of personal income.

Same goes for the other two people above pls.

 

[Konstanz]

and as a result get taxed on it as income, instead of capital gains. No Corporate income tax as you have no clients/its your own money.



Which is exactly what I said. PERSONAL INCOME, not business.



Can you provide some examples pls? With clear rules on what turns your own trading into 'business income', instead of personal income.

Same goes for the other two people above pls.

in UAE you pay CIT even as physical person if you do business as physical person

From UAE government website:
"
UAE CT applies to juridical persons incorporated in the UAE and juridical persons effectively managed and controlled in the UAE, as well as to foreign juridical persons that have a permanent establishment (see section Foreign persons) in the UAE (see question ‘Who is considered resident for UAE CT purposes?’ under section Scope and rate).
Individuals will be subject to CT only if they are engaged in a business or business activity in the UAE, either directly or through an unincorporated partnership or sole proprietorship."

https://tax.gov.ae/en/taxes/corporate.tax/faqs.aspx

 

[Sols]

Can you provide some examples pls? With clear rules on what turns your own trading into 'business income', instead of personal income.

I understand what you're asking for but I'd be surprised if any of these jurisdictions have a simple one-pager saying "If you trade like X, Y, and Z conditions, you're a corporation." It's different rules coming together. The jurisdictions I have written down here are the usual tax hells: Spain, Canada, Australia, Germany.

Essentially, it's like any activity. If you do enough of it personally, there's a risk it becomes a business activity. They look at things like whether it's a full-time activity, your sole/primary source of income, and so on. If your activities mimic those of a company, there is a non-zero risk you're taxed as a company. Buy and sell a couple of things on Ebay and no one bats an eye. Make it a multi-million dollar activity and the tax man cometh.

Didn't have a reason to look into this in much detail before, but it seems enforcement is mostly to extract social security contributions that wouldn't be due if you're paying just PIT/CGT. PIT/CGT is higher than CIT in many cases so the tax authority has no interest taxing you less. It's all about finding reasons to tax you more and in new ways.