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Does the new UAE tax apply for RAKICC offshore companies?

OJ333

OJ333

Active Member
Jul 7, 2021
50
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Bulgaria
#1
Does the new UAE tax apply for RAKICC offshore companies? I have read threads in the forum, the long article Everything You Need to Know About the Corporate Tax in the UAE – What to Do & What to Avoid where people disagree on that topic and I also read countless websites of consultants and also government websites.

And I still can't understand whether the new tax law applies to RAKICC offshore (IBC) companies? Everyone us talking about UAE and Free Zones and it is as if RAKICC companies don't even exist.

I only found 2 places where it is mentioned:
RAK International Corporate Centre - About RAK ICC - it still says 0%.
RAK ICC - Creative Zone - it explicitly mentions the offshore companies as not eligible for taxes.

I also received a reply from an agent that was literally of no use:
"Currently there is no clear direction if this applies to RAKICC companies and whether the UAE corporate tax will be only applicable to businesses that do business solely within the UAE (following the Hong Kong offshore company model)."

Does anyone with experience know what is going on?
 
#2
As you may have read from several replies in the same article thread you refer to, it is not clear as of yet.

The desert knights have too much sand in their heads these days to make a sensible decision, while they ruin it for all the companies that are unsure about what will happen, and those who thought they were assured tax exemption in the oil country!
 
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#3
OJ333 said:
And I still can't understand whether the new tax law applies to RAKICC offshore (IBC) companies? Everyone us talking about UAE and Free Zones and it is as if RAKICC companies don't even exist.
Click to expand...

The federal corporate tax law changes applies to the United Arab Emirates (UAE). Ras Al Khaimah is one of the seven emirates within UAE. My question is what makes you think the tax law may not apply to that specific emirate and its companies?

OJ333 said:
Does anyone with experience know what is going on?
Click to expand...

I would speak to a tax advisor in RAK rather than rely on internet as the law is new and many websites are either out of date or give wrong information when it is their fianancial interest to do so sadly ;).
 
#4
OJ333 said:
Does the new UAE tax apply for RAKICC offshore companies? I have read threads in the forum, the long article Everything You Need to Know About the Corporate Tax in the UAE – What to Do & What to Avoid where people disagree on that topic and I also read countless websites of consultants and also government websites.

And I still can't understand whether the new tax law applies to RAKICC offshore (IBC) companies? Everyone us talking about UAE and Free Zones and it is as if RAKICC companies don't even exist.

I only found 2 places where it is mentioned:
RAK International Corporate Centre - About RAK ICC - it still says 0%.
RAK ICC - Creative Zone - it explicitly mentions the offshore companies as not eligible for taxes.

I also received a reply from an agent that was literally of no use:
"Currently there is no clear direction if this applies to RAKICC companies and whether the UAE corporate tax will be only applicable to businesses that do business solely within the UAE (following the Hong Kong offshore company model)."

Does anyone with experience know what is going on?
Click to expand...
it applies to these too (only some qualifying activity would set it to 0%), all other info is out of date, you might even find the promised 50 y tax exemption guarantee somewhere.
 
#5
Martin Everson said:
The federal corporate tax law changes applies to the United Arab Emirates (UAE). Ras Al Khaimah is one of the seven emirates within UAE. My question is what makes you think the tax law may not apply to that specific emirate and its companies?



I would speak to a tax advisor in RAK rather than rely on internet as the law is new and many websites are either out of date or give wrong information when it is their fianancial interest to do so sadly ;).
Click to expand...
I would. However, I am paying every year to agents that should have this answered and I don't even have a contact with a tax advisor in RAK. Now I am trying to figure out if my agents are incompetent or there really isn't a clear direction.

P.S. Another reply from an incorporation service:
"You have to register with the tax authorities
But not pay 9 percent as it's offshore/freezone as the law will honor the freezone as tax free
Rather than offshore better to register as freezone as bank account opening in offshore could be a challenge "
 
#6
Martin Everson said:
The federal corporate tax law changes applies to the United Arab Emirates (UAE). Ras Al Khaimah is one of the seven emirates within UAE. My question is what makes you think the tax law may not apply to that specific emirate and its companies?



I would speak to a tax advisor in RAK rather than rely on internet as the law is new and many websites are either out of date or give wrong information when it is their fianancial interest to do so sadly ;).
Click to expand...
Well, I think it does not apply to RAKICC as well as to DMCC companies once your clients are foreign based ,or in the case of DMCC if they are foreign based OR another DMCC company. This is what is explained at length by every UAE authorities concerned, simple enough to understand I think ....
 
#7
Tony D said:
Well, I think it does not apply to RAKICC as well as to DMCC companies once your clients are foreign based ,or in the case of DMCC if they are foreign based OR another DMCC company. This is what is explained at length by every UAE authorities concerned, simple enough to understand I think ....
Click to expand...
Where is it explained? Can you send me a link?
 
#9
Tony D said:
Well, I think it does not apply to RAKICC as well as to DMCC companies once your clients are foreign based ,or in the case of DMCC if they are foreign based OR another DMCC company. This is what is explained at length by every UAE authorities concerned, simple enough to understand I think ....
Click to expand...

Sorry what in the link you posted makes you think that the corporate tax law does not apply to freezone companies? What qualifying activities would you be doing so the law does not apply?
 
#10
Martin Everson said:
Sorry what in the link you posted makes you think that the corporate tax law does not apply to freezone companies? What qualifying activities would you be doing so the law does not apply?
Click to expand...
RAKICC is not technically a free zone it’s an IBC, therefore I think further clarification is required regarding this.
 
#11
It seems most small firms are simply dishonest or ignorant about the situation. If in doubt consult PWC, EY or Deloitte. I would simply not rely on small firms as 99.9% of these local firms have never had experience with corporate tax before. They are learning as they go along for very first time.
 
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#12
Martin Everson said:
Sorry what in the link you posted makes you think that the corporate tax law does not apply to freezone companies? What qualifying activities would you be doing so the law does not apply?
Click to expand...
Well, talking about DMCC , there is mostly a freezone devoted to commodity trading , so most companies there would end up exempt since they are in such businesses, and the other criteria being economic substance , which is mandatory in DMCCto get licence and to renew it . Furthermore, those criterias (commodities criteria) were being recently confirmed by the minister of finances of UAE ( UAE reveals new corporate tax decisions for free zone companies )., so there is good chances they will apply it ? This said, setting up business in DMCC is far from cheap .... Probably, we will witness the same kind of mess which happened with VAT implemetation, they will do their mistake , only to correct them after the (potential) damages are evident ....
 
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#13
Jbb1 said:
RAKICC is not technically a free zone it’s an IBC, therefore I think further clarification is required regarding this.
Click to expand...
Yes, you are absolutely right, RAK ICC isn't a free zone company, thus, logically, even free zone rules for taxation doesn't apply to it, it's an offshore, it would be absolutely non sense to apply free zones rules or any kind of taxation on them due to the actual trade limitation in UAE for such company, unless of course UAE fiscal authorities are collectively losing their mind on such matter ...

The big interest of such a company is (potential) access to UAE banking system (and that's the trick ...) personally, I been able so far to open a personal account (saving) as non-resident, on the basis of my past business credentials, new business projects in UAE, AND subscription to an investment plan !

So, obtaining a bank account in UAE for an RAK ICC depend on your personnal profile only as I can see !
 
#15
OJ333 said:
I just spoke with the senior tax advisor of the company I use. He was 100% sure it doesn't apply to the offshore zone. The goal of the tax is to tax businesses operating within the UAE. Companies in RAK ICC don't have the right to operate there.
Click to expand...
I was told the same thing today as well.
 
#18
Last edited:
#19
I directly contact RAKICC on their website and I get this answer :

« Unfortunately we may not comment on this matter yet as discussions are ongoing on high level with FTA .

We will officially inform all the agents once we finalize discussion .

Please feel free to seek Tax Advice meanwhile .
Thanks & Regards, »
 
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#20
Checkmelater said:
You can have Stripe UAE with a RAKICC or you have to make an UK LLP / US Delaware LLC ?

Because it could be interesting to no pay tax lol

«

Tax Incentives​

In 2023, the UAE implemented a corporate tax rate of 9%. However, offshore companies, as they are not eligible to operate their businesses within the country, are exempt from this tax.«

https://www.creativezone.ae/business-setup/rak-international-corporate-centre-rakicc/
Click to expand...
You can have a Stripe with it. HOWEVER, it only pays out in AED denominated bank account. And I have not been able to find an AED denominated EMI. So, in practice, the Stripe is useless :)
 
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