Dubai company - self-employed - should I pay myself low or high?

[miosgit]

Hello,

I opened a company and moved to Dubai.
I'm the only owner of my company, which is in a free zone and I don't have to pay corporate taxes or personal income taxes. Furthermore, I'm not a GCC national, so I don't have to pay te pension scheme.

Therefore I was thinking to pay myself the highest salary possible, to allow me to get access to high-end credit cards and similar stuff.

Does anyone see any downside in doing this? Maybe some hidden fees related to the salary amount that I'm not taking into account?

Thank you in advance for your help.

 

[Martin Everson]

I'm the only owner of my company, which is in a free zone and I don't have to pay corporate taxes or personal income taxes.

Not entirely true. No tax is due but only on "Qualifying Income". Otherwise your Freezone company is subject to tax.

Does anyone see any downside in doing this? Maybe some hidden fees related to the salary amount that I'm not taking into account?

If your company does turn out to be subject to tax by not meeting qualifying income requirement then you could run into problems with the below if your salary paid to yourself is above Market Standard level. UAE is not allowing crafty people to avoid the 9% tax by paying out excessive salaries.


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Will business owners earning from the entity as managerial remuneration be subject to tax?

A payment or benefit made to a connected person is deductible from revenue as expenses should it be made at an arms’ length basis (Market standard level) and any excess payment or benefit is subject to corporate tax. The connected person includes owners and directors of the taxable person.

---- quote end

Speak to a good accountant.

 

[turtle]

The salaries are high for skilled jobs in UAE. You can pay a salary 200K AED($55K) per month to yourself as a general manager.

The other thing is banks will not issue you a credit card just because of your salary because they check other things like the employee number of your company. They generally require a minimum of 20 employees to issue a credit card based on your salary. You can still get a credit card but not something good.

 

[SoNewToAllShit]

Not entirely true. No tax is due but only on "Qualifying Income". Otherwise your Freezone company is subject to tax.

If I have a company in a freezone, only do business outside of UAE and I live in Dubai. The corporate tax and personal tax to be paid is a big fat 0% true?

 

[turtle]

If I have a company in a freezone, only do business outside of UAE and I live in Dubai. The corporate tax and personal tax to be paid is a big fat 0% true?

There is no personal tax whether if you live in Dubai or anywhere else.

Regarding "Qualifying Income" requirements are still not announced so no one knows right now but several things are clear.

1-) It must be a freezone company.
2-) Revenue should come from a foreign country.
3-) Yearly company audit required.

 

[SoNewToAllShit]

@Fred, your companies are setup in freezones ?

 

[Fred]

@Fred, your companies are setup in freezones ?

Yes - we did decide starting 01.01.2023 to put Mainland Company Formations on hold as there is no demand any longer with the upcoming 9% Croporate Tax for Mainland Companies.

We have a good access for Mainland Company Formation even directly through a Freezone however we only do this for already exting clients who actually really require a Mainland Company to open Barber Shop/Restaurant/Medical Clinic in Dubai.

 

[zzzzzz]

@miosgit is there any special benefit of having credit card in UAE, compared to normal debit mastercard?

 

[clemens]

1-) It must be a freezone company.
2-) Revenue should come from a foreign country.
3-) Yearly company audit required.

acceptable. What would the cost be for the yearly company audit ?

 

[Martin Everson]

If I have a company in a freezone, only do business outside of UAE and I live in Dubai. The corporate tax and personal tax to be paid is a big fat 0% true?

Yes as long as you do not conduct business in UAE or a transaction does not take place in UAE. "Qualifying Income" full definition is still pending.

However you just need to ensure your company complies with Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses as it stands right now.

If in doubt get local tax advice.