Dubai Corporate tax + Pay out maximum

[MillionCents]

Hi,

I own a Freezone company in Dubai and generate a monthly profit of around 300,000 - 400,000 AED. I typically pay myself a monthly salary ranging from 70,000 to 90,000 AED, along with an additional 50,000 AED in bonus payments. My goal is to maximize the amount I can pay out to my personal bank account. I recently consulted with a tax advisor who mentioned that remuneration needs to be specified in the Memorandum of Association (MOA). I'm unclear on what this entails. Currently, I don't have a fixed salary structure—I adjust my pay as I see fit. Is this approach legitimate?

The advisor also mentioned that I require a salary certificate, even though I'm the owner and manager of the company. Why can't I pay 80,000 AED one month and 100,000 AED the next? Does my salary need to be fixed, or can it vary each month? Additionally, he informed me that if my personal income exceeds 1 million AED annually, I would be subject to individual corporate tax. I was under the impression that there was no income tax here—have I misunderstood, or is my advisor misinformed? Lastly, if the salary I pay myself differs from what is stated in the MOA, is that legally permissible? What’s the maximum salary I can withdraw without incurring significant corporate tax?

Any insights would be greatly appreciated.

Thank you.

 

[TRGali]

I am no expert, but that's the first time I hear that if your personal income if above 1 milliion AED, that you would be subject to tax on a personal level. Also, I never heard the general manager's salary should be written in the MOA.

I would advise you to find a good accountant and ask to them the questions about the salary amounts / variations. 25% of your profit as salary does not seem shocking, especially if you can demonstrate that this type of salary is the norm in your industry.

 

[uranium]

Hi,

I own a Freezone company in Dubai and generate a monthly profit of around 300,000 - 400,000 AED. I typically pay myself a monthly salary ranging from 70,000 to 90,000 AED, along with an additional 50,000 AED in bonus payments. My goal is to maximize the amount I can pay out to my personal bank account. I recently consulted with a tax advisor who mentioned that remuneration needs to be specified in the Memorandum of Association (MOA). I'm unclear on what this entails. Currently, I don't have a fixed salary structure—I adjust my pay as I see fit. Is this approach legitimate?

The advisor also mentioned that I require a salary certificate, even though I'm the owner and manager of the company. Why can't I pay 80,000 AED one month and 100,000 AED the next? Does my salary need to be fixed, or can it vary each month? Additionally, he informed me that if my personal income exceeds 1 million AED annually, I would be subject to individual corporate tax. I was under the impression that there was no income tax here—have I misunderstood, or is my advisor misinformed? Lastly, if the salary I pay myself differs from what is stated in the MOA, is that legally permissible? What’s the maximum salary I can withdraw without incurring significant corporate tax?

Any insights would be greatly appreciated.

Thank you.

What a joke lol
There is no personal income tax in uae
I suggest you raise you salary by drawing a new contract and you can pay your self dividend but you need to make sure your company has enough liquidity at all time to cover expenses.

 

[Checkmelater]

1.000.000 AED personal profits is different thing, salary from company is not taxable but for exemple if you have profits from a personal activity like I don’t know affiliations, you will have to pay even if it’s not company profits but personal profits
They put this also for free lancer ..
in my opinion they will not be to agressive they just want to be safe from EU and US who put pression on them, High salary high bonuses and you will be fine in my opinion

 

[A1988]

even if an individual derives income exceeding 1m aed, he or she is liable to pay corporate taxes of 9%, people saying there is no personal income tax in UAE should also know the freezone companies were supposed to be tax free a while ago.

 

[TRGali]

even if an individual derives income exceeding 1m aed, he or she is liable to pay corporate taxes of 9%, people saying there is no personal income tax in UAE should also know the freezone companies were supposed to be tax free a while ago.

Not if that income is a salary or a dividend. For an individual, it's liable at 9% if the income is directly generated from an activity that would be taxable if it was made under a company in UAE.

As far as I know, there is still no tax declaration to be made by individuals. The pain starts if the individuals exercises on its own a taxable activity,

 

[A1988]

UAE Tax residents have to pay on their worldwide income, irrespective of salary, dividends or capital gains, any money you take out from your company or any money younhave gained in your personal name is liable for corporate tax too, individuals are mandatorily required to register for corporate tax purposes and get a CT number.

 

[Moonlighter]

I suggest you get a second opinion, your tax advisor seems to mix up a lot of things and does not understand different types of income.

The 1M AED threshold only applies on a personal level if there's income from business activities conducted under your name, which excludes passive income like dividends and income from employment is also excluded from this threshold.

https://taxsummaries.pwc.com/united-arab-emirates/individual/taxes-on-personal-income

 

[TRGali]

UAE Tax residents have to pay on their worldwide income, irrespective of salary, dividends or capital gains, any money you take out from your company or any money younhave gained in your personal name is liable for corporate tax too, individuals are mandatorily required to register for corporate tax purposes and get a CT number.

Do you have a law (or explanatory document) from the FTA to show us to support this claim?

 

[uranium]

I never heard of such thing as personal income tax from uae..
Maybe if you are a freelancer and you are doing business as a freelancer so you have to pay 9% tax. But if you have a company, your company will pay 9% from profits and pay your self dividends then 0% tax.

 

[A1988]

Please read Federal Tax Authority Decision No. 3 of 2024 – Issued 22 February 2024 (Effective 1 March 2024). All resident persons have to register for corporatebtax if turnover exceeds 1m aed.

Please also read the FTA document available on the FTA UAE website amd read the section which mentions exempt persons from corporate tax.

Please remember, PWC or any accounting and tax firm is directly at conflict of interest with you as their client, they earn more if you are taken to court by the tax authorities lol.

You as an individual are also liable to pay corporate tax if you are resident of the UAE, it does not distinguish between a person and an entity, a person is also considered an entity in their corporate tax law and you as an individual receiving wages, investment income or capital gains is considered as a turnover in their tax law under carrying out a business or a business activity as a resident person.

You are exempt from UAE tax only if you are a non resident or do not receive any UAE source income or are undernthe exempt person or performing a qualifying activity as a company, that's all, otherwise with the new federal decree applicable from March 2024 onwards, you have to register as an individual for corporate tax purposes otherwise there are penalties

 

[uranium]

Please read Federal Tax Authority Decision No. 3 of 2024 – Issued 22 February 2024 (Effective 1 March 2024). All resident persons have to register for corporatebtax if turnover exceeds 1m aed.

Please also read the FTA document available on the FTA UAE website amd read the section which mentions exempt persons from corporate tax.

Please remember, PWC or any accounting and tax firm is directly at conflict of interest with you as their client, they earn more if you are taken to court by the tax authorities lol.

You as an individual are also liable to pay corporate tax if you are resident of the UAE, it does not distinguish between a person and an entity, a person is also considered an entity in their corporate tax law and you as an individual receiving wages, investment income or capital gains is considered as a turnover in their tax law under carrying out a business or a business activity as a resident person.

You are exempt from UAE tax only if you are a non resident or do not receive any UAE source income or are undernthe exempt person or performing a qualifying activity as a company, that's all, otherwise with the new federal decree applicable from March 2024 onwards, you have to register as an individual for corporate tax purposes otherwise there are penalties

If my company already paid 9% corporate tax and paid me dividends. Do I have to pay tax 9% on dividends?

 

[TRGali]

Please read Federal Tax Authority Decision No. 3 of 2024 – Issued 22 February 2024 (Effective 1 March 2024). All resident persons have to register for corporatebtax if turnover exceeds 1m aed.

Thanks for referring to the specific law.

So as far as I see, for natural persons it says: "A natural person conducting a Business or Business Activity in the State shall submit a Tax Registration application", so that's as we have been saying. It's only when an individual is carrying out on his own (without a company) a taxable activity.

 

[uranium]

Thanks for referring to the specific law.

So as far as I see, for natural persons it says: "A natural person conducting a Business or Business Activity in the State shall submit a Tax Registration application", so that's as we have been saying. It's only when an individual is carrying out on his own (without a company) a taxable activity.

Bingo! You explained it much better than me

 

[A1988]

If my company already paid 9% corporate tax and paid me dividends. Do I have to pay tax 9% on dividends?

Yes you have to, it depends how much money you took in your personal name in total. Above 1m aed you have to register, declare and pay 9% tax above 1m aed,

Thanks for referring to the specific law.

So as far as I see, for natural persons it says: "A natural person conducting a Business or Business Activity in the State shall submit a Tax Registration application", so that's as we have been saying. It's only when an individual is carrying out on his own (without a company) a taxable activity.

An individual resident person has to register, declare and pay tax on any income above 1m aed in a financial year. If you own the company or have any shareholding in the company then you are automatically considered as performing a business activity hence liable to corporate tax as an individual. Hope it makes it simpler.

So the gentleman who first wrote about his circumstances, if you own the company you just can't say your salary is millions and try to pay zero in taxes. The money you take out as dividends or wages will be liable to tax, hope it's clear now.

It becomes a completely different affair when an employee in theory and practise who doesn't have any shareholding in the company and is genuinely an employee which majority of the people in dubai are is not going to be taxed at all, in some exceptional cases there are very few who are drawing a salary of 1m aed a year in whole of UAE.

 

[Cloudbanck]

Yes you have to, it depends how much money you took in your personal name in total. Above 1m aed you have to register, declare and pay 9% tax above 1m aed,

Not on dividends! That's already been taxed, and there is no tax on dividends in the UAE.

The 9% tax could apply if you take a salary that is so large that it breaches GAAR rules. Or if you do business activities as an individual without a company and have a turnover above 1M AED (here trading is a greyzone).

 

[A1988]

If my company already paid 9% corporate tax and paid me dividends. Do I have to pay tax 9% on dividends?

Hey man, you can dislike me or my comment, I paid thousands of euros to lawyers and tax experts in UAE and I'm sharing it for free to you, you can go and pay to lawyers yourself and you will hear the same thing what I am saying. I also paid thousands of euros to form freezone companies and visas etc and then moved my whole family out of dubai. I wish you all the best.

 

[Checkmelater]

Not making any sense I’m sorry but the guys who told you this they told you bulls**t, in Arabic the text is even more clear and it says, (I read Arabic) you pay if you are involved in activity without companies, it’s for free lancer or peoples who make money without company, for exemple you have the golden visa and make money with YouTube for example, you don’t need company to have your money. So if you make 1.5M AED adsense revenu for exemple you have to register CIT and pay 9% ..
I hope it help you

Edit : Imagine a guy who makes 10 millions AED revenue with YouTube Adsense he can send the money directly in his bank account and don’t pay tax ? No he has to pay 9% CIT above 1M AED, that’s it
If you have already pay CIT for your business profits you will not pay tax for revenues beacquse there is no income tax here

 

[cryptotree]

If my company already paid 9% corporate tax and paid me dividends. Do I have to pay tax 9% on dividends?

This makes no sense at all

 

[A1988]

Not on dividends! That's already been taxed, and there is no tax on dividends in the UAE.

The 9% tax could apply if you take a salary that is so large that it breaches GAAR rules. Or if you do business activities as an individual without a company and have a turnover above 1M AED (here trading is a greyzone).

You are contradicting your ownself here, there is no dividends tax? In their federal decree it says no tax on dividends, so that basically means no withholding tax on dividends (WHT) that's what it is, once dividends received by an individual in their personal name and its above 1m aed then CIT applies and that's where it becomes different and that's how it works everywhere.

In your second point, your proved my point, any income in any shape or form is liable for corporate tax, so whether you take money as a company or individual, each recipient has to pay corporate tax on their respective thresholds.

You cannot go and say to the tax authorities that my company paid corporate tax and then distributed this dividend to me as a shareholder, this money is already taxed hence I shouldn't be taxed lol