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Dubai is dead, any alternative to the free zone 9% tax?
- Thread starter JonnyStekkino
- Start date
True, most EU EMIs cant do cards in other currency than EUR.
Is it that bad tho? You can use a combination of EU EMI for banking and maybe ADVCASH for USD card.
Or try banks in Mauritius for both things in the same platform.
(Swissquote will onboard you too, and give you cards, if you manage your treasury with them)
185. When can a Person prepare their Financial Statements using the Cash Basis of Accounting?
A Person can use Cash Basis of Accounting if their Revenue does not exceed AED 3,000,000.
If the Person’s Revenue exceeds the AED 3 million threshold, they may use Cash Basis of Accounting under exceptional circumstances and pursuant to an application approved by the Federal Tax Authority.
What do they mean by that? How does this work in NON RESIDENTS ? (having offshore rak etc, most of owners are residing in different country). I read around for the 3M AED but it says only for Residents! (having Dubai ID etc) which I don't.
Thank you
Thank you ! I didn't know that there was no audit requirements for normal freezones. Neither did I know of the possibility of cash basis accounting under 3M aed.
My agent was a bit misleading about these two, probably to sell me his accounting services...
I am constantly hearing about people who's agents are misinforming them., so you're not alone.
It's for companies in the UAE. Nothing to do with individuals (who are still on 0% income tax).
@Don is this true?
Assuming this is true, which service provider In Dubai would you recommend who can help clarify this and be responsible enough to back up their representations?
Some free zone authorities will ask to present the audited financial statements at the time of the company’s trade license renewal.@Don is this true?
Assuming this is true, which service provider In Dubai would you recommend who can help clarify this and be responsible enough to back up their representations?
Further, for any free zone company to obtain the status of Qualified Free Zone Person to be subject to zero corporate tax on the profits of the free zone company, getting the books of accounts audited is one of the mandatory requirements.
Sorry, I can't recommend anyone. They will all know as much as anyone else who reads the government guidance. But, they'll also have a major incentive to sell you their services, with pretty much no come back on them for misinformation. Best to read up for yourself and keep your ear to the ground for any new information (coming directly from the government).@Don is this true?
Assuming this is true, which service provider In Dubai would you recommend who can help clarify this and be responsible enough to back up their representations?
Correct.
In addition to this, to be able to close your FZCO, IFZA will ask for audited accounts for all the years of existence of the company, and this is an old rule...not anything that came up with the new CIT.
Remember guys, about 1 year ago how we were all sold a FZCO with NO AUDIT by the forum's Dubai guru at the time?
Generally speaking when it comes to recommending service providers in UAE, it depends on who is asking.@Don is this true?
Assuming this is true, which service provider In Dubai would you recommend who can help clarify this and be responsible enough to back up their representations?
I would recommend different firms for your average one man band and a billion dollar company. The firms focused on serving the latter are usually not preferable for the first and vice versa.
I have family ties in multiple different CSP-s in UAE, and I wouldnt recommend anyone else, so if anyone wants a biased recommendation feel free to DM.
Even Fred was complaining about "dirty competition".
I mean, he was the same making blog posts to tell others that it was still possible even doe everyone else was challenging him to stop lying about it (and a few users got banned because of having the balls to call it bs)
Everything about FZCO is becoming a nightmare (getting a bank account, queries from the bank, audits etc). What if one wants to just live in Dubai and operate a US LLC, are audits and accounting needed then? I already have good banking in place and need a US LLC for my client-facing work in the US anyway.
Hey @Nickster thanks again for this.
But even if no real accounting necessary (so no audit required), what about the tax? Why my accountant keeps saying that less than 3M AED there is no tax at all, but everywhere I read 375K AED that over them the company has to pay tax? I am talking about offshore RAK etc companies.
Who knows what is true? is amazing confusion,
Thanks
Imagine getting a nominee Emirati on board as a director or shareholder. I can tell you things will go way smoother.
The government actually even pays you to hire Emiratis. If you pay them a low salary, you get some kind of grant. Since there are no payroll taxes, it's like picking up money from the ground.
The first question is, are you a tax resident in UAE?
The second question: is this US LLC effectively managed and controlled in the UAE and forms a permanent establishment in the UAE?
A foreign person or non-resident entity is considered to have a PE in UAE -
- if it owns at least one permanent or fixed location in the country for operating its business.
- if a resident person holds the authority to operate a business on behalf of a foreign individual who is a non-resident.
- if it owns any other partnerships or connections that are mentioned in other Cabinet Decisions, if not in Federal Decree-Law no. 47.
Under the corporate tax regime, foreign companies having a PE in the UAE will be subject to the corporate tax rate of 9% on annual taxable income exceeding AED 375,000 attributable to UAE business operations and activities such as service provision, goods production or sale, property rentals, etc. These non-resident entities are required to register for corporate tax and file tax returns within 120 days of the end of the financial year.
I think 375 AED is for every entity, the profit threshold where the company starts paying tax. And then there is an exception of "small business relief" that you may (depending on criterias) apply for up until end of 2026 tax year. With that, you don't pay tax if your income is below 3 million AED, but I think to have read that if you one time exceed it, you cannot apply for it anymore. See link below about that small business relief:
It seems that Small Business Relief is for Tax Residents of UAE only. Therefore, many people that own offshore RAK, can't take it.I think 375 AED is for every entity, the profit threshold where the company starts paying tax. And then there is an exception of "small business relief" that you may (depending on criterias) apply for up until end of 2026 tax year. With that, you don't pay tax if your income is below 3 million AED, but I think to have read that if you one time exceed it, you cannot apply for it anymore. See link below about that small business relief:
1. Taxable persons that are resident persons can claim Small Business Relief where their revenue in the relevant tax period and previous tax periods is below AED3 million for each tax period
Isn't it better to sell an offshore company though. As they, unlike freezone companies, seem to be excluded from the corp tax, I would expect such companies to be quite valuable especially with banking set up. Subject to the usual unclear-ness of UAE though. But there was another thread about UAE offshore companies, and it seemed they were not subject to corp tax, which makes sense as they are offshore.
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