Financial statements UAE Freezone used only for Crypto Cashout?

[Asmodeus]

Since 2 years i am the owner of a Freezone company in the UAE and used it only to inject my crypto funds into the company and cash it out as dividends to my private bank account. About 6 million so far. 3 Million received on my Business Emirates NBD and 3 Million splitted on foreign business bank accounts.
Now with this whole corporate income tax situation i am planning to close the company and for the liquidation an audited liquidation report is required and for this liquidation report you obviously need to submit the financial statements to
the accountant.

The question is now. What should i tell the accountant? The truth that i injected my private crypto funds into the company and just used it for cashout? Will there be any questions about source of funds for the injection (because the SoF problem was the one that required this whole cashout setup).
Or should i just submit a zero filing that the company did not made any money? What are the penalties for wrong filings? If it is just 100k AED it's kinda okay for me to take the risk (can't find any information about penalties in this regard online).

Would be thankful for any hints how to handle this situation.

Maybe someone has a recommendation for local accountant in the UAE that can advise for such cases.

 

[Martin Everson]

What should i tell the accountant?

The truth.

Will there be any questions about source of funds for the injection (because the SoF problem was the one that required this whole cashout setup).

I am surprised no one has asked already from any of the banks for a SOF.

Or should i just submit a zero filing that the company did not made any money?

You don't want to commit intentional financial fraud in UAE i.e premeditated.

What are the penalties for wrong filings?

Wrong filing??? This is intentional fraud and a severe case of under reporting. Penalties depend on what offense they feel you committed not what offense you feel you did. You can face up to 2 years in jail for fraud. If they determine money laundering then more problems.

Is NBD bank aware the money comes from crypto?

 

[Asmodeus]

The truth.



I am surprised no one has asked already from any of the banks for a SOF.




You don't want to commit intentional financial fraud in UAE i.e premeditated.



Wrong filing??? This is intentional fraud and a severe case of under reporting. Penalties depend on what offense they feel you committed not what offense you feel you did. You can face up to 2 years in jail for fraud. If they determine money laundering then more problems.

Is NBD bank aware the money comes from crypto?

NBD Bank never asked for any documents.

 

[Juleski70]

Caveat: I am not an expert on UAE Corporate filings/audits/enforcement.

You were not explicit so I am going to make some guesses. Am I right in thinking that (a) the personally-bought crypto was undeclared (at the personal level) and you did not want to be liable for capital gains on it? And (b) your personal tax residency is NOT UAE?

In that case, my intuition is that you declare the crypto as a shareholder loan (as crypto assets to fund the business), the corporation was a failure (did not make money as an active business) and you returned the shareholder loan in $ or AED upon winding down the company.

I don't think the info will trace it's way back to whatever country is your personal tax residency (even if that's also UAE, I doubt they'd connect the dots on your personal crypto gains, but again, not an expert on UAE).

 

[Martin Everson]

NBD Bank never asked for any documents.

3m and no questions asked by NBD . And that folks is why UAE is on FATF grey list for money laundering. Although they may soon be removed.

https://www.politico.eu/article/uni...o-look-the-other-way-on-uae-money-laundering/
P.S I assume your asking for a good local accountant because you don't already have one? Hopefully someone can recommend you a good one.

 

[alessio]

Hello, we can get your audit report 100% managed within 48h. Please contact in DM and I will send references (+1000)

 

[Asmodeus]

Caveat: I am not an expert on UAE Corporate filings/audits/enforcement.

You were not explicit so I am going to make some guesses. Am I right in thinking that (a) the personally-bought crypto was undeclared (at the personal level) and you did not want to be liable for capital gains on it? And (b) your personal tax residency is NOT UAE?

In that case, my intuition is that you declare the crypto as a shareholder loan (as crypto assets to fund the business), the corporation was a failure (did not make money as an active business) and you returned the shareholder loan in $ or AED upon winding down the company.

I don't think the info will trace it's way back to whatever country is your personal tax residency (even if that's also UAE, I doubt they'd connect the dots on your personal crypto gains, but again, not an expert on UAE).

1. I was a perpetual traveler for several years and accumulated all the crypto during the time i was traveling so there is no tax evasion or things like that hence there are also no capital gains to declare to any country.
2. My personal tax residency is the UAE since i formed the company. Before that i had no tax residency.

The problem was that i participated in almost every kind of crypto activity that made money and exchanged crypto so many times during this time that it's almost impossible to provide any source of funds.
Maybe some of the funds could be tracked back but tbh i am also just too lazy i don't want to waste my time sitting at least a whole month trying to track back my transactions that i did since 2016.

Thanks for the info with the Shareholder loan.

Hello, we can get your audit report 100% managed within 48h. Please contact in DM and I will send references (+1000)

Hello alessio, pleased send me a DM i am unable to visit your profile.
"This member limits who may view their full profile."

 

[sergeylim88]

if no issue with previous country for tax, why didn't you declare it as a personal investment and withdraw money directly without use of company??
are we talking about 3-4 million AED or EUR/USD?

 

[Asmodeus]

if no issue with previous country for tax, why didn't you declare it as a personal investment and withdraw money directly without use of company??
are we talking about 3-4 million AED or EUR/USD?

Source of Funds problems. It's easier to move the money when you've received the money as dividends from a company.
Otherwise it's always pain in the a*s to move the money from one private bank account to another.

 

[sergeylim88]

you could always say "various crypto investments" during last few years
you sold the investment while being a resident in tax free country and paid 0% income tax on it

i agree dividends would be easier, but in your case those are not dividends
if bank does a good kyc they will ask for invoices, proof of paymnet, some form of contract, and they an even check if the clients exist

 

[Asmodeus]

you could always say "various crypto investments" during last few years
you sold the investment while being a resident in tax free country and paid 0% income tax on it

i agree dividends would be easier, but in your case those are not dividends
if bank does a good kyc they will ask for invoices, proof of paymnet, some form of contract, and they an even check if the clients exist

Seems like you never dealt with such a problem because then you would know that it's not that easy.
You can't just say that the money is from "various crypto investments". Especially if you never invested a single penny of fiat money.
They want clear proofs except it's some shady private bank that is charging you 20k account fee a year.
Otherwise have fun getting your money freezed, investigations for money laundering and thousands of dollars waste in lawyer fees.

 

[Lopt Farbauti]

Since 2 years i am the owner of a Freezone company in the UAE and used it only to inject my crypto funds into the company and cash it out as dividends to my private bank account. About 6 million so far. 3 Million received on my Business Emirates NBD and 3 Million splitted on foreign business bank accounts.
Now with this whole corporate income tax situation i am planning to close the company and for the liquidation an audited liquidation report is required and for this liquidation report you obviously need to submit the financial statements to
the accountant.

The question is now. What should i tell the accountant? The truth that i injected my private crypto funds into the company and just used it for cashout? Will there be any questions about source of funds for the injection (because the SoF problem was the one that required this whole cashout setup).
Or should i just submit a zero filing that the company did not made any money? What are the penalties for wrong filings? If it is just 100k AED it's kinda okay for me to take the risk (can't find any information about penalties in this regard online).

Would be thankful for any hints how to handle this situation.

Maybe someone has a recommendation for local accountant in the UAE that can advise for such cases.

What crypto exchange have you used for transfers to Emirates NBD?

 

[jafo]

Did you ever solve this?

If affirmative, would you mind sharing how? Of course, if it doesn't affect you.