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Important! RAK ICC Company Dubai and new rules economic Substance

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AK UAE

New member
Ah o.k. I hope my agent did all right since he told me there is no more to do from my side and all the important things he did. Do you have maybe a link what informations they need?
 

rowena

Entrepreneur
I don't have a link, I talked via email and they told me ERS notification is a must for all entities regardless of activity type.
 

AK UAE

New member
I just mean if you know what information they (RAK ICC) exactly need? I just want check also if my agent really did it right...
 

smartcard

Offshore Agent
I talked with directly RAKICC and they told me all every company must complete ESR notification. I will finish ESR notification via agent next week.
I have RAKICC that does Software as a Service (SaaS) business, in this case, what should I fill in the forms?
 

rowena

Entrepreneur
I have RAKICC that does Software as a Service (SaaS) business, in this case, what should I fill in the forms?
Every agency following different ways for ESR notification. My agency automatically filled my ESR because my business is not a relevant activity. Which bank are you using for your RAKICC?
 

Crest

New member
I have RAKICC that does Software as a Service (SaaS) business, in this case, what should I fill in the forms?


If your company is conducting distribution services, whether goods or services, but only to a related foreign party. So in your case, are you providing the software to a company outside of the UAE, AND are those companies related to you by way of shared ownership. If you are only providing services to non related parties then you are NOT undertaking a 'relevant activity'.

You have to remember the idea of the ESR is to see if you are doing BEPS (base erosion and profit sharing), so if you are trying to reduce the profit of a related company in a taxable country. If you are selling (services) or buying (goods) from a non related party then you are not enabling base erosion.

Hope that helps
 

blueweb

Corporate Services
Mentor Group Gold
Elite Member
did
I talked with directly RAKICC and they told me all every company must complete ESR notification. I will finish ESR notification via agent next week.
you find it and could you let me know how secure you feel with your company setup there? you are not living inside the UAE right?
 

rowena

Entrepreneur
did

you find it and could you let me know how secure you feel with your company setup there? you are not living inside the UAE right?
I live in Dubai. My setup feels safe. There are several developments regarding ESR since the last post. Those entities completely exempted from CRS in UAE

- Entities that are wholly owned by UAE residents are not part of a multinational group, and only carry out business activities in the UAE.
- Natural persons, sole proprietors, trusts and foundations are no longer subject to the ESR and, as such, they are not required to file economic substance notifications(ex mainland company with a single owner).


I think those developments are game-changer for companies with a single owner or owner who is not living in UAE.
 
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CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
You need to have some type of "substance" because by doing that you have to pay VAT!!
Of the 150K plus companies that are registered in the UAE, you can imagine how much revenue that brings in.
I am going next week to negotiate a serviced office and telephone answering service for all my clients with a provider in Dubai.
They will give you a hot desk and telephone answering service for about 1000 per year and an "employee" for about 500 per month.
So about 6K per year but we know that will be negotiating that down.
 

rowena

Entrepreneur
You need to have some type of "substance" because by doing that you have to pay VAT!!
Of the 150K plus companies that are registered in the UAE, you can imagine how much revenue that brings in.
I am going next week to negotiate a serviced office and telephone answering service for all my clients with a provider in Dubai.
They will give you a hot desk and telephone answering service for about 1000 per year and an "employee" for about 500 per month.
So about 6K per year but we know that will be negotiating that down.
Did you check mainland companies with a professional license? It is a sole proprietorship company and exempt from ESR also easy to open a bank account. I think it is a good setup for people not really living UAE. The setup/renewal/visa cost should be around 6-8k USD per year.
 

wheelspin

New member
So moving to UAE, living there and having a single owner free zone company which operates in consulting or IT stuff can get in trouble if there’s no substance?
 

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
Thats what I advise mostly but cost is the biggest barrier.
It works just the same as a FZE but with the advantage of having local clients but that does make you liable for VAT.
Bank account opening is as easy as getting an EMI
Did you check mainland companies with a professional license? It is a sole proprietorship company and exempt from ESR also easy to open a bank account. I think it is a good setup for people not really living UAE. The setup/renewal/visa cost should be around 6-8k USD per year.
 

JustAnotherNomad

Mentor Group Gold
So moving to UAE, living there and having a single owner free zone company which operates in consulting or IT stuff can get in trouble if there’s no substance?

You would be the substance in that case anyway.
And it’s just you, you can get a freelancer license instead. You don’t need a full company. In some emirates, the freelancer license actually comes as a FZE company with a name of your choice - so from the outside you can’t tell if it’s a proper company license or just a freelancer license that’s behind it. The freelancer license is a good deal cheaper.
 

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
Increased cost of accounting but it's not really a problem but good to make people aware.
A client of mine sells crypto to UAE residents and got stung on VAT. So he had to set up an LLP to take payments from UAE resident. Then transfers it back to the UAE.

Just thought I would share the VAT issue.
 
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