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Incorporating in UAE / RAK (offshore)

nnwakelam

New member
Hey there,

I've been reading online and have spoken to an agent regarding incorporating in the RAK (offshore).

I've been told that I apparently need a residence visa as it will be very difficult to source a banking relationship without residence.

Does anyone have recent experience with this? Is this correct?

I'm essentially wanting an offshore corporation that I can use to operate my day to day business as I am finding the new changes in Labuan too expensive.

EDIT: I am also open to other zones if anyone knows of a better option than RAK.

Thanks

To clarify - that I will need to go for an option that includes residence as RAK will not be an option* (is what the agents have told me).

If it's useful - background is that (pre coronavirus) I was spending ~6 months a year travelling and 6 months based in Thailand. I'm looking to incorporate somewhere so I don't run afoul of taxation authorities in my home country (due to not lodging taxes anywhere). I was previously using Labuan for this purpose, but the proposed changes in Labuan are going to make this far more expensive than it needs to be so I am looking to incorporate in UAE. I'm not sure if an offshore company suits my needs.

Any advice appreciated!

Thanks
 
Last edited:

JustAnotherNomad

Entrepreneur
Don’t get an offshore company. They are useless. No bank account and no residency visa.

Get a free zone company/freelance license. That gives you residency at least.
 

nnwakelam

New member
Don’t get an offshore company. They are useless. No bank account and no residency visa.

Get a free zone company/freelance license. That gives you residency at least.
Thanks. This was the conclusion I'd come to. I'm looking at "Masdar Free Zone" for this purpose.
 

JustAnotherNomad

Entrepreneur
Never heard of Masdar. Looks expensive, except for the 0-visa package, for which you probably won’t get a bank account.
Be aware that the cheaper the free zone, the more difficult it will be to get a bank account for the business. I’ve heard that without a proper office (no flexi desk), it can be almost impossible.
Also beware that sometimes the license fee is low, but then they require you to rent an outrageously expensive office.
Personally I haven’t quite understood why anyone would need a UAE business bank account when there are no taxes or CFC rules in the UAE. Just get residency there and be happy.

@rowena and @BlueMist are very knowledgeable about the UAE.
 

nnwakelam

New member
Never heard of Masdar. Looks expensive, except for the 0-visa package, for which you probably won’t get a bank account.
Be aware that the cheaper the free zone, the more difficult it will be to get a bank account for the business. I’ve heard that without a proper office (no flexi desk), it can be almost impossible.
Also beware that sometimes the license fee is low, but then they require you to rent an outrageously expensive office.
Personally I haven’t quite understood why anyone would need a UAE business bank account when there are no taxes or CFC rules in the UAE. Just get residency there and be happy.

@rowena and @BlueMist are very knowledgeable about the UAE.
I mean - wouldn't a business account be required in order to operate as a business (as opposed to a personal bank account)? Correct me if I don't understand correctly!

Great - I'm happy to take advice from whoever. I was mainly angling towards opting for a more expensive option as I feel it will show me to be more legitimate to a bank. (Plus at like $30-40K for 3 years, it seems like a pretty reasonable outlay to not have to pay taxes at all).

Cheers
 

JustAnotherNomad

Entrepreneur
What I meant was that you could move to the UAE and register a company with “flow-through” taxation somewhere else, like a UK LP. But of course banking could still be a challenge.

But if you live in Thailand anyway, there might be even simpler options:

For the record: As far as I have understood, only passive foreign income isn’t taxed in Thailand. If you work from Thailand, you still have to pay the tax. And I’m not sure if the approach works with a flow-through entity like a UK LP because it can’t distribute dividends. But apparently it works in practice at least, so...

As for the risk of being taxed by your home country, that depends on your home country. There may or may not be a risk.
 

nnwakelam

New member
As far as I une
What I meant was that you could move to the UAE and register a company with “flow-through” taxation somewhere else, like a UK LP. But of course banking could still be a challenge.

But if you live in Thailand anyway, there might be even simpler options:

For the record: As far as I have understood, only passive foreign income isn’t taxed in Thailand. If you work from Thailand, you still have to pay the tax. And I’m not sure if the approach works with a flow-through entity like a UK LP because it can’t distribute dividends. But apparently it works in practice at least, so...

As for the risk of being taxed by your home country, that depends on your home country. There may or may not be a risk.
As far as I understand it - If I'm incorporated in UAE and am paying the taxes there my obligation to my home country is non-existent. I think it would be non-existent regardless I just want to make sure I cover myself as I know how friendly taxation authorities can be when push comes to shove! :)

A UK LP sounds interesting.

What I am proposing is simply banking through UAE and claiming residency there (entering twice a year). As far as working from Thailand - would that be tax payable to the Thai government? I'm currently going in and out on tourist vias but will be securing a Thai Elite visa once I sort out all of this with UAE. I imagine this structure will have to change in the future, but the only real obligation I would have in this situation would be to the Thai government if I am doing my work there, correct?

Worth keeping in mind is all of my work is remote.
 

JustAnotherNomad

Entrepreneur
It depends on your home country. Residency is not the same thing as tax residency.

Yes, if you work from Thailand, you will (as far as I know) have to pay taxes. And working in Thailand without a work permit is illegal - and I don’t think the elite visa includes one, does it? That’s the theory at least. In practice, they probably don’t care.

I’m not sure the UAE is a good solution for you. If you spend only 2 days per year in the UAE, that’s pretty much worthless from a tax perspective. You should probably just get a proper visa in Thailand that will allow you to spend >183 days there. Then you’ll have proper tax residency established in Thailand. Then just make sure Thailand doesn’t tax you and you should be fine.

But it also depends on your home country.
 

nnwakelam

New member
It depends on your home country. Residency is not the same thing as tax residency.

Yes, if you work from Thailand, you will (as far as I know) have to pay taxes. And working in Thailand without a work permit is illegal - and I don’t think the elite visa includes one, does it? That’s the theory at least. In practice, they probably don’t care.

I’m not sure the UAE is a good solution for you. If you spend only 2 days per year in the UAE, that’s pretty much worthless from a tax perspective. You should probably just get a proper visa in Thailand that will allow you to spend >183 days there. Then you’ll have proper tax residency established in Thailand. Then just make sure Thailand doesn’t tax you and you should be fine.

But it also depends on your home country.
All of the advice I have gotten from people in the UAE on the ground is that I'd only need to enter once every ~180 days in order to maintain tax residency.

The elite visa doesn't have a work permit.

I agree with you that is a good idea but I am more looking for an interim solution as I need somewhere to park money in the next ~6 months. UAE looks like it'll suit my needs if only for 1-2 years.
 

JustAnotherNomad

Entrepreneur
In theory maybe. You won’t get a tax residency certificate - which you may or may not need.

But most of all, it’s likely irrelevant if some other country claims you as a tax resident.
It’s possible to be tax resident in more than one country.
 

nnwakelam

New member
In theory maybe. You won’t get a tax residency certificate - which you may or may not need.

But most of all, it’s likely irrelevant if some other country claims you as a tax resident.
It’s possible to be tax resident in more than one country.
So anecdotally would you say this advice is wrong or simply that my mileage may vary in personally implementing it?
 

JustAnotherNomad

Entrepreneur
What advice? If you’re a UAE resident (for which 2 days per year are enough), the UAE says you need to pay your taxes there. The taxes just happen to be zero.

But if for whatever reason any other country also says you should pay all your taxes there, then it is what it is. If there is a tax treaty, it contains rules that determine where your taxes shall be paid. Basically it says that they will check which country you have closer ties to. If your wife and kids are in Poland and you have a Polish passport and you spend 4 months every year in Poland, you clearly have closer ties to Poland than to the UAE, so your UAE residency is worthless. (Poland is just a placeholder, I don’t know the actual Polish laws.)
Some countries also have very disadvantageous tax treaties with the UAE that don’t reduce your taxes at all.
And if there is not even a tax treaty, then no such checks are done and you automatically have to pay taxes in both countries.
If the other country requires a tax residency certificate, then you also won’t get it if you only spend two days in the UAE.

I’m repeating myself here, but it all depends on your home country.

Thailand already is a very good option. I don’t see any value in getting UAE residency “on top”. You should probably work on getting even closer ties to Thailand and making sure Thailand doesn’t tax your income.
 

nnwakelam

New member
What advice? If you’re a UAE resident (for which 2 days per year are enough), the UAE says you need to pay your taxes there. The taxes just happen to be zero.

But if for whatever reason any other country also says you should pay all your taxes there, then it is what it is. If there is a tax treaty, it contains rules that determine where your taxes shall be paid. Basically it says that they will check which country you have closer ties to. If your wife and kids are in Poland and you have a Polish passport and you spend 4 months every year in Poland, you clearly have closer ties to Poland than to the UAE, so your UAE residency is worthless. (Poland is just a placeholder, I don’t know the actual Polish laws.)
Some countries also have very disadvantageous tax treaties with the UAE that don’t reduce your taxes at all.
And if there is not even a tax treaty, then no such checks are done and you automatically have to pay taxes in both countries.
If the other country requires a tax residency certificate, then you also won’t get it if you only spend two days in the UAE.

I’m repeating myself here, but it all depends on your home country.

Thailand already is a very good option. I don’t see any value in getting UAE residency “on top”. You should probably work on getting even closer ties to Thailand and making sure Thailand doesn’t tax your income.
I understand. Sorry to make you reiterate the point I'm just trying to get a completely clear understanding. Do you know much about Australia in regards to this? I haven't been back for any considerable amount of time in the last ~5 years and have no financial or personal ties to the country.
 

JustAnotherNomad

Entrepreneur
Not really, sorry. But if you’ve cut all ties, I think it is highly unlikely that they’ll ever try to tax you if you don’t move back. But you should talk to an Australian accountant to be sure.
Thai residency should be fine. Just make sure you don’t trigger tax residency or permanent establishment anywhere else, at least not without having a contingency plan.
 

nnwakelam

New member
Not really, sorry. But if you’ve cut all ties, I think it is highly unlikely that they’ll ever try to tax you if you don’t move back. But you should talk to an Australian accountant to be sure.
Thai residency should be fine. Just make sure you don’t trigger tax residency or permanent establishment anywhere else, at least not without having a contingency plan.
Thanks for the advice. That's the way I understand it too. I don't plan on moving back at all but I could potentially see myself back here in a decade (maybe).
 

JustAnotherNomad

Entrepreneur
There’s plenty of information here:

If you fit none of the criteria, I wouldn’t worry much about Australia. I would rather check other countries where you spend time or may even be working.
 

JustAnotherNomad

Entrepreneur
If you get residency in Thailand, that should be as good as UAE residency, if not better, since you’ll actually be spending time there.
So even if you move back, you can easily prove to the OZ taxman that you lived in Thailand.
I think the only cases where people got into trouble when they moved back were when they weren’t tax resident of any country.

It seems that Thailand has a requirement of 180 days for tax residency. If you can spend that many days there every year, the case should be very clear:
 

eastern

New member
As far as I understand it - If I'm incorporated in UAE and am paying the taxes there my obligation to my home country is non-existent. I think it would be non-existent regardless I just want to make sure I cover myself as I know how friendly taxation authorities can be when push comes to shove! :)
The ground is shifting underneath us, this UAE status is "recognised" until they are not. Also you need to declare in the UAE papers that you are not tax resident of another jurisdiction. My bet is that give the current political / economic turmoil this scheme will not last long.
 

Noorlo

New member
In Australia "foreign residents are generally taxed only on their Australian-sourced income, such as money they earn working in Australia" ATO
You definitely should consider declaring dividends from offshore company and pay it in personal Australian bank account so it is already there if you do move back in 10 years.
Make sure you lodge your annual tax return in Australia as foreign resident. You will have to pay high taxes on the interest generated from leaving your cash in Australian bank but not on the foreign dividends
You may have to declare this dividends in your actual tax residency country
 
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