Permanent Establishment rules UAE, with new CT on Companies

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andrew28fl

New member
I have been trying to research what would happen to owners of offshore companies who live in the UAE. For example, if one lives in Dubai, and operates a US LLC or UK LLP etc. I came across this article (hope links are allowed) Introduction of Corporate Tax in the UAE, other wise search for "gibson dunn corporate tax in uae"

which says "In line with tax measures in other jurisdictions, CT will be levied on foreign legal entities: (1) with a permanent establishment (“PE”) in the UAE, and that earn UAE sourced income, or (2) that are tax resident by way of management and control in the UAE."

So basically if the owner lives in the UAE, the (2) would apply, and the foreign entity (US LLC/UK LLP) will become taxable in the UAE, correct? More than the 9% tax, I am worried about the upkeep, bookkeeping, and filing taxes. Any experts to shed some light on this? Thanks.
 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member
So basically if the owner lives in the UAE, the (2) would apply, and the foreign entity (US LLC/UK LLP) will become taxable in the UAE, correct?

Yes it would seem that way. Even government website hinted this is my post I made here months ago.

Any experts to shed some light on this?

Speak to a local tax firm or the one you linked. UAE is going through a lot of new tax changes in its tax practices as we speak owing to OECD pressure. It is a work in progress. No one is going to know more right now than a local tax advisor firm out there in UAE.
 

MiddleEuroAsia

opportunist
Mentor Group Gold
Entrepreneur
I have been trying to research what would happen to owners of offshore companies who live in the UAE. For example, if one lives in Dubai, and operates a US LLC or UK LLP etc. I came across this article (hope links are allowed) Introduction of Corporate Tax in the UAE, other wise search for "gibson dunn corporate tax in uae"

which says "In line with tax measures in other jurisdictions, CT will be levied on foreign legal entities: (1) with a permanent establishment (“PE”) in the UAE, and that earn UAE sourced income, or (2) that are tax resident by way of management and control in the UAE."

So basically if the owner lives in the UAE, the (2) would apply, and the foreign entity (US LLC/UK LLP) will become taxable in the UAE, correct? More than the 9% tax, I am worried about the upkeep, bookkeeping, and filing taxes. Any experts to shed some light on this? Thanks.
Yes, your LLC/LLP would be seen as a mainland company from tax prespective. Would that be enforcable? no, that's just to please the suckers in the OECD and remove UAE from the grey list.

Easy solution: form a FZCO that own the LLC/LLP, appoint yourself as a manager of the FZCO and repartiate the profits from the LLC/LLP to the FZCO, then to you as a manger vid dividends/salary/director fees.

Speak to tax attorney though to make sure you have everything covered.
 
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