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Questions about UAE Freezone

kurosaki4d

kurosaki4d

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May 24, 2019
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#1
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Hello Everyone,

It’s been a couple of years now that I’m into Affiliate Marketing, and my monthly income has been growing steadily.

Currently, the annual income is around $120k per year. Would you say it's time to form an LLC? Or is it still early considering the expenses/taxes of a company?

I’ve heard great things about UAE freezone companies, to the point where I’m thinking it’s too good to be true.

  • Does my business model qualify and is suitable for UAE freezone company?
  • Is it really 0% tax regardless of how much money you’re making yearly? (what’s the catch)
  • On average, how much will it cost me in total to open the UAE company? (including minimum funds required in a bank)
  • Once the company is formed, Is it ok if I don’t live in UAE and I’m in another country? Or do I have to be physically present there for the company to be eligible to remain open?

Anyone who has some experience with this UAE company formation, I would be deeply grateful if you can share your valuable insights with me in this regard.

Thank you
 
#5
AnonymousCryptoOTC said:
UAE is no longer tax free.

They have implemented corporate tax of 9% for certain activities and yours would be subject to tax.
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Oh wow. I mean sooner or later we expected for that to happen, but didn't think it would be that soon.

So, what is the next best option that comes close in terms of the old advantages of the freezone?
 
#8
kurosaki4d said:
Hello Everyone,

It’s been a couple of years now that I’m into Affiliate Marketing, and my monthly income has been growing steadily.

Currently, the annual income is around $120k per year. Would you say it's time to form an LLC? Or is it still early considering the expenses/taxes of a company?

I’ve heard great things about UAE freezone companies, to the point where I’m thinking it’s too good to be true.

  • Does my business model qualify and is suitable for UAE freezone company?
  • Is it really 0% tax regardless of how much money you’re making yearly? (what’s the catch)
  • On average, how much will it cost me in total to open the UAE company? (including minimum funds required in a bank)
  • Once the company is formed, Is it ok if I don’t live in UAE and I’m in another country? Or do I have to be physically present there for the company to be eligible to remain open?

Anyone who has some experience with this UAE company formation, I would be deeply grateful if you can share your valuable insights with me in this regard.

Thank you
Click to expand...
With 120k$ per Year your effective Tax Rate with a Dubai Freezone Company would be 0% - no matter what.

First 100k$ are Tax Free and the 20k$ you can payout as a Salary - it would be a even a joke of a salary.

So you have upside potential by paying yourself a 60k AED Salary + 10K AED Allowance per month - you can get easily 300k$ per year Tax Free out - not to mention the benefits of a Tax Free Residence on the Personal Income Level - no Capital Gain Tax either.

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I give the above example anyway only because that's the majority opinion of the forum members actually - in reality Affiliate Marketing is not mentioned on the Excluded Activity List - which is a finished List of Activities and therefore Affiliate Marketing remain 0% as a Business Activity within the scope of Qualifying Income.

Again if you or whoever sees this different - stick to above mentioned example - no matter what - you can pull out 300k$ Tax Free which would mean a 3X on your current Business Earnings - at 0% Tax - not that bad.
 
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#9
Fred said:
With 120k$ per Year your effective Tax Rate with a Dubai Freezone Company would be 0% - no matter what.

First 100k$ are Tax Free and the 20k$ you can payout as a Salary - it would be a even a joke of a salary.

So you have upside potential by paying yourself a 60k AED Salary + 10K AED Allowance per month - you can get easily 300k$ per year Tax Free out - not to mention the benefits of a Tax Free Residence on the Personal Income Level - no Capital Gain Tax either.

-------------------------------------------------------------------------------------------------------------------------

I give the above example anyway only because that's the majority opinion of the forum members actually - in reality Affiliate Marketing is not mentioned on the Excluded Activity List - which is a finished List of Activities and therefore Affiliate Marketing remain 0% as a Business Activity within the scope of Qualifying Income.

Again if you or whoever sees this different - stick to above mentioned example - no matter what - you can pull out 300k$ Tax Free which would mean a 3X on your current Business Earnings - at 0% Tax - not that bad.
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Thanks a lot for this valuable information. This is exactly the kind of information I needed to know. What you said makes a lot of sense.

I wasn't aware that you can pull out up to $300k tax free. That's really encouraging.

This is good news, I'd really love to learn from your experience how much in average would it cost in total between forming the company, and creating a bank account? What's the average estimate required for that?
 
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#10
I pay AED11,000 - it might be a bit more with a visa but I don't need that (I'm sponsored by my wife). From what I recall, you don't pay anything for bank setup* but relationship fees are AED200 per month with mine.

*I paid Fred for the account setup (advisable) - I can't remember the precise amount but I am not on the big-bucks and it was perfectly reasonable.

You may need to spend 90 days in the UAE per year - this is where our situations differ as I need/want to spend time here anyway (wife), so others can advise further.
 
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#11
Thank you so much Alexrinse for disclosing these amounts. This is indeed very helpful and insightful to me.

Those are reasonable amounts considering the amount of work that the person in charge of the setup will do.

When I'll be ready to form the company I noticed that Fred is the person to go to, seems like he knows what he's doing.

Much appreciated for your explicit answer mate.
 
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#12
kurosaki4d said:
Thank you so much Alexrinse for disclosing these amounts. This is indeed very helpful and insightful to me.

Those are reasonable amounts considering the amount of work that the person in charge of the setup will do.

When I'll be ready to form the company I noticed that Fred is the person to go to, seems like he knows what he's doing.

Much appreciated for your explicit answer mate.
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If it helps a large chunk of my business is in affiliate marketing and I've been in Dubai a year now having used Fred to set up my FZ company, visa and banking. Cannot fault the service - and all the bank accounts I have are free with the exception of one of the biz accounts, WIO (which in my experience is the best by a mile)

Assuming most of your affiliate partners are in US the only real fly in the ointment when here is they're at the opposite side of the clock when it comes to calls/conferencing and nobody ever seems to make an allowance for that!

They all pay into my US LLC account, and every month that then transfers to Dubai etc. Clockwork.

So glad I made the shift, there's something just so positive and forward looking here that's completely lacking in the UK.
 
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#15
Fred said:
I give the above example anyway only because that's the majority opinion of the forum members actually - in reality Affiliate Marketing is not mentioned on the Excluded Activity List - which is a finished List of Activities and therefore Affiliate Marketing remain 0% as a Business Activity within the scope of Qualifying Income.
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The first part about the 375kAED exemption and being able to somehow play with how much is your salary is right, but this part I'm quoting above is wrong.

It's not about a list of "Excluded activities", it's about a list of "Accepted activities". Huge difference. Any activities that are outside the "Accepted activities" mentioned in the latest Cabinet Decision 55 (https://mof.gov.ae/wp-content/uploa...ifying-Activities-and-Excluded-Activities.pdf) WILL be taxed at 9%. ALL acitivities outside that scope and that includes "management", "social media marketing", "affiliates", etc. Period.

This is the case for most people on this forum who provides services that are outside of the accepted activities (I'll assume not many people here build planes or ships...).
 
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#16
Au999 said:
If it helps a large chunk of my business is in affiliate marketing and I've been in Dubai a year now having used Fred to set up my FZ company, visa and banking. Cannot fault the service - and all the bank accounts I have are free with the exception of one of the biz accounts, WIO (which in my experience is the best by a mile)

Assuming most of your affiliate partners are in US the only real fly in the ointment when here is they're at the opposite side of the clock when it comes to calls/conferencing and nobody ever seems to make an allowance for that!

They all pay into my US LLC account, and every month that then transfers to Dubai etc. Clockwork.

So glad I made the shift, there's something just so positive and forward looking here that's completely lacking in the UK.
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Hope you don't mind, just want to clarify:

You have a US LLC that receives all US based revenue which you then transfer to your UAE FZCO's business bank account?

If so, does the UAE company own the US LLC?

Assuming you're not a US citizen, are there any US taxes you need to pay, or any reporting requirements, or is it only UAE based legal requirements that are relevant?
 
#17
yoyodubai said:
Hope you don't mind, just want to clarify:

You have a US LLC that receives all US based revenue which you then transfer to your UAE FZCO's business bank account?

If so, does the UAE company own the US LLC?

Assuming you're not a US citizen, are there any US taxes you need to pay, or any reporting requirements, or is it only UAE based legal requirements that are relevant?
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FZCO is the single member of the LLC yes.
Both ubo and fz are non-us and there's zero work or substance on the ground in US, so it's just a simple form once a year in the US. Basically the LLC is a payment processor for me as from experience US companies are wholly unable to get their heads around paying into a Dubai bank!
 
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#18
Au999 said:
FZCO is the single member of the LLC yes.
Both ubo and fz are non-us and there's zero work or substance on the ground in US, so it's just a simple form once a year in the US. Basically the LLC is a payment processor for me as from experience US companies are wholly unable to get their heads around paying into a Dubai bank!
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Interesting! Thanks for sharing.

Currently have a freezone company where i work with companies on a global basis. I use stripe to process payments and it's expense here in the uae.

I've been thinking about setting up a us llc and using that with stripe instead. i've already managed to set up a us business bank account.

do you use stripe atlas to set up the llc or something else?
 
#19
yoyodubai said:
Interesting! Thanks for sharing.

Currently have a freezone company where i work with companies on a global basis. I use stripe to process payments and it's expense here in the uae.

I've been thinking about setting up a us llc and using that with stripe instead. i've already managed to set up a us business bank account.

do you use stripe atlas to set up the llc or something else?
Click to expand...
stripe with the us llc works well for me. Im not an us fella.
 
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#20
yoyodubai said:
thanks for confirming! can you share how you went about setting up the us llc?
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contacting a service provider for it. There are some in this forum. It is VERY easy, everything.
Pick a provider who does the form 5472 and proforma tax form filing or whatever number it is for you. Then you do not even have to do it yourself.
 
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