UAE - 2024 - And now, what?

[JackieTsan]

Dear Everyone,
I opened this thread to understand what is happening with UAE OFFSHORE currently : TAX

1) I am reading that a) Offshore will NOT have 9%, b) Offshore WILL have 9%, c) there is no tax to the 1st $100K per year (AED 400K),
2) That a company MIGHT comply to a program called small business relief, but it's not sure. Should do less than $390K (AED 1800000K ?). But might not.
3) I heared that they stopped opening OFFSHORE at the moment, is that true and if yes, why?

What are the updates today, April 2024? Where are we going? IF there will be 9% tax why we don't completely know it by today?

I'm looking forward to sharing your knowledge.

 

[JonnyStekkino]

There is already the 9% tax, and if you keep thinking there is not, expect a fine.

 

[Alexmorgan]

Dear Everyone,
I opened this thread to understand what is happening with UAE OFFSHORE currently : TAX

1) I am reading that a) Offshore will NOT have 9%, b) Offshore WILL have 9%, c) there is no tax to the 1st $100K per year (AED 400K),
2) That a company MIGHT comply to a program called small business relief, but it's not sure. Should do less than $390K (AED 1800000K ?). But might not.
3) I heared that they stopped opening OFFSHORE at the moment, is that true and if yes, why?

What are the updates today, April 2024? Where are we going? IF there will be 9% tax why we don't completely know it by today?

I'm looking forward to sharing your knowledge.

Not only that

If you live in UAE without any company in UAE or if you have non operating company in UAE and you have an operating LLC company in US which is disregarded entity and you have an EU or African or any nationality you will still pay a Corporate tax in UAE

So Run

Last couple of weeks i was in a lot of meetings for manufacturing companies trying to sell their companies some of them have under construction factories in UAE and they are running away

So again

Run

 

[JackieTsan]

9% tax starting Over which amount??
At the offshores too??
What about the first 100k not taxed?
What about the small business relief?

Thank you

 

[manukahoney]

Generally speaking:
1) there is little difference now between FZCO and mainland companies, except it's easier to have a proper substance for a mainland company (very cheap office in the outskirts, very cheap stuff if needed), so banking is much easier done for mainland.
2) there is VAT and rules are more or less the same as in the UK or EU - you pay VAT when you sell goods and services in the UAE, you don't if you sell goods offshore, tricky with services. Some nice exception if you trade FZCO to FZCO.
3) there is a corporate tax with some exception - like first 375k of profit are tax free, there is exception for small business that let you have 3mil free of tax, the allowed expenses rules are very relaxed at the moment (comparing with the UK), so for most small enterprises there will be no or very small tax, but you do need bookkeeping now and submit reports.
4) non-incorporated business activities - generally speaking you now need to separate your professional activity and personal income. Like if you are a professional personal coach, you should submit your earnings and pay tax, however I doubt anyone will do it and that authorities will chase that. Anyways it's usually a good advice to have a layer of corporate protection around your business activities for many reasons.
5) offshore entities - the rules are pretty much the same as anywhere. If you manage your offshore company, it will be considered an UAE tax resident and you need to pay corp tax and submit reports. If there is real substance offshore and the company is not managed by UAE residents, you don't. Again, the wording and the clarity is not yet here, so exercise caution.

Everyone saying "Dubai is dead" are slightly exaggerating, there are not so many developed countries where you can reside and pay close to 0 personal tax and very low corporate tax with very relaxed rules on expenses.

 

[JackieTsan]

Generally speaking:
1) there is little difference now between FZCO and mainland companies, except it's easier to have a proper substance for a mainland company (very cheap office in the outskirts, very cheap stuff if needed), so banking is much easier done for mainland.
2) there is VAT and rules are more or less the same as in the UK or EU - you pay VAT when you sell goods and services in the UAE, you don't if you sell goods offshore, tricky with services. Some nice exception if you trade FZCO to FZCO.
3) there is a corporate tax with some exception - like first 375k of profit are tax free, there is exception for small business that let you have 3mil free of tax, the allowed expenses rules are very relaxed at the moment (comparing with the UK), so for most small enterprises there will be no or very small tax, but you do need bookkeeping now and submit reports.
4) non-incorporated business activities - generally speaking you now need to separate your professional activity and personal income. Like if you are a professional personal coach, you should submit your earnings and pay tax, however I doubt anyone will do it and that authorities will chase that. Anyways it's usually a good advice to have a layer of corporate protection around your business activities for many reasons.
5) offshore entities - the rules are pretty much the same as anywhere. If you manage your offshore company, it will be considered an UAE tax resident and you need to pay corp tax and submit reports. If there is real substance offshore and the company is not managed by UAE residents, you don't. Again, the wording and the clarity is not yet here, so exercise caution.

Everyone saying "Dubai is dead" are slightly exaggerating, there are not so many developed countries where you can reside and pay close to 0 personal tax and very low corporate tax with very relaxed rules on expenses.

Thank you for your time to response, but probably you missed that I am NOT tax resident, even resident at all in UAE.
Companies are RAK
Company 1 has Director in UAE
Company 2 has Director out of UAE
Companies DO NOT do business with companies in UAE (and as I know these companies are NOT allowed to do business in UAE)
Expected income: 1.5M AED/ year (max)
Is there any clarification what the tax will be?

 

[manukahoney]

Expected income: 1.5M AED/ year (max)

https://tax.gov.ae/DataFolder/Files/Guides/CT/Small%20Business%20Relief%20Guide%20-%20EN%20-%2027%2008%202023.pdf

Generally speaking - 0 tax til 2026.
You need to apply for a small business relief though and keep papers in order.

 

[JackieTsan]

@manukahoney thank you! How I can be sure of this? My accountant cannot confirm anything at all... I don't want any surprise that's why i'm looking for alternatives.
Thank you

 

[manukahoney]

You need another accountant then. There are some companies that advertise on this forum.

 

[bibing]

Am I the only one thinking 9% is like nothing?

Why the fuzz about it?

Yes, 0% is better, I agree, but this is going to end, even in banana islands.

In the next decade I'm quite sure no country will offer 0%, except for some complicated structures. Or if 0% they will make you pay in fees (audits, etc.)

 

[banafinfodafuggiano]

Am I the only one thinking 9% is like nothing?

Why the fuzz about it?

Yes, 0% is better, I agree, but this is going to end, even in banana islands.

In the next decade I'm quite sure no country will offer 0%, except for some complicated structures. Or if 0% they will make you pay in fees (audits, etc.)

9% is not nothing. If you are earning 10m+ in profits a year, 9% adds up pretty quickly.

 

[bibing]

9% is not nothing. If you are earning 10m+ in profits a year, 9% adds up pretty quickly.

Try to earn 10m+ in profits in a 40% tax country then

 

[JackieTsan]

You need another accountant then. There are some companies that advertise on this forum.

Today my accountant sent me this message “Tax Authority has launched a paid tax opinion service”
What is this, amazing!! I’m very very disappointed with this, no clear info and they issue a service, PAID!! To clarify what??
Do I need to wait to the expiration in order to dissolve (close) the company or I can do it now?
Can you suggest accountant (to run the company or consult me?) in case I can keep it?
Thank you

 

[Don]

@manukahoney thank you! How I can be sure of this? My accountant cannot confirm anything at all... I don't want any surprise that's why i'm looking for alternatives.
Thank you

UAE CT applies to juridical persons incorporated in the UAE and juridical persons effectively managed and controlled in the UAE, as well as to foreign juridical persons that have a permanent establishment in the UAE.
Individuals will be subject to CT only if they are engaged in a business or business activity in the UAE, either directly or through an unincorporated partnership or sole proprietorship.

Unless there is an exemption by law, CT has to be paid.


Why is the UAE introducing CT?
A competitive CT regime based on international best practices is expected to cement the UAE’s position as a leading global hub for business and investment and accelerate the UAE’s development and transformation to achieve its strategic objectives.

Introducing a CT regime also reaffirms the UAE’s commitment to meeting international standards for tax transparency and preventing harmful tax practices.

 

[JackieTsan]

UAE CT applies to juridical persons incorporated in the UAE and juridical persons effectively managed and controlled in the UAE, as well as to foreign juridical persons that have a permanent establishment in the UAE.
Individuals will be subject to CT only if they are engaged in a business or business activity in the UAE, either directly or through an unincorporated partnership or sole proprietorship.

Unless there is an exemption by law, CT has to be paid.


Why is the UAE introducing CT?
A competitive CT regime based on international best practices is expected to cement the UAE’s position as a leading global hub for business and investment and accelerate the UAE’s development and transformation to achieve its strategic objectives.

Introducing a CT regime also reaffirms the UAE’s commitment to meeting international standards for tax transparency and preventing harmful tax practices.

So according to this (ct is country tax?), the company has to pay 9% yes?
For any income? I’m not resident of uae just have the offshore rak company there.
In this case understand that the time to close it has come. I am NOT willing to pay 9% tax for having this company there.
and having no clear info at all! I see many rumors about tax but nobody can tell me something that is sure. Somewhere I read that it’s 9% over the first 400K AED. Then what? Is it a scale? If I go over 400K do I get taxed for all the amount or only the amount over the 400k? What about business relief. Can I get it 100% sure or no? Everything so unclear, what is the reason to stay?
And when I can start closing? Do I need to wait to expire and not renew or start it now? I’m seriously pi***d off with this situation.

 

[0xDEADBEEF]

So according to this (ct is country tax?), the company has to pay 9% yes?

CT stands for Corporate Tax. Indeed, every company effectively managed from the UAE, whether it's an LLC, FZCO, or a general UAE company, will be subject to this 9% tax.

For any income? I’m not resident of uae just have the offshore rak company there.

I can't provide a definitive answer on this, but if you're not conducting business within the UAE or can structure your FZCO to potentially qualify for an exemption, you might not be subject to this tax.

Somewhere I read that it’s 9% over the first 400K AED. Then what? Is it a scale? If I go over 400K do I get taxed for all the amount or only the amount over the 400k? What about business relief. Can I get it 100% sure or no? Everything so unclear, what is the reason to stay?

Actually, you will pay 9% over the first 375k AED, so the first 375k is exempt. Regarding the small business relief, you can qualify for it during each tax period until the end of 2026 if your revenue is below 3m AED. You can apply this exemption for multiple tax periods, potentially exempting your revenue for up to 3 years if it remains below the threshold. Once you exceed this limit, corporate tax will apply to the full amount.

Everything so unclear, what is the reason to stay?

Deciding to stay is a personal choice, and I share your frustration with the lack of clarity. So far, the most definitive response I've received is "we will have to wait and see.". Depending on your residency, you might find a better option elsewhere.

And when I can start closing? Do I need to wait to expire and not renew or start it now? I’m seriously pi***d off with this situation.

You can initiate the closure procedures at any time. It would be best to contact your Freezone Authority to understand the next steps. They can guide you through the process or maybe recommend an intermediary to assist you.

*Please note that I am not a financial advisor, I'm simply sharing my understanding and personal experiences regarding the current situation.

 

[uranium]

I have a feeling that you will waste time looking for other banana jurisdictions with no real bank account and later come back to Dubai.
As others suggested: find better accountant.
Go meet 5-10 accounting firms at their office and you will figure it out.

 

[JackieTsan]

I can't provide a definitive answer on this, but if you're not conducting business within the UAE or can structure your FZCO to potentially qualify for an exemption, you might not be subject to this tax.

I don’t provide any business in UAE, Imthe company is offshore (rak, ajman, etc are offshore regions). In the one, the director is Permanent resident of Dubai, in the other no.
I am looking for who can help me understand the tax so I decide use them or close them.
Thank you

I have a feeling that you will waste time looking for other banana jurisdictions with no real bank account and later come back to Dubai.
As others suggested: find better accountant.
Go meet 5-10 accounting firms at their office and you will figure it out.

Yes I understand. Any suggestions? I can’t fly to Dubai I don’t live there so everything needs to be done remotely.

 

[Don]

Dear Everyone,
I opened this thread to understand what is happening with UAE OFFSHORE currently : TAX

1) I am reading that a) Offshore will NOT have 9%, b) Offshore WILL have 9%, c) there is no tax to the 1st $100K per year (AED 400K),
2) That a company MIGHT comply to a program called small business relief, but it's not sure. Should do less than $390K (AED 1800000K ?). But might not.
3) I heared that they stopped opening OFFSHORE at the moment, is that true and if yes, why?

What are the updates today, April 2024? Where are we going? IF there will be 9% tax why we don't completely know it by today?

I'm looking forward to sharing your knowledge.

Depending on the type of income, it might be exempt in the UAE.
If its an offshore company it shall pay tax somewhere right?
In such case the income might not be double taxed in UAE.

 

[sergeylim88]

@0xDEADBEEF you said following

Depending on your residency, you might find a better option elsewhere.

can you point out to what other options are you referring (maybe just list them)

thank you