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UAE clarification of Freezone Qualifying Income
- Thread starter joffreylol
- Start date
They probably will go for income tax. I think that they believe Dubai and the UAE is such a great place that it's worth it to pay taxes there. Although I don't understand why would someone pay income tax in a state where you don't have public schools, public healthcare nor pensions. At least for the next couple of years there are options to mitigate this damage but who knows what happens next..
How far into the future can they see? ;-)
If they already say it with a limitation like that, it's guaranteed to happen.
They won't be able to do that in the near future, there are no CFC rules in the UAE, so it will work.
So is there anything clear and guaranteed now or is it speculation based on yet another online article of newspaper?
So according to those official documents, if you don't have income from qualifying activities, it means you don't have qualifying income, so your income will be taxed.
Qualifying Activities: manufacturing, processing, holding of shares and securities, ownership and operation of ships, reinsurance services, fund management services, wealth and investment management services, headquarter services to related parties, treasury and financing services to related parties, financing and leasing of aircraft, distribution of goods or materials in/from a designated zone, logistics services, and activities ancillary to the aforementioned activities.
Qualifying Activities: manufacturing, processing, holding of shares and securities, ownership and operation of ships, reinsurance services, fund management services, wealth and investment management services, headquarter services to related parties, treasury and financing services to related parties, financing and leasing of aircraft, distribution of goods or materials in/from a designated zone, logistics services, and activities ancillary to the aforementioned activities.
Yes see earlier in the thread
Interestingly -So it’ll need to be 15 percent ?
UAE begins corporate tax roll-out, with free zones exempted
The UAE began rolling out a 9% business tax on Thursday, with exemptions for the many free zones which power its economy, as the formerly tax-free oil producer seeks to boost non-oil revenue and remain a regional commercial hub.
www.reuters.com
The UAE tax coincides with a new global minimum corporate tax from the Organisation for Economic Cooperation and Development (OECD), signed by 136 signatories including the UAE, to ensure big companies pay a minimum 15% and make tax avoidance harder.
Guys,
you see that they are talking all the time about Freezones making Business within the UAE? Either from Freezone to Freezone or within a Freezone - designated Freezone?
They ignore entirely the origin definition of a Freezone - a Company being located in a separate Freezone doing international business.
There is no single word about International Business - they mention only Business Activities happening locally in the UAE - hence the weird list of activities provided and nothing about modern Business Activities like E-Commerce, Marketing or Consulting.
We don't know yet - if they did forget to mention this or they didn't mention this for a reason.
A request to PwC through a Corporate Entity with 350+ Employees was sent earlier today and we read in the CC.
Expect further clarification after the weekend.
Yes - we see all your messages and Yes - everyone gets a response however we need to set priority to our own clients first.
Have a great weekend and don't take it too serious!
you see that they are talking all the time about Freezones making Business within the UAE? Either from Freezone to Freezone or within a Freezone - designated Freezone?
They ignore entirely the origin definition of a Freezone - a Company being located in a separate Freezone doing international business.
There is no single word about International Business - they mention only Business Activities happening locally in the UAE - hence the weird list of activities provided and nothing about modern Business Activities like E-Commerce, Marketing or Consulting.
We don't know yet - if they did forget to mention this or they didn't mention this for a reason.
A request to PwC through a Corporate Entity with 350+ Employees was sent earlier today and we read in the CC.
Expect further clarification after the weekend.
Yes - we see all your messages and Yes - everyone gets a response however we need to set priority to our own clients first.
Have a great weekend and don't take it too serious!
Fred, thank you for taking the time.
We'll wait for your report.
PS. In the meantime, this is a friendly reminder that OECD employees are tax-exempt, but yet push for OTHERS, except them, to pay taxes! This is ANALogous to people pushing gender mutilation laws while they remain exempt from such laws.
Better policies for who?Better policies for better lives how they say
I remember the good old days when government employees had to produce (e.g. State-owned enterprises) to earn a living and not be a parasite on the population. How did society fall so far backward?
a. Income derived from transactions with other Free Zone Persons, except for income derived from Excluded Activities.
b. Income derived from transactions with a Non-Free Zone Person, but only in respect of Qualifying Activities that are not Excluded Activities.
The a and b above are “qualifying” it goes on to say “non free zone person” to be anyone/anything other so it should include any company anywhere.
However;
Under A. Freezone to freezone is exempt. Surely they must have an anti avoidance rule somewhere. Otherwise freezone A received all the money from abroad and needs to declare this revenue . But then receives invoices from freezone B. Thereby reducing the profit. Yet for freezone b it’s qualifying .
The origin definition of Freezone is a designated area, usually physically separated, where they receive tax benefits.
Doing international business shifting away revenue into tax havens is a thing of the past. UAE just killed the business model of free zones and the business around it. Without tax benefits, there's no reason why IFZA should exist. They are not even physically separated from the mainland.
In that form, UAE is getting way less competitive. Mandatory audits, high license fees and other useless fees in addition to taxes, are a tough pill to swallow. It looks like the outside pressure is just too high, because overall this is a bad deal.
However, clarification for many points is still required and it will take some time until everything is black and white.
I agree! Best wait for @Fred to tell us if we have zero taxes or not. If that is not the case, I'm back in Monaco. I'll have to cut a separate deal with Monaco to be able to travel 11 months out of the year to supervise manufacturing.
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