UAE (Dubai) Expats: What moves will you make with the new UAE tax laws?

[JustAnotherNomad]

I am actually considering making Thailand my new base and spending significant time there, but not 6+ months per year.
I would have residency (probably not even a requirement, but just seems like the better idea), probably even get some local income through an EOR company and pay local tax. Rent a cheap apartment.
I would pay tax on the income from the EOR company, which would cover all my costs in Thailand.
You get a tax ID, tax returns, utility bills.
You can put your Thai address on form 5472 and give it to banks, but you wouldn't even be tax resident in Thailand. It seems very farfetched that they would attribute a PE when you're not even tax resident and you pay tax on all the income that is remitted to Thailand (your salary which covers all expenses).
You set up a company somewhere where there is no tax (US LLC, HK, whatever) and then you keep that money out of Thailand. You only spend while you travel, which is for 7+ months per year.
Seems like a pretty clean setup to me.
The only risk is that the Thai tax authority could claim that there is a PE in Thailand or that your company is being managed and controlled from Thailand, but how? You're not even tax resident, you don't have a fixed office, you literally spend only a few months there. At the same time, you can prove to any other country that Thailand is your center of life as you have a job there, an apartment and you spend way more time there than in any other country.

 

[Moonlighter]

If you're nowhere > 6 months, the center of your life and economic interests, is the deciding factor. Hence Thailand could make the case. Very unlikely to happen, but a possibility.

You can make the same point about UAE, and no one knows how the laws are enforced in the end. The decision if a PE is triggered depends on a case by case basis and many countries don't make the effort to go after small fish.

However, go to a local lawyer / tax attorney and see about the detailed implications, getting tax advise and structuring something, highly depends on personal circumstances.

 

[JustAnotherNomad]

If you're nowhere > 6 months, the center of your life and economic interests, is the deciding factor.

The deciding factor for what? Tax residency? There is no such general rule. Yes, high tax countries typically have such rules. But Thailand doesn't. Thailand has a strict rule about the number of days in the country, that's it.
You have to look at the specific rules for the countries you're dealing with, you can't just assume because country X has a law, country Y must have the same law. There is no world government (yet), so every country still makes its own laws.
I would even be happy if there was such a rule in Thailand, because then one would be able to get a tax residency certificate without having to stay for 6+ months.

However, go to a local lawyer / tax attorney and see about the detailed implications, getting tax advise and structuring something, highly depends on personal circumstances.

That's a good idea in general.

 

[Paul Tudor Jones]

Biggest lesson from the Dubai mess: Avoid groupthink and do your own analysis.

Don't go where everybody is going. If everybody is going to Dubai and everybody knows that Dubai is the place to do shady things (no need for details), that jurisdiction is a ticking time bomb...

Just do your own thing in your lane and you can operate for years without any issues. Plenty of jurisdictions were mentioned here and there that are working well for years with essentially low tax. All of them will have their haters that for personal reasons have a grudge against this or that jurisdiction. Ignore the haters.

Do your own due dilligence. Plenty of people will remain in Dubai and will pay 0% tax. Plenty of people are using other jurisdictions are practically paying 0% tax (maybe some nominal flat amount). No, the nets are not "closing in", there are plenty of loopholes and ways to pay 0% tax anywhere you are in the world (unless you're an American, and even then you can move to PR).

 

[jafo]

I've visited a law firm in Thailand. They said you have to pay taxes because of the PE.

What you said, it's illegal.

What did you expect them to say? They are "officers" of the court by their own admission. Their "license" comes from the state. The state "allows" them to practice law and earn an income from us. They "sell" state-sponsored "solutions" from the same state that's trying to claw the maximum amount of income from our production. What am I missing?

(1) Lawyers as Officers of the Court

(2) https://core.ac.uk/download/pdf/322560042.pdf

(3) Ad inifnitum...

 

[Moonlighter]

You have to look at the specific rules for the countries you're dealing with, you can't just assume because country X has a law, country Y must have the same law.

Fair point, for PE you also need to look into the DTA between the involved countries. Involving multiple jurisdictions is not exactly a trivial thing and written law and enforcement are usually different. Even if you stay in different countries during the remaining 7 month as tourist, it doesn't mean you can't trigger a PE somewhere else. You don't need to be a tax resident in a country to trigger a PE. One example is Georgia, where it's very easy to trigger it even as tourist. Is it enforced? In most cases not.

 

[jafo]

Avoid groupthink and do your own analysis.

100% this! What might work for me may not work for others. Some of us blend in others don't.

the place to do shady things

My personal interpretation and answer to this:
Look how far we have sunk! We are admonishing & self-criminalizing ourselves and others who seek freedom for having the audacity NOT to be robbed by unproductive parasites under the ruse of "government".
I, literally, along with some other entrepreneurs I know have NO homes in Europe or anywhere else, we don't spend time in Europe, travel 11 months out of the year for work (e.g. supervising production in a plant in e.g. China for 30 days), never spend more than 2 months anywhere, and stay in hotels all the time, don't use any state resources, and yet there are "thugs" in one of more tax agencies around the "civilized" world willing to claim these people as "tax residents" (but not give them residency) for the sole purpose to extort a portion of the fruits of their labor under the threat of state-sponsored violence.
Ponder on this insanity/Stockholm Syndrome...

 

[yngmind]

But what is the enforcement like?
What are the criteria for a PE? If you spend less than 6 months per year in Thailand (even if you have a residence permit), you're not even considered tax resident. Would they claim there's a PE? Especially if you live in a hotel?
I would feel much more comfortable being in a "grey area" in Thailand than in the UAE.



Nobody really knows.
Based on what has been published, it would seem like the deciding factor is where the LLC is managed/where work for the LLC is performed.
If you are a UAE tax resident and the LLC is a one man show, then it would seem logical that the LLC would be subject to corporate tax in the UAE. If you're just a passive investor and you have a director in the Seychelles who really runs everything, it could be different.

If you live less than 6 month, that's fine.

 

[JustAnotherNomad]

Fair point, for PE you also need to look into the DTA between the involved countries.

You typically wouldn't get access to DTAs with such a setup. Unless you incorporate in a country where companies are tax resident due to incorporation.
Yes, you can trigger a PE somewhere else, but it's highly unlikely if you don't have local clients, don't have a fixed office, only work from your laptop from your hotel etc.
And that's a risk that you ALWAYS have, no matter where you live or where your company is registered. It would be mitigated if your company was properly resident in a country with a good tax treaty network, but that would usually mean that you'd have to pay corporate tax.

 

[stivemoose]

Look it from this way.
For the LLC you need to put your address (tax home) on form 5472. What address will you be putting there?
Do you have other option than in UAE?

Well, what if I am the sole member of my LLC, but in reality, there is substantial activity taking place? For instance, I have expenses such as phone bills and server costs. Suppose I sell software that customers can download immediately after payment. In this scenario, although I may not be physically running a business from Dubai in theory, there are actual business operations happening. Additionally, if I hire a freelancer and make regular monthly payments to them, that would further establish the presence of business activities.

I have to pay taxes only because I declare my address in 5472 and this, UAE I believe would never be able to get.

Any ideas? Thanks

But what is the enforcement like?
What are the criteria for a PE? If you spend less than 6 months per year in Thailand (even if you have a residence permit), you're not even considered tax resident. Would they claim there's a PE? Especially if you live in a hotel?
I would feel much more comfortable being in a "grey area" in Thailand than in the UAE.



Nobody really knows.
Based on what has been published, it would seem like the deciding factor is where the LLC is managed/where work for the LLC is performed.
If you are a UAE tax resident and the LLC is a one man show, then it would seem logical that the LLC would be subject to corporate tax in the UAE. If you're just a passive investor and you have a director in the Seychelles who really runs everything, it could be different.

But the director, should be also the guy who open the bank accounts? Or bank accounts are opened still by me? Any idea where to get such people?

 

[Dylan63]

Why everybody is panicking ?
9% tax on PROFIT is NOTHING
If it was on turnover I’d panic but there is absolutely no reason to leave Dubai now
These 9% can be close to 0 if your company has various expenses.

 

[JustAnotherNomad]

Suppose I sell software that customers can download immediately after payment. In this scenario, although I may not be physically running a business from Dubai in theory, there are actual business operations happening.

Still someone is setting up the online store. Someone is deciding what software to sell. Someone is signing agreements with payment providers, hosting providers, software manufacturers. Who does that? And where is that person located? Where are agreements usually signed?

Additionally, if I hire a freelancer and make regular monthly payments to them, that would further establish the presence of business activities.

Freelancers typically aren't relevant, only employees. Unless they work for you exclusively, maybe.
But still someone decided to hire freelancer. Who? Where is the office? Where does that person live? Where are contracts usually signed?

But the director, should be also the guy who open the bank accounts? Or bank accounts are opened still by me?

Look, nobody knows. There is no precedence for how this will be handled by the UAE. Most likely, they will only go after big companies the first year, they don't have resources or willingness to go after small fish. Until they do. There are no clear laws. They say they will follow the established practice, but there is no established practice in the UAE. Will they be like EU countries and come after you for every last cent? Doubtful. But we don't know, so there's significant risk. You may be fine or not. Maybe they will only come after a handful of people to scare the rest. Nobody knows. You won't be able to appeal, there is no rule of law. You just have to pay.

Any idea where to get such people?

Probably in the Seychelles? I don't know. Most corporate service providers should be able to help.

These 9% can be close to 0 if your company has various expenses.

I guess a lot of people have high profit margins.
Also not everyone feels comfortable with declaring their financial situation to an autocratic government that can change its mind at any time. Now it's 9%. Who says they won't change their mind after the first year and change it to 19%? Or 29%? Or introduce personal income tax retrospectively? Once you have declared what you earn and own, it will be difficult to escape.

 

[Konstanz]

I am actually considering making Thailand my new base and spending significant time there, but not 6+ months per year.
I would have residency (probably not even a requirement, but just seems like the better idea), probably even get some local income through an EOR company and pay local tax. Rent a cheap apartment.
I would pay tax on the income from the EOR company, which would cover all my costs in Thailand.
You get a tax ID, tax returns, utility bills.
You can put your Thai address on form 5472 and give it to banks, but you wouldn't even be tax resident in Thailand. It seems very farfetched that they would attribute a PE when you're not even tax resident and you pay tax on all the income that is remitted to Thailand (your salary which covers all expenses).
You set up a company somewhere where there is no tax (US LLC, HK, whatever) and then you keep that money out of Thailand. You only spend while you travel, which is for 7+ months per year.
Seems like a pretty clean setup to me.
The only risk is that the Thai tax authority could claim that there is a PE in Thailand or that your company is being managed and controlled from Thailand, but how? You're not even tax resident, you don't have a fixed office, you literally spend only a few months there. At the same time, you can prove to any other country that Thailand is your center of life as you have a job there, an apartment and you spend way more time there than in any other country.

Any proper lawyer would tell this set-up is illegal and most likely cause problems either with tax authorities or banks.
If you are not tax resident in Thailand so where are you tax resident then? If you claim tax resident on documents yourself, all authorities will treat you like Thai tax resident - no questions asked.

Why you guys love Thailand so much , but why not just do Caribbean?
Is it just because it's "cheap" in Thailand. Yes it's cheap for low quality. But do we really live like bagpackers and eat street food?

 

[yngmind]

I am actually considering making Thailand my new base and spending significant time there, but not 6+ months per year.
I would have residency (probably not even a requirement, but just seems like the better idea), probably even get some local income through an EOR company and pay local tax. Rent a cheap apartment.
I would pay tax on the income from the EOR company, which would cover all my costs in Thailand.
You get a tax ID, tax returns, utility bills.
You can put your Thai address on form 5472 and give it to banks, but you wouldn't even be tax resident in Thailand. It seems very farfetched that they would attribute a PE when you're not even tax resident and you pay tax on all the income that is remitted to Thailand (your salary which covers all expenses).
You set up a company somewhere where there is no tax (US LLC, HK, whatever) and then you keep that money out of Thailand. You only spend while you travel, which is for 7+ months per year.
Seems like a pretty clean setup to me.
The only risk is that the Thai tax authority could claim that there is a PE in Thailand or that your company is being managed and controlled from Thailand, but how? You're not even tax resident, you don't have a fixed office, you literally spend only a few months there. At the same time, you can prove to any other country that Thailand is your center of life as you have a job there, an apartment and you spend way more time there than in any other country.

If you spend less than six months in Thailand, it will work.

It's also not that easy to get a Thai residency. Thai elite looks like a good option to me.

I'm also a big fan of Thailand, and considering moving there.

Any proper lawyer would tell this set-up is illegal and most likely cause problems either with tax authorities or banks.
If you are not tax resident in Thailand so where are you tax resident then? If you claim tax resident on documents yourself, all authorities will treat you like Thai tax resident - no questions asked.

Why you guys love Thailand so much , but why not just do Caribbean?
Is it just because it's "cheap" in Thailand. Yes it's cheap for low quality. But do we really live like bagpackers and eat street food?

You can be a tax resident nowhere. Depends on your citizenship, for sure.

My country has only a 183-day rule to determine whether I'm a tax resident.

No center of life BS.

To be safe, we can get a tax residency in Paraguay for $1-3k a year. I don't remember the cost.

 

[jafo]

To be safe, we can get a tax residency in Paraguay for $1-3k a year. I don't remember the cost.

Are you sure about this? Source?

 

[yngmind]

Are you sure about this? Source?

https://visadb.io/blog/how-to-become-a-0--paraguay-tax-resident-without-living-there-62cf1662a7fcdcd95e3300b2

 

[Konstanz]

If you spend less than six months in Thailand, it will work.

It's also not that easy to get a Thai residency. Thai elite looks like a good option to me.

I'm also a big fan of Thailand, and considering moving there.


You can be a tax resident nowhere. Depends on your citizenship, for sure.

My country has only a 183-day rule to determine whether I'm a tax resident.

No center of life BS.

To be safe, we can get a tax residency in Paraguay for $1-3k a year. I don't remember the cost.

You can't be without tax residence nowadays. It's an old myth of flag theory
Your passport country would trigger tax residence if you don't have some normal tax residence some place

 

[bio]

I plan to apply for Small Business Relief (SBR). For me, someone who earns less than 3m AED/year, it's the simple solution.
I'll sit back, wait for others to try Qatar/Bahrain/Kuwait/etc., then re-evaluate where to set up in 2027 when UAE SBR expires.

Even at 9%, after expenses (salary, travel, etc.), my actual tax rate should be less than 5%. Not bad when you also consider zero CGT.

 

[yngmind]

You can't be without tax residence nowadays. It's an old myth of flag theory
Your passport country would trigger tax residence if you don't have some normal tax residence some place

Depends on the country.

It still works with lots of passports.

That's why I've mentioned Paraguay tax residency.

 

[Konstanz]

Depends on the country.

It still works with lots of passports.

That's why I've mentioned Paraguay tax residency.

Yes it depends on passport.
But if it's EU passport, I doubt that