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MrDeddy

Mentor Group Gold
Hi All,

I have been researching into setting up a freezone company to act as a brokerage for buying and selling IT hardware.

My original idea was to set the company up as a freezone company and purchase from factories then sell on to local partners - these would be partners not in the UAE - mainly SE Asia.

I was hoping for some advice re Ultimate Overseas Beneficiary and UAE reporting. Ass I understand it, UAE requires a registry of UOB for all company's - even freezone company's?
  • Main questions is what is done with this information - is it automatically shared with the relevant authority in my country of residence?
  • Let's say I was resident in UK - the UAE authorities would automatically share this information with the UK authority / HMRC?
My plan was initially to take UAE residency with the company setup and move to the UAE only after the company was profitable. This would mean technically I will be tax resident elsewhere and I am worried that this would cause issues and it is likely I would be reported to the local tax authority if I did not declare the earnings of the freezone copany.

If anyone has any insight or experience of this it would be great to understand more.

Thanks,
 

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
Hi All,

I have been researching into setting up a freezone company to act as a brokerage for buying and selling IT hardware.

My original idea was to set the company up as a freezone company and purchase from factories then sell on to local partners - these would be partners not in the UAE - mainly SE Asia.

I was hoping for some advice re Ultimate Overseas Beneficiary and UAE reporting. Ass I understand it, UAE requires a registry of UOB for all company's - even freezone company's?
  • Main questions is what is done with this information - is it automatically shared with the relevant authority in my country of residence?
  • Let's say I was resident in UK - the UAE authorities would automatically share this information with the UK authority / HMRC?
My plan was initially to take UAE residency with the company setup and move to the UAE only after the company was profitable. This would mean technically I will be tax resident elsewhere and I am worried that this would cause issues and it is likely I would be reported to the local tax authority if I did not declare the earnings of the freezone copany.

If anyone has any insight or experience of this it would be great to understand more.

Thanks,
What is your citizenship and residency currently.
 

Helkins

New member
As I know UAE is not in CRS, correct me if I am wrong
People really confuse this fact. Theoretically the UAE signed CRS and when you google it or visit wiki page it'll say the UAE is amongst the CRS countries although when you read the MOF document, ever since it says

"The UAE Competent Authority shall not exchange information under the CRS until it is satisfied that a reportable partner jurisdiction has in place adequate measures to ensure the required confidentiality and data security. These confidentiality obligations are evaluated by the Global Forum on Transparency and Exchange of Information for Tax Purposes through its implementation monitoring programme."

Meaning the UAE does NOT share details as of now but might opt to share it in the future.
 

CounselRep

Mentor Group Gold
Here are two links that give you information about:

1) which countries are committed to CRS; and

2) who they have then gone on and activated exchange relationships with.

1. The UAE has signed up to CRS/AEOI (look under 2018):


Screen Shot 2020-11-22 at 10.49.26.png



2. After signing up to AEOI, the UAE has then gone on to activate exchange relationships with 69 other CRS countries (just select "UAE" in the "From Jurisdiction" box for a list of who those 69 countries are):


I'm not sure what happens in practice, but in theory at least, this second link suggests that the UAE is satisfied the 69 countries it has activated exchange relationship with have sufficient confidentiality and data security systems in place to share information with now (they wouldn't have added them to the list of 69 otherwise).

So it would be worth asking whether the details your UAE bank has links the account holder (or links the UBO, if the account holder is a Passive NFE registered in a non-CRS jurisdiction) back to one of those 69 countries.

Screen Shot 2020-11-22 at 10.53.07.png
 

Helkins

New member
Here are two links that give you information about:

1) which countries are committed to CRS; and

2) who they have then gone on and activated exchange relationships with.

1. The UAE has signed up to CRS/AEOI (look under 2018):


View attachment 1895


2. After signing up to AEOI, the UAE has then gone on to activate exchange relationships with 69 other CRS countries (just select "UAE" in the "From Jurisdiction" box for a list of who those 69 countries are):


I'm not sure what happens in practice, but in theory at least, this second link suggests that the UAE is satisfied the 69 countries it has activated exchange relationship with have sufficient confidentiality and data security systems in place to share information with now (they wouldn't have added them to the list of 69 otherwise).

So it would be worth asking whether the details your UAE bank has links the account holder (or links the UBO, if the account holder is a Passive NFE registered in a non-CRS jurisdiction) back to one of those 69 countries.

View attachment 1896
Based on what you’re quoting it’d seem like the UAE participates in the CRS, while that might be true I’d say it’s only in theory. I’ve had experiences with the tax office and strong prosecution with one of the EU countries UAE supposedly shares the information with and since 2007 till now they haven’t shared nor replied to any of the inquires of the national Tax bureau, DA office, MOFA or even judicial subpoenas.
 

CounselRep

Mentor Group Gold
Based on what you’re quoting it’d seem like the UAE participates in the CRS, while that might be true I’d say it’s only in theory. I’ve had experiences with the tax office and strong prosecution with one of the EU countries UAE supposedly shares the information with and since 2007 till now they haven’t shared nor replied to any of the inquires of the national Tax bureau, DA office, MOFA or even judicial subpoenas.
That's really interesting feedback about your experience, thank you.

You often see replies on this forum that are based on the "strict letter of the law". I'm not judging that approach at all - in fact if you can achieve that, for obvious reasons that's the best way to go. But it's also good to get an idea of what is more likely to happen in practice in addition to the strict view. Hearing about both can help make an informed decision.
 

CaptK

Nominee Company Bank Account Real Estate Passport
Mentor Group Gold
Let's be honest the only thing attracting the use of the UAE is the tax benefits. They will use every excuse under the sun untill they can no longer sustain it.

I have clients who are bankrupt in Europe and have all their cash in the UAE. Their respective governments know they are there but the UAE has not shared any information. One of them has had his company in the UAE since 2009 and went bankrupt in 2017 in his home country. He still fly's back to his home country.
 

Helkins

New member
That's really interesting feedback about your experience, thank you.
You're most welcome
You often see replies on this forum that are based on the "strict letter of the law"
Although I don't think such approach is entirely wrong I believe that these people think of the world in a wrong way. The law might state one thing but reality might be totally different and we see it in examples from each corner of the world. A side note and another example from my personal experience might be that I've always followed the rule of law to the fullest which didn't stop any government from putting a freeze on the assets for 12 years, doesn't matter if you're living in a democracy, communism or dictatorship, if the government wants to screw you they will. Very few people in the world have the resources to fight the authority as the State has unlimited money, manpower and the law (which they can change) on their side, while you're limited to what you've earned and protected.
They will use every excuse under the sun untill they can no longer sustain it.
Gladly the sun is shining in the UAE all year long and hopefully no cloudy days come.
I have clients who are bankrupt in Europe and have all their cash in the UAE. Their respective governments know they are there but the UAE has not shared any information. One of them has had his company in the UAE since 2009 and went bankrupt in 2017 in his home country. He still fly's back to his home country.
As long as the UAE doesn't see any benefit in sharing information why would they. The wealthy flee there to protect their money and stay and spend tons on entertainment and luxuries of which the UAE is famous for. European countries don't have the leverage on the GCC countries as they control the natural resources and hold a big stake in European investments, provided you're not some big time international criminal you're safe there.

All in all the rules apply only to the common folk.
 

JackAlabama

New member
You're most welcome

Although I don't think such approach is entirely wrong I believe that these people think of the world in a wrong way. The law might state one thing but reality might be totally different and we see it in examples from each corner of the world. A side note and another example from my personal experience might be that I've always followed the rule of law to the fullest which didn't stop any government from putting a freeze on the assets for 12 years, doesn't matter if you're living in a democracy, communism or dictatorship, if the government wants to screw you they will. Very few people in the world have the resources to fight the authority as the State has unlimited money, manpower and the law (which they can change) on their side, while you're limited to what you've earned and protected.

Gladly the sun is shining in the UAE all year long and hopefully no cloudy days come.

As long as the UAE doesn't see any benefit in sharing information why would they. The wealthy flee there to protect their money and stay and spend tons on entertainment and luxuries of which the UAE is famous for. European countries don't have the leverage on the GCC countries as they control the natural resources and hold a big stake in European investments, provided you're not some big time international criminal you're safe there.

All in all the rules apply only to the common folk.
"might be that I've always followed the rule of law to the fullest which didn't stop any government from putting a freeze on the assets for 12 years, doesn't matter if you're living in a democracy, communism or dictatorship, if the government wants to screw you they will."
well said.

With the green new deal the euro commies want to escape from the natural resources.
I hope the GCC can pull it through and resist the pressure from the global commies.
 
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