UAE: FZCO, VAT, CIT, SBR, TRC - Help?

[bio]

A few months ago I moved to the UAE:
I opened a FZCO w/ IFZA.
I received my EID and UAE driver's license.
I opened a personal and business bank account.
I rented an apartment and received an Ejari/DEWA.
I opened a personal IBKR account.
I've lived in the UAE now for 90+ days.

In that time, a lot has changed with the upcoming 9% corporate tax rate.
I hadn't really been paying attention as I've been working 100+ hours per week on building my business, but now I am realizing I need to catch up soon as I'm almost at the 375k AED threshold for VAT.
I do not know what I need to do next. Any advice is highly appreciated.

1) Do I need to register for VAT? I provide digital consultancy services to a company in the USA. I have no customers in the UAE and no physical goods.

2) My estimated earnings are less than 3M AED per year for the foreseeable future. Should I switch to a mainland company and apply for small business relief? If so, how? Do I need to wait until 2024? I am afraid of missing a deadline and getting stuck with 9% CIT.

3) A tax residency certificate in the UAE seems easy enough for me to get, but I assume there is no rush to obtain one unless I plan to move back to my country of birth? Or is it better to establish a TRC as early as possible?

4) If I travel back to my country of birth for two months per year on holiday and stay in an Airbnb, is there anything to worry about?

Thank you!

 

[Martin Everson]

Don't mean to be rude but shouldn't whoever helped you set up the company answer these basic questions (1-3) . In Dubai you need a good CSP to keep abreast of the constant changes that can happen overnight if you run a company out there and to answer these fundamental questions. Even if you know the system its always better to get a second opinion from your CSP to make sure nothing obvious is missed.

In terms of traveling back you need to explain country of birth and ties you have to that country. However it should not generally be an issue if you have spent the majority of the year in Dubai.

Maybe @EmiratesSetup can help here.

 

[Barbara Roessle]

A few months ago I moved to the UAE:
I opened a FZCO w/ IFZA.
I received my EID and UAE driver's license.
I opened a personal and business bank account.
I rented an apartment and received an Ejari/DEWA.
I opened a personal IBKR account.
I've lived in the UAE now for 90+ days.

In that time, a lot has changed with the upcoming 9% corporate tax rate.
I hadn't really been paying attention as I've been working 100+ hours per week on building my business, but now I am realizing I need to catch up soon as I'm almost at the 375k AED threshold for VAT.
I do not know what I need to do next. Any advice is highly appreciated.

1) Do I need to register for VAT? I provide digital consultancy services to a company in the USA. I have no customers in the UAE and no physical goods.

2) My estimated earnings are less than 3M AED per year for the foreseeable future. Should I switch to a mainland company and apply for small business relief? If so, how? Do I need to wait until 2024? I am afraid of missing a deadline and getting stuck with 9% CIT.

3) A tax residency certificate in the UAE seems easy enough for me to get, but I assume there is no rush to obtain one unless I plan to move back to my country of birth? Or is it better to establish a TRC as early as possible?

4) If I travel back to my country of birth for two months per year on holiday and stay in an Airbnb, is there anything to worry about?

Thank you!

Hello, this are very specific questions that are not helpful to others on the forum. Therefore I would like to ask you to contact me directly and we can work out a consulting fee for this. [email protected]

 

[uranium]

A few months ago I moved to the UAE:
I opened a FZCO w/ IFZA.
I received my EID and UAE driver's license.
I opened a personal and business bank account.
I rented an apartment and received an Ejari/DEWA.
I opened a personal IBKR account.
I've lived in the UAE now for 90+ days.

In that time, a lot has changed with the upcoming 9% corporate tax rate.
I hadn't really been paying attention as I've been working 100+ hours per week on building my business, but now I am realizing I need to catch up soon as I'm almost at the 375k AED threshold for VAT.
I do not know what I need to do next. Any advice is highly appreciated.

1) Do I need to register for VAT? I provide digital consultancy services to a company in the USA. I have no customers in the UAE and no physical goods.

2) My estimated earnings are less than 3M AED per year for the foreseeable future. Should I switch to a mainland company and apply for small business relief? If so, how? Do I need to wait until 2024? I am afraid of missing a deadline and getting stuck with 9% CIT.

3) A tax residency certificate in the UAE seems easy enough for me to get, but I assume there is no rush to obtain one unless I plan to move back to my country of birth? Or is it better to establish a TRC as early as possible?

4) If I travel back to my country of birth for two months per year on holiday and stay in an Airbnb, is there anything to worry about?

Thank you!

Well done
I see you have reached milestone already
I can answer your questions based on my personal experience
You have fzco and customers are all outside UAE
You need to register for CIT only.
Do not register for VAT.
Switching to mainland will not help. Keep it fzco and I suppose your financial year starts from 2024
I believe you can opt for small business relief with fzco. I am really not sure about this point because didn't go through it.
For TRC it is only your country who ask for it. But you need to be living 6 months in UAE continuously to get it.
It is very easy you pay a small fee online and download it. Can do it anytime.

 

[Clank]

Well done
I see you have reached milestone already
I can answer your questions based on my personal experience
You have fzco and customers are all outside UAE
You need to register for CIT only.
Do not register for VAT.
Switching to mainland will not help. Keep it fzco and I suppose your financial year starts from 2024
I believe you can opt for small business relief with fzco. I am really not sure about this point because didn't go through it.
For TRC it is only your country who ask for it. But you need to be living 6 months in UAE continuously to get it.
It is very easy you pay a small fee online and download it. Can do it anytime.

He should register for VAT if he exceeds the threshold even if he has no VAT to pay.

 

[uranium]

He should register for VAT if he exceeds the threshold even if he has no VAT to pay.

Nom he has no customers from uae. Why register for VAT?

 

[USDT]

Regardless of where his customers are from, he must register once the threshold of 375k is exceeded. He will simply submit zero reports and won't pay VAT, but the obligation to register remains. The TRC can be obtained in 3 months; there were recent changes.

 

[uranium]

Regardless of where his customers are from, he must register once the threshold of 375k is exceeded. He will simply submit zero reports and won't pay VAT, but the obligation to register remains. The TRC can be obtained in 3 months; there were recent changes.

He need to register only for CIT for his fzco
He will get fined if he register for VAT and has no customers from UAE
I suggest you check with certified UAE lawyer
I'm 100% sure of my information
for TRC 3 months path, have you done it personally?

 

[USDT]

He need to register only for CIT for his fzco
He will get fined if he register for VAT and has no customers from UAE
I suggest you check with certified UAE lawyer
I'm 100% sure of my information
for TRC 3 months path, have you done it personally?

The only thing in your post I can agree with is to check with a lawyer.

Everything is outlined in the source, perhaps somewhat confusingly: https://mof.gov.ae/vat/.
A business must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
Zero-rated sectors VAT will be charged at 0% in respect of the following main categories of supplies: Exports of goods and services to outside the GCC
In his case, it will be the export of goods and services with a VAT rate of 0%. Once the threshold of 375k is reached, he has a month to register, otherwise there's a fine of 20,000 AED. Of course, he can choose not to register, but for the year 2024 reports will still need to be submitted under the new CIT, and then the non-registration for VAT will be detected.

Regarding the TRC, you've already been answered in another thread. Here's the primary source - https://tax.gov.ae/Datafolder/Files...inet Decision 85 of 2022 - For publishing.pdf. Refer to Article 4, section 3:
3. If he has been physically present in the State for a period of (90) ninety days or more, within the relevant (12) twelve consecutive months, and he is a UAE national, holds a valid Residence Permit in the State or holds the nationality of any member state of the Gulf Cooperation Council, and meets any of the Cabinet Decision No. 85 of 2022 - Unofficial Translation 3following: a. He has a Permanent Place of Residence in the State. b. He carries on an employment or Business in the State.

 

[uranium]

The only thing in your post I can agree with is to check with a lawyer.

Everything is outlined in the source, perhaps somewhat confusingly: https://mof.gov.ae/vat/.
A business must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
Zero-rated sectors VAT will be charged at 0% in respect of the following main categories of supplies: Exports of goods and services to outside the GCC
In his case, it will be the export of goods and services with a VAT rate of 0%. Once the threshold of 375k is reached, he has a month to register, otherwise there's a fine of 20,000 AED. Of course, he can choose not to register, but for the year 2024 reports will still need to be submitted under the new CIT, and then the non-registration for VAT will be detected.

Regarding the TRC, you've already been answered in another thread. Here's the primary source - https://tax.gov.ae/Datafolder/Files...inet Decision 85 of 2022 - For publishing.pdf. Refer to Article 4, section 3:
3. If he has been physically present in the State for a period of (90) ninety days or more, within the relevant (12) twelve consecutive months, and he is a UAE national, holds a valid Residence Permit in the State or holds the nationality of any member state of the Gulf Cooperation Council, and meets any of the Cabinet Decision No. 85 of 2022 - Unofficial Translation 3following: a. He has a Permanent Place of Residence in the State. b. He carries on an employment or Business in the State.

Check with certified accountant because that is what I did.
My accountant confirmed that I don't need to register for VAT because I have fzco + all my customers are outside UAE.

 

[USDT]

Check with certified accountant because that is what I did.
My accountant confirmed that I don't need to register for VAT because I have fzco + all my customers are outside UAE.

I also recommend checking out this document from the official source. It mentions "exception from registration" as well, but I'm not sure about the practice of obtaining it.

 

[JackAlabama]

Check with certified accountant because that is what I did.
My accountant confirmed that I don't need to register for VAT because I have fzco + all my customers are outside UAE.

Funny how everyone tells something different regarding this

 

[Barbara Roessle]

Funny how everyone tells something different regarding this

another take on it:

Even though a zero rated revenue earner is out of scope, the advisable approach is to apply for VAT exemption so no liability remains from VAT perspective.

The only issue is you won’t be able to claim any VAT paid on expenses here in the UAE if you choose to apply for VAT exemption. Companies having zero rated income but lot of expensesinside UAE, are advised to go for VAT registration so they can claim back everything.

Official Version is that you HAVE to register in any way but we have loads of clients that chose not to and so far we never heard anybody being approached or having problems. Also now in light of the new corproate tax I doubt that it will be controlled but of course to be on the safe side, you should register.

Make your own decision ;-)

We, in cooperation with accounting office, can handle the entire VAT registration plus application for exemption, if you like.

 

[JackAlabama]

another take on it:

Even though a zero rated revenue earner is out of scope, the advisable approach is to apply for VAT exemption so no liability remains from VAT perspective.

The only issue is you won’t be able to claim any VAT paid on expenses here in the UAE if you choose to apply for VAT exemption. Companies having zero rated income but lot of expenses in the UAE are advised to go for VAT registration so they can claim back everything.

Official Version is that you HAVE to register in any way but we have loads of clients that chose not to and so far we never heard anybody being approached or having problems. Also now in light of the new corproate tax I doubt that it will be controlled but of course to be on the safe side, you should register.

Make your own decision ;-)

We, in cooperation with accounting office, can handle the entire VAT registration plus application for exemption, if you like.

That is a very good answer.

 

[Barbara Roessle]

That is a very good answer.

Thanks Jack

 

[uranium]

Funny how everyone tells something different regarding this

You have no idea how the situation is on the ground.
A golden rule I learned in UAE, always ask same question to different people to get accurate info.

 

[JackAlabama]

You have no idea how the situation is on the ground.
A golden rule I learned in UAE, always ask same question to different people to get accurate info.

Yah I have no clue, please enlighten me.

 

[uranium]

Yah I have no clue, please enlighten me.

I already did
I remember Fred complained about this same issue before, everyone in UAE telling you something different.
Even when I call the bank, I note down their answer and I call back to double check.
I think issue behind it is because most of these people who work in offices, banks; are foreigners who lack knowledge of UAE law.

 

[mgs999999999]

The only thing in your post I can agree with is to check with a lawyer.

Everything is outlined in the source, perhaps somewhat confusingly: https://mof.gov.ae/vat/.
A business must register for VAT if their taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
Zero-rated sectors VAT will be charged at 0% in respect of the following main categories of supplies: Exports of goods and services to outside the GCC
In his case, it will be the export of goods and services with a VAT rate of 0%. Once the threshold of 375k is reached, he has a month to register, otherwise there's a fine of 20,000 AED. Of course, he can choose not to register, but for the year 2024 reports will still need to be submitted under the new CIT, and then the non-registration for VAT will be detected.

Regarding the TRC, you've already been answered in another thread. Here's the primary source - https://tax.gov.ae/Datafolder/Files/Legislation/Corporate Tax/Cabinet Decision 85 of 2022 - For publishing.pdf. Refer to Article 4, section 3:
3. If he has been physically present in the State for a period of (90) ninety days or more, within the relevant (12) twelve consecutive months, and he is a UAE national, holds a valid Residence Permit in the State or holds the nationality of any member state of the Gulf Cooperation Council, and meets any of the Cabinet Decision No. 85 of 2022 - Unofficial Translation 3following: a. He has a Permanent Place of Residence in the State. b. He carries on an employment or Business in the State.

Does that mean that you do not need a yearly rental as long as you:

1) have a company in the UAE who employed you and
2) you stay 90 days or more even in hotel or Airbnb doing short term?

I mean, under the 2 conditions above + valid VISA, do you get the tax residence certificate?

Best wishes,

 

[USDT]

Does that mean that you do not need a yearly rental as long as you:

1) have a company in the UAE who employed you and
2) you stay 90 days or more even in hotel or Airbnb doing short term?

I mean, under the 2 conditions above + valid VISA, do you get the tax residence certificate?

Best wishes,

I don't know. I think a service provider can answer this question; there are at least two active ones on the forum.