UAE Mainland or FreeZone?

[Don]

I don't think the percentage is an issue rather the amount. You can pay yourself 100% of a company pre tax profits if the number is small.

Look instead to market averages for people in similar situations, roles and positions in the market you're working.

That 65% number given earlier as a salary is not a big wage compared to what thousands of people earn in the UAE.

One man companies making a million a year are quite plentiful in Dubai and I'd imagine the vast majority pay themselves a handsome salary.

Given that as the local market average who's going to insist they only pay themselves a Macdonald's wage? Who in a country of visible consumption can say that you in particular can't earn a similarly high salary?

Yes.
The law states that payments made to related parties shall meet the arms-length principle so the difference from market level salaries could be taxed with the income tax.

 

[lacomaco]

Yes.
The law states that payments made to related parties shall meet the arms-length principle so the difference from market level salaries could be taxed with the income tax.

I agree, and that is why the authorities probably would look at similar sized companies where the shareholder and director is not the same person

 

[myhand]

Can't you appoint nominee director and shareholder to avoid any "close related issues" ?

 

[lacomaco]

Can't you appoint nominee director and shareholder to avoid any "close related issues" ?

You can, although it is a question whether the UAE tax auditors would check matters further (not really probable in the near future), and the director has to lie about the BO when declaring it during the KYC renewal with the banks. What could be the problem is finding a suitable director who will not steal the money, as we do not speak a yearly salary of US$10,000 a year but much more

 

[smartcard]

What if open a UAE offshore company (less than $2000 fee per year) with a Wio Bank account, is this a good option?

 

[Jbb1]

What if open a UAE offshore company (less than $2000 fee per year) with a Wio Bank account, is this a good option?

What do you mean by offshore, you can only get a bank account in the UAE with an FZ and a visa.

 

[gatrader]

Has anyone ever heard about a mainland dormant (non actived company)?

 

[GerhardStrasser]

If you need support with the company formation (freezone or mainland), visa and bank account, feel free to drop us a message.

 

[clemens]

What would be the best setup to avoid public be exposed, avoid taxes and benefit from privacy ?

 

[GerhardStrasser]

In this case the freezone would be the better choice of course. Most of the freezones do not maintain publicly visible company registers.

 

[bigleo]

That is quite a dangerous proposition. No company pays out 65% of its revenue to a director as salary, it is against GAAP rules and I think pure tax evasion

Real question here. Imagine that my company is an IT consulting services, my partner and me are doing IT development/consulting, our salary are almost 80% of the revenue of my company, we don’t have many investments neither costs, it’s all done via working from home. In this case UAE courts can see it has tax evasion? Why?

 

[Mekan Gurbanov]

Real question here. Imagine that my company is an IT consulting services, my partner and me are doing IT development/consulting, our salary are almost 80% of the revenue of my company, we don’t have many investments neither costs, it’s all done via working from home. In this case UAE courts can see it has tax evasion? Why?

The GAAP rule for the salary percentage for directors is about 11% only. While the overall salary ratio can reach until 60% percent. However, it all comes down to the justification of the amount that you are recording. If your IT company is running for quite some time now and the salary rate is constant from the beginning of the operation then it should be ok. Additionally, you also mention that there were no major expenses since this is a consulting company and almost every transaction can be done remotely, so this is justifiable as well. It will also be safe if the salary that you are receiving are still based on the market value. The Directors usually received 40k-60k a month. So if the salary that you are getting are within this range, then this is an additional safe point to consider. But all of this things should have proper supporting documents to begin with. So in case of audit, you can have sufficient proof for your books. The only red flag is that upon the release of the corporate tax law, the company decided to spike up their expenses especially the salaries, then it can be ground for tax evasion.