UAE to introduce 9% corporate tax on business profits from June 1, 2023 (FZCO REMAINS 0%)

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karishi

Active Member
"Mahar Afzal is a managing partner at Kress Cooper Management Consultants. The above is not an official but a personal opinion of the writer based on the UAE corporate tax law. For any queries/clarifications, please write to him at [email protected]"
And he doesn't appear to have a clear grasp on the subject, I hope this article was written by an underpaid intern. AFAIK not much is clear so far on how things will work, but freezones should be unaffected
 

Fred

Dubai Expat
Mentor Group Gold
Elite Member
Commercial Service
Entrepreneur
"Mahar Afzal is a managing partner at Kress Cooper Management Consultants. The above is not an official but a personal opinion of the writer based on the UAE corporate tax law. For any queries/clarifications, please write to him at [email protected]"
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And he doesn't appear to have a clear grasp on the subject, I hope this article was written by an underpaid intern. AFAIK not much is clear so far on how things will work, but freezones should be unaffected
That's it.
 

Marzio

Rainmaker
Entrepreneur
fHJPqO.jpg


WTF is qualifying income?
 

hireblade89

Mentor Group Light (Private use!)
fHJPqO.jpg


WTF is qualifying income?
Probably it is income which is not sourced from mainland, I read somewhere that if a Freezone has income from UAE mainland that income will be subject to CT so here they want to make a different between foreign income and UAE sourced income, probably.

On the first line in fact it says: "A Free Zone Person that is Qualifying Free Zone Person can benefit from a preferential Corporate Tax rate of 0% on their "Qualiying Income""
 

Marzio

Rainmaker
Entrepreneur
I read somewhere that if a Freezone has income from UAE mainland that income will be subject to CT so here they want to make a different between foreign income and UAE sourced income, probably.

So income accrued by a freezone entity is considered foreign sourced income and foreign sourced income is qualifying income.

Now, what if i have a freezone entity that sells services to another freezone entity?

Would that income still be considered foreign sourced income? @Fred
 

hireblade89

Mentor Group Light (Private use!)
So income accrued by a freezone entity is considered foreign sourced income and foreign sourced income is qualifying income.

Now, what if i have a freezone entity that sells services to another freezone entity?

Would that income still be considered foreign sourced income? @Fred
Transactions between free zones should be out of the scope of CT, but let’s wait the opinion of a more experience person regarding this matter.
 

Marzio

Rainmaker
Entrepreneur
Qualifying income is any income receieved by the Qualifying Free Zone Person

So you are a qualifying free zone person if you receive qualifying income and qualifying income is any income.

I love how those emirates think about business.
 

Larin

New member
So you are a qualifying free zone person if you receive qualifying income and qualifying income is any income.

I love how those emirates think about business.
I think its more like you are a qualifying free zone person if you have substance in the UAE and any income you receive is qualifying income, which just happens to be 0% taxed. As the article mentions the definition of qualifying income will probably be amended, otherwise all income of a free zone person would be outside of the scope of CT, which I suppose is what people in this thread have been saying all along...
 

Fred

Dubai Expat
Mentor Group Gold
Elite Member
Commercial Service
Entrepreneur
Probably it is income which is not sourced from mainland, I read somewhere that if a Freezone has income from UAE mainland that income will be subject to CT so here they want to make a different between foreign income and UAE sourced income, probably.

On the first line in fact it says: "A Free Zone Person that is Qualifying Free Zone Person can benefit from a preferential Corporate Tax rate of 0% on their "Qualiying Income""
Correct.
So income accrued by a freezone entity is considered foreign sourced income and foreign sourced income is qualifying income.

Now, what if i have a freezone entity that sells services to another freezone entity?

Would that income still be considered foreign sourced income? @Fred
Freezone to Freezone - no UAE Mainland sourced income - 0% CT.

So you are a qualifying free zone person if you receive qualifying income and qualifying income is any income.

I love how those emirates think about business.
I'm surprised that still so many guys are surprised about this fact - it's "good global standard" eye wishing "we are with OECD and FATF" bla bla bla.

Not to talk about the actual law enforement of CT - never seen expats getting pissed of by the UAE GoV who actually bring in all the money and forming the whole UAE real estate etc.
 

bamboozlethemall

bamboozlethemall
Mentor Group Gold
BANNED MEMBER
Maybe some of the UAE based Forum users here now understand why we work with Freezone Companies only - this move was expected to keep off the FATF Grey List.


---START QUOTE---

The United Arab Emirates is planning to introduce federal tax on corporate earnings for the first time, scrapping the levy-free regime that’s helped make it a magnet for businesses from across the world.

The government is set to introduce a 9% federal corporate tax on business profits from June 2023, state-run WAM news agency said on Monday. Corporate tax will not apply on personal income from employment, real estate and other investments, and incentives for free zones will continue.


---END QUOTE---

Source

Hi Fred for a freelancer under one of the FZCOs will my income be taxed or it wont be?
 

Bill D

Silver Member
I am trying to understand, if Online Day Traders (trading on online brokers, securities, cryptos...), trading their own assets (in their personal capacity) will have to pay the 9% CT ?

In the new Decree they define :




Business : « any activity conducted regularly on an ongoing and independant basis by any Person and in any location, such as industrial, agricultural, vocational, professional, service or excavation activities or any other activity related to the use of tangible or intangible assets »



Business activity : « any transaction or activity, or series of transactions or series of activities conducted by a Person in the course of Business »



So it would mean someone who Trade actively own assets would fit in this definition



However following to that the FAQ published by MOF says about Natural persons seems to contradict that point:

https://mof.gov.ae/corporate-tax-faq/



« UAE and foreign individuals will not be subject to UAE CT on dividends, capital gains and other income earned from owning shares or other securities in their personal capacity »
does it fit if you actively trade these ?


Corporate Tax in the UAE—Are You Ready? (Part 1)



The analyst in this article :said even though it is not 100% sure, that business which should be taxed should be these requiring a licence, but day trading your own assets (securities, cryptos) do not require a licence.



It seems there is a difference between natural persons and business on CT, but they did not decide which natural person will be shielded from that tax :"The Cabinet shall, upon a suggestion of the Minister and in coordination with the relevant competent authorities, issue a decision specifying the categories of Business or Business Activity conducted by a resident or non-resident natural person that are subject to Federal Decree-Law No. 47 of 2022 - Unofficial translation 15 Corporate Tax under this Decree-Law."

If you need to pay 9% on trading your own assets, with all the risks and audits necessities it bring it makes it not attractive.



Do you think this tax applies to natural persons resident who actively/regularly trade their own assets ? (securities, crypto, futures, …)

In case yes, how is the starting date going to be determined as there is no personnal income tax return currently, will it be &st january 2024 or 1st June 2023 ?
 

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