Where are you going after the UAE?

[SimpleGuy]

Given that 99% of companies in the UAE are now taxed at 9%, my question is the following for those who have decided not to contribute to the new Sheikh's Yacht and therefore leave the UAE.

What are your future setups, and in which country will you incorporate your company now? And why did you choose this country? What are the advantages ?

 

[MrPepper]

I will personally wait for one more year to see how this resolves. If things get too tricky and complicated, I'll just go somewhere else.

Some of the places that I'm planning to 'research' what fits me personally best are; Cyprus, Ireland, UK, Delaware/Wyoming US, Singapore, Hong Kong, and a few Cayman options.

Of course, some of these have certain things better than others. Meaning, you can have more security in terms of the law system but higher taxes. Or you can have lower taxes but a government that is not 100% trustable if you had some issues, harder time with banking etc.

I.E. trying to prove your point in Dubai court isn't going to hold if it's against that same government or their citizen, right? In Singapore, you have that safety for example.

I'm also curious to hear other people's opinions on this, since I'm by no means an expert, just stating my observations and opinions.

 

[SimpleGuy]

Ok do you think the UAE will finally say they were joking and then back off?

Yes it is true that the Cayman Islands, BVI and Anguilla are tempting because attached to the United Kingdom.

 

[MrPepper]

Ok do you think the UAE will finally say they were joking and then back off?

Of course not, but making a decision overnight is not something I want to do before I see how things will (not) work... If things will suck, I'll search for other options.

There are so many parameters that need to be taken into consideration because even this 9% is not that bad compared to most EU countries.

Dubai is close to where I live, a 5-6h flight. But if things will suck, I'll give myself time to research everything in detail and pick the best option for me. Ease of banking, taxes, bureaucracy, cost to maintenance, stability of the gov/country etc.

Nobody knows yet how this will play out yet. The thing is, you will need to do some accounting, and bookkeeping now as well with some extra expenses besides 9%... Deal more with the gov in Dubai while submitting taxes etc. In general, within the next 1 year or so, we will see if it's worth keeping our businesses in Dubai or moving somewhere else.

 

[Cloudbanck]

Dubai might still be ok if you have a non-UAE company and pay yourself a salary (below GAAR limits) so the profit isnt above 375k AED, or have a nominee employee/director in some other country.

But yes, the whole dealing with reporting to UAE authorities is not great. I ve understood that for VAT the UAE Federal Tax Administration is very strict and not very understanding. Anyway, still not clarified how things will turn out, so one might as well start looking for a home base to replace/complement Dubai.

Ideas:
-Subsaharan Africa (except South Africa) - there is a lot of freedom in economies where the informal sector dominates, are cash based, streets dont have names or numbers, there are no personal tax returns, the government dont keep track of residents very much. There are downsides as well of course, when you have to deal with the government it can be a pain, anything imported is expensive (cause imports are heavily taxed, just like it used to be in Europe 100 years+ ago), and quality of goods and services can be low.
On the upside you got enormous economic opportunities, the population and the economies are growing fast, competition is limited, and Africa effectively filters out "tourists". Also lifestyle-wise it can be really great living in a beautiful place, with inexpensive live-in domestic staff, chauffeur, nurses for baby/children, personal trainer etc

-Some Caribbean island: Cayman, Bahamas, Barbados, St Martin, DR, St Barths, Curacao, Turks and Caicos (Im still doing research here)

-A Pacific island: Seems both Palau and Vanuatu totally dont tax foreign income even if you manage a foreign company from there. Yes, bit far away, small, bad timezone, but still, would be cool a month or two a year.

-Latin America: Heard Panama City is like Dubai but for (slightly) poorer people. Panama has made it harder to get residency though, but still possible. Paraguay seems great in terms of not so difficult to get residency, and good tax wise too. El Salvador and other central american countries with territorial tax seem interesting too, even if it's not so clear tax wise if you manage a foreign company for there

 

[sergeylim88]

@MrPepper
What is the story with HK and Singapore?
If you open a company there, it will be taxed.

Help me understand what is the benefit here

 

[troubled soul]

Suggestion for Tax free Jurisdiction for Software company....Dubai Freezone Alternative

As Dubai Free zone is best solution for zero tax ...As it become complicated...What are the good alterative for tax saving ? Simple solution not complex... What are your suggestion ? Singapore, HK or any other @Martin Everson What will be your advice for this ? Dump Dubai and Pay tax in some...

www.offshorecorptalk.com

Hope this help

 

[scooterguy]

The global situation for tax optimization is very worrying I think.

I am currently hopping around underdeveloped countries, which provide the best deals/freedom, but I see them catching up slowly, and will probably make no sense in a few years. I see all doors closing and I can see myself living in a high-tax Western Europe country soon.

Mostly because if I have to pay taxes, I'd rather be in a country such as Spain than UAE.

 

[andrew28fl]

Given that 99% of companies in the UAE are now taxed at 9%, my question is the following for those who have decided not to contribute to the new Sheikh's Yacht and therefore leave the UAE.

What are your future setups, and in which country will you incorporate your company now? And why did you choose this country? What are the advantages ?

Thailand residency with US Single Member LLC for me. You have the choice of big city living (Bangkok), Beaches (Phuket, Koh Samui etc), or Mountains (Chiang Mai). I am surprised that Thailand hasn't come up more on such discussions.

 

[Cloudbanck]

The global situation for tax optimization is very worrying I think.

I am currently hopping around underdeveloped countries, which provide the best deals/freedom, but I see them catching up slowly, and will probably make no sense in a few years. I see all doors closing and I can see myself living in a high-tax Western Europe country soon.

Mostly because if I have to pay taxes, I'd rather be in a country such as Spain than UAE.

Some doors are closing, but others are also opening. Lots of countries want to attract successful people, and there is definitely institutional competition to offer low taxes to entrepreneurs/digital nomads/anybody with a decent income. Look at all digital nomad and other visa/residency programmes that have opened - some have really good terms.

There are countries that werent on the map previously that are now contenders like Georgia or El Salvador or Montenegro or many African countries (which are not catching up in the foreseeable future). And even a country like Italy offer really low taxes with it's newly improved impatriate regime.

And living in a high tax western country where the government takes about half of what you earn - nah, makes you not feel free, just a tax donkey, and it's not good for the general population, just for the bureaucrats that get more power. No need for that!

 

[MrPepper]

@MrPepper
What is the story with HK and Singapore?
If you open a company there, it will be taxed.

Help me understand what is the benefit here

That's why I mentioned that taxes are not the only reason I take into consideration and that 9% isn't the end of the world, but it might be for some.

For now, I like Dubai. It is still very competitive, even with 9%, it's close to me but the banking and law systems are kinda tricky part or better say, not the best.

Truth be told, if I had legal issues in Dubai vs Singapore, I would trust more Singapore law system any day of the week, it has great banking and has very healthy business environment. On the other hand, It's freaking far for me, it's more expensive, and taxes are higher. It's all about balance and what will suit you best for your own situation. There is no perfect solution, hence I said I will wait and see how this will play out.

 

[sergeylim88]

thank you for your input
greatly appreciated

 

[JustAnotherNomad]

Unless something changes fast in the UAE (I heard some rumors that they may backpadel on the Qualifying Activities thing), then I'll probably move my base to Thailand.
It's a bit sad, I really liked Dubai and especially its location, close to both Europe and Southeast Asia. Then again, Thailand is much greener, I like the people more (I never felt I really fit in with the Dubai crowd), it's cheaper, building quality seems better.
But I really don't want to be the guinea pig for seeing how this new corporate tax is applied nor do I want to have to deal with UAE bureaucrats. If they decide to change the rules retroactively, you're screwed in the UAE. Thailand seems much more stable.
I live a nomadic lifestyle and it's just a base for me. I'll also be much more flexible with my timezone going forward, so I can spend even more time in Southeast Asia than I was doing before.

 

[sergeylim88]

did you think about keeping your freezone company, and id card (being resident on paper just to keep bank accounts) and staying only like 15-30 days max in UAE per year(you shouldn't be actual resident for tax purpose in this case i think since it requires 90 days to get the tax certificate)?
and you get your thai residency and live there (be actually resident there or no where)

that way if something changes in a year or two you can come back easy

am i missing something why you shouldn't do this?

 

[OTROTG]

did you think about keeping your freezone company, and id card (being resident on paper just to keep bank accounts) and staying only like 15-30 days max in UAE per year(you shouldn't be actual resident for tax purpose in this case i think since it requires 90 days to get the tax certificate)?
and you get your thai residency and live there (be actually resident there or no where)

that way if something changes in a year or two you can come back easy

am i missing something why you shouldn't do this?

I am also thinking the same. Isn't there still a benefit of having UAE in your stack even if there is now 9% CIT? I believe UAE PIT is still effectively at 0%, so it may still be viable to pay yourself a high salary to reduce your CIT rate to 0% through deductions.

Please elaborate if we are missing something here.

 

[JustAnotherNomad]

I never had a freezone company, I had a freelancer visa, which is cheaper. It came with a sort of "company" anyway, but I never used it. My visa was expiring anyway and I had to decide whether to renew or close everything, so I closed everything.
It's very easy to get a Golden Visa now, and cheaper as well. I'll probably use that opportunity. Then I'll have residency without the hassle of having to deal with freezones at all. Though I think that it will only become easier to get residency in the UAE, now that they're introducing taxes. And then I'll always be able to go back, should I change my mind.

I believe UAE PIT is still effectively at 0%, so it may still be viable to pay yourself a high salary to reduce your CIT rate to 0% through deductions.

0% PIT only works for salaries up to AED 375k, and for dividend income.
You could use something like a UK Ltd. with a nominee director and pay a 375k salary, yes, but what if you want to earn more than that?
You could use a traditional offshore company like a BVI or Seychelles company with a nominee director and distribute dividends, yes, but I see no point in that since I can just move. I am a nomad anyway, it's just about where I have my base.
One could probably also use a US LLC with a nominee director (partnerships are taxed in the UAE based on presence, not based on ownership), but where would you find the nominee? And who knows if the UAE would really apply the law the way they have written? It's all a hassle.

Yes, you could use a UAE company and pay salary + deductions, but my lifestyle is very modest and I really don't want to prepare accounts in the UAE. UAE authorities are a nightmare to deal with. What if they don't accept your deductions? What if they come up with some strange rule later that? I don't trust them at all. They have no idea what they're doing.
Even as a freelancer (!), you had to submit UBO declarations. And the freezone could not even tell me if you can really get limited liability. Someone I know had a limited liability company in a freezone, and in order to close it, he had to sign a waiver that he'd be taking on all liabilities of the company in his own name. If you ask three different lawyers or government institutions, you get five different answers to any question. It's just not a good place to run a proper business.

 

[lacomaco]

Why do you think that above AED375k PIT will apply to proper salaries? PIT does not exist at all…. For an expat at a good employer it could surely go above 375k, why should that person pay corporate tax? He is not a sole entrepreneur…

 

[OTROTG]

Thanks for clarifying your reasoning and rationale.

@lacomaco, I think @JustAnotherNomad is referring to his PIT maybe possibly due to his visa type being a freelancer? I'm not entirely sure how the tax structuring works for that freelance model in particular, but I am in FZ as LLC. Since they are introducing the new "qualifying" business rules for FZ businesses, I am also subject to 9% CIT.

However, I haven't heard anything about them planning to introduce PIT yet, and may still be at 0%.

Please correct me if I am wrong or share a reference/source if they plan to change the PIT rules.

 

[madihrb]

n as a freelancer (!), you had to subm

I never had a freezone company, I had a freelancer visa, which is cheaper. It came with a sort of "company" anyway, but I never used it. My visa was expiring anyway and I had to decide whether to renew or close everything, so I closed everything.
It's very easy to get a Golden Visa now, and cheaper as well. I'll probably use that opportunity. Then I'll have residency without the hassle of having to deal with freezones at all. Though I think that it will only become easier to get residency in the UAE, now that they're introducing taxes. And then I'll always be able to go back, should I change my mind.



0% PIT only works for salaries up to AED 375k, and for dividend income.
You could use something like a UK Ltd. with a nominee director and pay a 375k salary, yes, but what if you want to earn more than that?
You could use a traditional offshore company like a BVI or Seychelles company with a nominee director and distribute dividends, yes, but I see no point in that since I can just move. I am a nomad anyway, it's just about where I have my base.
One could probably also use a US LLC with a nominee director (partnerships are taxed in the UAE based on presence, not based on ownership), but where would you find the nominee? And who knows if the UAE would really apply the law the way they have written? It's all a hassle.

Yes, you could use a UAE company and pay salary + deductions, but my lifestyle is very modest and I really don't want to prepare accounts in the UAE. UAE authorities are a nightmare to deal with. What if they don't accept your deductions? What if they come up with some strange rule later that? I don't trust them at all. They have no idea what they're doing.
Even as a freelancer (!), you had to submit UBO declarations. And the freezone could not even tell me if you can really get limited liability. Someone I know had a limited liability company in a freezone, and in order to close it, he had to sign a waiver that he'd be taking on all liabilities of the company in his own name. If you ask three different lawyers or government institutions, you get five different answers to any question. It's just not a good place to run a proper business.

Thats the point here, I have both Freelancer and Company License. I am not sure do I have to file as freelancer or that combined 1 Million AED individual threshold apply to freezone freelancers? It looks likes no one know what is happening here, nor accountants nor feeezone authorities, you may be right even government is not sure what they are doing.

Why they have made things so complicated like taxing corporate tax to individuals why not just copy laws from developed world and focus on companies that have 50+ employees.

 

[JustAnotherNomad]

Sorry, I got this mixed up in my reply.
Corporate profits up to 375k aren't taxed (and possibly no corporate tax if revenue is less than AED 3M).
Salaries aren't taxed, so you can pay a high salary, but this is subject to GAAR. So you can only pay a "regular" salary, you can't inflate your salary to artificially lower the corporate profits. Sorry for the confusion.

For those on freelancer licenses, I believe you'd usually have a FZE, and I would expect that to be treated as a company. So you could probably do the same thing with salary + "dividend" as they have made it clear that corporate tax also applies to individuals.