Dubai Corporate tax + Pay out maximum
- Thread starter MillionCents
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Anyways, I am out after this post, whoever is selling a 0 tax UAE idea to you all is making a fool out of you, I have seen lot of people move out of dubai and look for other options and these service providers have been chased by the same people they sold the 0 tax idea, if you don't understand how dividends work and their distributions then you are bound to get fooled. Goodluck I am out.
The consultant has provided some accurate information. To adequately demonstrate your "Employee Income" you must have an employment contract and a salary certificate, without your employment status with the company is not valid.
As the owner and General Manager of a FZ company in Dubai, I have an employment contract with my company and can obtain a Salary Certificate from the Free Zone authority at any time, which includes all necessary details such as joining date, salary and title. This is the proper setup.
Regarding the second point, it is smart to maintain your salary below 1 million AED per year. While it is known︀ that salaries are not subject to income tax, extracting excessively high profits through salaries is︁ not allowed obviously otherwise everyone would go with high salaries and no one would pay︂ corporate tax.
100% correct. I remember that some sponsored corporate tax providers in this forum︄ previously misled people into believing that a 0% tax rate was possible in the UAE.︅
As the owner and General Manager of a FZ company in Dubai, I have an employment contract with my company and can obtain a Salary Certificate from the Free Zone authority at any time, which includes all necessary details such as joining date, salary and title. This is the proper setup.
Regarding the second point, it is smart to maintain your salary below 1 million AED per year. While it is known︀ that salaries are not subject to income tax, extracting excessively high profits through salaries is︁ not allowed obviously otherwise everyone would go with high salaries and no one would pay︂ corporate tax.
100% correct. I remember that some sponsored corporate tax providers in this forum︄ previously misled people into believing that a 0% tax rate was possible in the UAE.︅
you may have misunderstood the details,︇ Please refer point 3.2 of the following document
https://tax.gov.ae/Datafolder/Files/Guides/CT/Taxation of natural persons - 25 11︈ 2023.pdf
Natural person according to the︌ above docs refer generally to a freelancer or any unincorporated business activity conducted by an︍ individual.
So, monthly salary is employment income in case of an incorporated business (there is︎ a distinction here, between incorporated and unincorporated business) is by default exempt from corporate tax️ - period. When you own a Freezone company, the company as an entity becomes taxable, you on the other hand as a natural person, will be either a director/CEO or a manager of that company drawing out a salary. There is no Personal Income Tax in UAE and you are misinformed that there aren't too many people in UAE with 1 million AED yearly salary.
@MillionCents please change your accountant.
https://tax.gov.ae/Datafolder/Files/Guides/CT/Taxation of natural persons - 25 11︈ 2023.pdf
Natural person according to the︌ above docs refer generally to a freelancer or any unincorporated business activity conducted by an︍ individual.
So, monthly salary is employment income in case of an incorporated business (there is︎ a distinction here, between incorporated and unincorporated business) is by default exempt from corporate tax️ - period. When you own a Freezone company, the company as an entity becomes taxable, you on the other hand as a natural person, will be either a director/CEO or a manager of that company drawing out a salary. There is no Personal Income Tax in UAE and you are misinformed that there aren't too many people in UAE with 1 million AED yearly salary.
@MillionCents please change your accountant.
I remember being quoted about 5k USD by two UAE law firms for studying my relatively basic structure case and offering me a setup solution. But from either how they wrote to me or talked to me, I realized they did not have much of a clue or only the basics info that everybody knew... my point is, I suspect a lot of these UAE law firms are very expensive and just not good at all. Fake it till you make it... but they are still at the first stage.
I have read︃ the whole document word by word, you are ABSOLUTELY wrong my friend, I have burned︄ my fingers setting up companies and paying lawyers, and trust me with the below and︅ verify it yourselves since I am not a tax expert but someone who runs a︆ business will understand what I am talking about.
In point 3, there is a clear︇ distinction if you are an incorporated or an unincorporated business. If you are a resident︈ individual then by default you are considered an unincorporated business unless in theory you are︉ on a resident visa issued by a company which you do not own(a real employee).︊
There is a clear distinction of business activity or performing a business, which means in︋ both terms you as the owner have a separate legal identity in the corporate tax︌ law, unless you declare during the formation how much salary you will take and its︍ registered, then your business makes 1m aed and the next month you want to take︎ it out as a salary then sorry it's not possible since you as an individual️ will be taxed on 1m aed or above at 9%.
Also, there is a clear distinction of what is a wage.
So basically in theory you are saying if you don't incorporate a business in UAE and live there since there is no income tax i don't pay anything??? Sorry that's not possible either. Hope it makes it clear and I'm out.
You are absolutely correct in your analysis, people︉ don't understand and just think they can do whatever they want like before in the︊ UAE, some don't even understand the differences and like to play with fire
In point 3, there is a clear︇ distinction if you are an incorporated or an unincorporated business. If you are a resident︈ individual then by default you are considered an unincorporated business unless in theory you are︉ on a resident visa issued by a company which you do not own(a real employee).︊
There is a clear distinction of business activity or performing a business, which means in︋ both terms you as the owner have a separate legal identity in the corporate tax︌ law, unless you declare during the formation how much salary you will take and its︍ registered, then your business makes 1m aed and the next month you want to take︎ it out as a salary then sorry it's not possible since you as an individual️ will be taxed on 1m aed or above at 9%.
Also, there is a clear distinction of what is a wage.
So basically in theory you are saying if you don't incorporate a business in UAE and live there since there is no income tax i don't pay anything??? Sorry that's not possible either. Hope it makes it clear and I'm out.
You are absolutely correct in your analysis, people︉ don't understand and just think they can do whatever they want like before in the︊ UAE, some don't even understand the differences and like to play with fire
Correct but one more thing;
If you do business and pay excessively high salaries(like 100K AED per month) to yourself to reduce or eliminate corporate taxes, you will still pay taxes.
If you do business and pay excessively high salaries(like 100K AED per month) to yourself to reduce or eliminate corporate taxes, you will still pay taxes.
corporate tax = tax on benefits company
100k AED is not high salary when Marketing Director can own between 30-50k monthly
Managing director can easily have 100k monthly and more with bonuses
Don’t forget this is Dubai one of the most expensive city in the world you can easily justify 100k salary monthly, don’t pay you 1M / monthly of course lol
But for managing director / CEO and all theses jobs you can pay you at least 75k monthly with no problem in my opinion because this is the market rate and don’t forget you have 0 tax for 3 years if you make︀ less than 3M revenue (not profits)
100k AED is not high salary when Marketing Director can own between 30-50k monthly
Managing director can easily have 100k monthly and more with bonuses
Don’t forget this is Dubai one of the most expensive city in the world you can easily justify 100k salary monthly, don’t pay you 1M / monthly of course lol
But for managing director / CEO and all theses jobs you can pay you at least 75k monthly with no problem in my opinion because this is the market rate and don’t forget you have 0 tax for 3 years if you make︀ less than 3M revenue (not profits)
The title of CEO︁ is for larger organizations, not for small businesses with just a few employees. Salary figures︂ like those mentioned are possible in multinational corporations or companies with at least 20-30 employees︃ and a turnover in the tens of millions.
The FTA will not entertain your claim︄ that you are the "CEO" of a one-employee, desk based company and that you avoid︅ corporate taxes by paying yourself a salary comparable to that of a multinational company CEO.︆
The FTA will not entertain your claim︄ that you are the "CEO" of a one-employee, desk based company and that you avoid︅ corporate taxes by paying yourself a salary comparable to that of a multinational company CEO.︆
Either you have no︁ idea what you are talking about or you are a secret dubai service provider, I︂ have no idea. The small business relief is one time only upto 3m aed upto︃ 2026, you cannot claim it every year 3m aed nor can you claim it with︄ multiple companies, there is an anti abuse rule in place. Please consult a good law︅ firm and verify your facts before you post.
I agree with your point of view regarding the salary, but what about receiving dividends from my company? Under which section of this document do dividends fall? Can receiving dividends be classified as State Sourced Income, as described in point 3.9?
I do understand the confusion a little bit.
The document’s reference to "State Sourced Income" is about ensuring that income derived from the UAE is appropriately taxed, but as a resident receiving dividends from a UAE company, this doesn’t trigger additional tax obligations for you.
The document’s reference to "State Sourced Income" is about ensuring that income derived from the UAE is appropriately taxed, but as a resident receiving dividends from a UAE company, this doesn’t trigger additional tax obligations for you.
So, true, absolutely correct. You get it. That is how corporate tax is treated across OECD countries, and the UAE corporate tax code follows OECD guidelines.
Again, if a natural person does business as a freelancer or any form of "unincorporated business" then, in that case, you as a natural person will be tax liable for your incomes. But if the same︀ natural person incorporates a business and draws out salary then there won't be any tax︁ on that salary in UAE.
Again, if a natural person does business as a freelancer or any form of "unincorporated business" then, in that case, you as a natural person will be tax liable for your incomes. But if the same︀ natural person incorporates a business and draws out salary then there won't be any tax︁ on that salary in UAE.
I found the answer to my question here:
Chapter Seven – Exempt Income
Article 22 – Exempt Income
The following income and related expenditure shall not be taken into account in determining the Taxable Income:
1. Dividends and other profit distributions received from a juridical person that is a Resident Person.
Chapter Seven – Exempt Income
Article 22 – Exempt Income
The following income and related expenditure shall not be taken into account in determining the Taxable Income:
1. Dividends and other profit distributions received from a juridical person that is a Resident Person.
Thank you for this valued info. Well Dubai was a F*#"*ckup for me. Went for work, dropped resumes, got interviews went back home, unsuccessful feedback. I have learnt, which agencies to work with, who not to trust, and pay attention to data protection laws, the laws are strict. I would say it was a career move, the money wasted I would equate to tuition fees, lessons learned.
A salary certificate is a simple︉ and individual document for everyone (it is made by hand and with any content). The︊ specific amount in the KPI should not be mentioned in any of their official documents︋ (remuneration can be for anything and anything, but it is always better to have supporting︌ contracts. Even to himself). And the practice that there is 1 Director in the company︍ and he pays himself and concludes contracts with himself is the norm huh. But in︎ this case, of course, it is more difficult and there are more risks.
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