Headquarter services tax-exempt in the UAE?

[JustAnotherNomad]

Wow! That was really comprehensive.
Unfortunately, as usual, it basically just says: "This is my‌ opinion. But who knows what the authorities will say, we really have no idea..."
Typical UAE.

 

[JustAnotherNomad]

@Don Do you have any experience with this?

 

[daniels27]

I think it is UAE and all remains open. Probably they won't audit you.

 

[Don]

You may find︊ this interesting as well
https://www.pgplaw.com/analytics-an...zone-vs-distribution-from-a-designated-zone-/

https://www.pgplaw.com/analytics-an...zone-persons-guide-substance-for-hq-services/
Provided the relevant conditions are fulfilled in substance (not just in︌ form) then it can work.
Its a rather complex area.

 

[Marzio]

You're right, i missed the boat with‌ this one.

I thought HQ = final holding while isn't always the case.

 

[daniels27]

I think this whole "headquartering" originates from the UK jurisdiction's economic substance rules.
https://www.gov.gg/CHttpHandler.ashx?id=141223&p=0
https://www.gov.im/media/1365807/ec...nsey-isle-of-man-and-jersey-26-april-2019.pdf
There, headquartering is definined as

• taking relevant management decisions
  
• incurring expenditures on behalf of intra‌ group persons
  
• ordinating group activities
  

‘Incurring expenditures on behalf of group entities’ includes the taking‍ of specialist advice or procuring technology on behalf of the group as a whole, or⁠ purchasing significant assets / specific services for / on behalf of a group entity.

There is also distribution and service centres which are defined as

• transporting and storing goods, components⁤ and materials
  
• managing stocks
  
• taking orders
  
• providing consulting or other administrative services
  

And more specifically:⁣

• The definition encompasses companies which purchase raw materials and finished products from other non-resident members⁢ of the same group3/connected persons and re-sell them for a profit.
  
• The definition also encompasses︀ companies which provide services, consulting or other administrative services, to other non-resident members of the︁ same group/connected persons.
  

Now, argueing from that perspective, I would say that at least in︂ the UK realm, headquartering would not include product/service trade as they are listed elsewhere more︃ specifically.

But seems the UAE law is somewhat quite unclear.

 

[JustAnotherNomad]

Thanks. Yes, it definitely seems quite complex.
But it also⁠ seems like something that might work well for someone who wouldn't mind actually living in⁤ the UAE. Substance shouldn't be an issue, you would need substance anyway for proper transfer⁣ pricing.
But how can you get certainty if your setup would work or not?