Can i open a Dubai company to invoice my UK company for expenses?

[janus]

Hello everyone! Great to find this site and a lot of useful information here
I been running my UK Limited company now for the last 7 years. I sell household products mostly online and i'm paying quite a lot of corporation tax each year as my profit is over 100K
I wanted to ask if i can open a offshore Dubai company to invoice my UK company few times a year to reduce my tax each year?

Is this ok and legal?

Sorry if i'm missing something but this is new for me and i been thinking about this for few years as the tax each year is growing each year

I been reading here and see the public record in Dubai offshore will not be available so i would not need to give my accountants any details that i own this offshore company right ?

Hope to to get some answers here to help me on this

Thanks. Jan

 

[Martin Everson]

janus said:
Is this ok and legal?
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It is legal but makes no sense tax wise as transaction will fall under BEPS i.e its pure and clear profit shifting with a transaction being done by a related party and not done at arms length. HMRC is not stupid but you may be able to get away with it for a while until they get to you and then they can go back years to recover all the unpaid tax with interest 😕.

You can reduce your effective tax loss to around 15% in total legally. Which is not too bad for a combined corporate and personal income tax.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[janus]

Thanks for your reply
Can you explain better please. Why this does not makes sense ? - And i don't see how they should ever find out me being the related party and what you mean by reducing my tax loss 15% ?

 

[Martin Everson]

janus said:
Can you explain better please. Why this does not makes sense ? - And i don't see how they should ever find out me being the related party
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Google BEPS online read and fully understand it is the best way to prevent yourself asking such questions 🙄.

janus said:
and what you mean by reducing my tax loss 15% ?
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It means exactly what it says i.e reducing money lost to tax to 15%. The legal tax rate in UK is way different than the effective tax rate someone pays. i.e 20% of 100k profit is way different tan 20% of 10k profit.

"The effective tax rate for a corporation is the average rate at which its pre-tax profits are taxed, while the statutory tax rate is the legal percentage established by law."

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[fshore]

Do you live in the UK?
What would the dubai company invoice for?
It's possible to invoice if on arms length, but you probably have to prepare related party documentation in the UK.