Does the new UAE CT applies to day tradings

[Bill D]

I am interested in relocating in UAE as a crypto/stock day trader, however i don't know if it's suitable with the new rules.
UAE is set to implement CT of 9% from mid 2023, they released this month a new consultation document trying to explain better who will be subject to that.

However it is not clear to me if you are day trading, cryptos, or stocks, your own funds, as your center of operation will be within uae, will you undergo the new CT of 9% on these operations trading your own funds ? And are you allowed to do that without a specific license/company registration ?


If yes what are the alternativ to UAE ?
(It seems that in UAE you would be able to avoid tax up to 375 000 aed and you could add to that a reasonable monthly salary.
however if it requires you to audit+pay 9% on the trades above that, with hefty fines up to 50% of the gains, it would make it not interesting to live in the Dubai.)

 

[JackAlabama]

Bill D said:
I am interested in relocating in UAE as a crypto/stock day trader, however i don't know if it's suitable with the new rules.
UAE is set to implement CT of 9% from mid 2023, they released this month a new consultation document trying to explain better who will be subject to that.

However it is not clear to me if you are day trading, cryptos, or stocks, your own funds, as your center of operation will be within uae, will you undergo the new CT of 9% on these operations trading your own funds ? And are you allowed to do that without a specific license/company registration ?


If yes what are the alternativ to UAE ?
(It seems that in UAE you would be able to avoid tax up to 375 000 aed and you could add to that a reasonable monthly salary.
however if it requires you to audit+pay 9% on the trades above that, with hefty fines up to 50% of the gains, it would make it not interesting to live in the Dubai.)
Click to expand...

No one knows at this point and a lot of things will, can and do change in the very short period of a year.

 

[rowena]

Bill D said:
I am interested in relocating in UAE as a crypto/stock day trader, however i don't know if it's suitable with the new rules.
UAE is set to implement CT of 9% from mid 2023, they released this month a new consultation document trying to explain better who will be subject to that.

However it is not clear to me if you are day trading, cryptos, or stocks, your own funds, as your center of operation will be within uae, will you undergo the new CT of 9% on these operations trading your own funds ? And are you allowed to do that without a specific license/company registration ?


If yes what are the alternativ to UAE ?
(It seems that in UAE you would be able to avoid tax up to 375 000 aed and you could add to that a reasonable monthly salary.
however if it requires you to audit+pay 9% on the trades above that, with hefty fines up to 50% of the gains, it would make it not interesting to live in the Dubai.)
Click to expand...

Day trading can be considered a professional activity and subject to CT tax. It is still uncertain. The worst case you use your FZ for day trading to avail 0% CT.

Bill D said:
with hefty fines up to 50% of the gains
Click to expand...

I don't think it is true. Where did you see this?

 

[calnana]

This is one of the views that some of us subscribed to a few weeks/months ago. They make crypto activities require a license or a permit (registration with the virtual assets regulatory authority) then slap everyone with CT.
Still not clear if this will be the case for individuals, but ....

I mean... look at that juicy article 16 🙂 Law No. (4) of 2022 Regulating Virtual Assets in the Emirate of Dubai

Last edited: May 29, 2022

 

[Bill D]

rowena said:
Day trading can be considered a professional activity and subject to CT tax. It is still uncertain. The worst case you use your FZ for day trading to avail 0% CT.
Click to expand...

Even your own personnal funds ? Are they really gonna distinguish a day trader doing 10000 transaction a year, people running high frequency trading bots doing 100M transaction a year, and the small investor doing 10 transaction per year ?

Also are you sure that a FZ would be exempt, knowing that most brokers are now licensed in uae, that you center of operation would itself be from UAE (your flat), above that it would be exempt, it seems to me, only if the license perfectly match with the activity that you want to exempt, so it would need to be licensed for both crypto and stock trading, is that even possible and bankable ?

rowena said:
I don't think it is true. Where did you see this?
Click to expand...

Saw that from a youtuber consultant

calnana said:
This is one of the views that some of us subscribed to a few weeks/months ago. They make crypto activities require a license or a permit (registration with the virtual assets regulatory authority) then slap everyone with CT.
Still not clear if this will be the case for individuals, but ....

I mean... look at that juicy article 16 🙂 Law No. (4) of 2022 Regulating Virtual Assets in the Emirate of Dubai
Click to expand...

From that article 16, it seems that as of now only the provision of such services will require VARA but not the trading of your own balance, despite the last sentence of that article means it could change without notice

 

[khara]

Is there any update on the topic now that CIT is in full force?
If you day trade under your own name, would that liable for corporate tax?

 

[Thomas67]

khara said:
Is there any update on the topic now that CIT is in full force?
If you day trade under your own name, would that liable for corporate tax?
Click to expand...

For this question I invite you to visit the website tax.gov.ae (or ask in their chat to an agent). They have a list of documents/manuals related to the Corporate Tax Law, including when applied to natural persons. 1m AED as threshold for the Turnover (not clear how they define it for trading).

I'm more concerned about the requirement of a license even in the case of trading on personal savings.

 

[Konstanz]

Thomas67 said:
For this question I invite you to visit the website tax.gov.ae (or ask in their chat to an agent). They have a list of documents/manuals related to the Corporate Tax Law, including when applied to natural persons. 1m AED as threshold for the Turnover (not clear how they define it for trading).

I'm more concerned about the requirement of a license even in the case of trading on personal savings.
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Can you please give source about license for trading on personal savings?

 

[sergeylim88]

@Konstanz take a look at 109 on page FAQs

 

[Konstanz]

sergeylim88 said:
@Konstanz take a look at 109 on page FAQs
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I think this is for passive income. Many people / lawyers misinterpret what is day trading (active trading each day or week) between long term investments.
Passive investments to gain dividends, sell shares yes will remain non taxable, but if you trade on speculative manner this can be taxed 9% income tax

 

[Tom85]

khara said:
If you day trade under your own name, would that liable for corporate tax?
Click to expand...

I asked that question on reddit
https://www.reddit.com/r/dubai/comments/182n8l7

Tax consultants and lawyers from EY and PWC think day trading on personal account won't be taxed.

 

[backpacker]

Tom Taylor said:
I asked that question on reddit
https://www.reddit.com/r/dubai/comments/182n8l7

Tax consultants and lawyers from EY and PWC think day trading on personal account won't be taxed.
Click to expand...

Read again the Reddit you posted! A conclusion can not be drawn from the Reddit post.
Things are still too vague.

Last edited: Dec 25, 2023

 

[Konstanz]

Tom Taylor said:
I asked that question on reddit
https://www.reddit.com/r/dubai/comments/182n8l7

Tax consultants and lawyers from EY and PWC think day trading on personal account won't be taxed.
Click to expand...

I expect UAE to leave just passive personal income not taxed, but active income taxed CIT

 

[TheCryptoAnt]

guys cmon stop doing drugs, NO country on the face of this planet sees you trading shares with your own money and says that you are 'engaging in business activities' and as a result you are subject to CIT.

At most, it goes from CGT to PIT, which does remain tax-free in the UAE

 

[Konstanz]

TheCryptoAnt said:
guys cmon stop doing drugs, NO country on the face of this planet sees you trading shares with your own money and says that you are 'engaging in business activities' and as a result you are subject to CIT.

At most, it goes from CGT to PIT, which does remain tax-free in the UAE
Click to expand...

Actually you are wrong. There are such laws in European countries. Active trading means you do personal business

 

[PhantomOf ThePits]

TheCryptoAnt said:
guys cmon stop doing drugs, NO country on the face of this planet sees you trading shares with your own money and says that you are 'engaging in business activities' and as a result you are subject to CIT.

At most, it goes from CGT to PIT, which does remain tax-free in the UAE
Click to expand...

Googling for one minute you could have found that for example:
https://en.wikipedia.org/wiki/Capital_gains_tax
In some countries, such as New Zealand and Singapore, professional traders and those who trade frequently are taxed on such profits as a business income

Switzerland and Malta and Belgium for example also



There's a lot of countries with tax free cap gains, once you're considered professional trader, you pay income taxes and social charges on top

 

[Sols]

TheCryptoAnt said:
guys cmon stop doing drugs, NO country on the face of this planet sees you trading shares with your own money and says that you are 'engaging in business activities' and as a result you are subject to CIT.
Click to expand...

If you do it in what's deemed a commercial or professional capacity, there are several jurisdictions that may try to consider it a business and apply CIT. The average retail investor isn't affected.

Toggle signature
This is the probably the answer to your question.

 

[TheCryptoAnt]

Konstanz said:
Actually you are wrong. There are such laws in European countries. Active trading means you do personal business
Click to expand...

and as a result get taxed on it as income, instead of capital gains. No Corporate income tax as you have no clients/its your own money.

PhantomOf ThePits said:
There's a lot of countries with tax free cap gains, once you're considered professional trader, you pay income taxes and social charges on top
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Which is exactly what I said. PERSONAL INCOME, not business.

Sols said:
If you do it in what's deemed a commercial or professional capacity, there are several jurisdictions that may try to consider it a business and apply CIT. The average retail investor isn't affected.
Click to expand...

Can you provide some examples pls? With clear rules on what turns your own trading into 'business income', instead of personal income.

Same goes for the other two people above pls.

 

[Konstanz]

TheCryptoAnt said:
and as a result get taxed on it as income, instead of capital gains. No Corporate income tax as you have no clients/its your own money.



Which is exactly what I said. PERSONAL INCOME, not business.



Can you provide some examples pls? With clear rules on what turns your own trading into 'business income', instead of personal income.

Same goes for the other two people above pls.
Click to expand...

in UAE you pay CIT even as physical person if you do business as physical person

From UAE government website:
"
UAE CT applies to juridical persons incorporated in the UAE and juridical persons effectively managed and controlled in the UAE, as well as to foreign juridical persons that have a permanent establishment (see section Foreign persons) in the UAE (see question ”˜Who is considered resident for UAE CT purposes?' under section Scope and rate).
Individuals will be subject to CT only if they are engaged in a business or business activity in the UAE, either directly or through an unincorporated partnership or sole proprietorship."

https://tax.gov.ae/en/taxes/corporate.tax/faqs.aspx

 

[Sols]

TheCryptoAnt said:
Can you provide some examples pls? With clear rules on what turns your own trading into 'business income', instead of personal income.
Click to expand...

I understand what you're asking for but I'd be surprised if any of these jurisdictions have a simple one-pager saying "If you trade like X, Y, and Z conditions, you're a corporation." It's different rules coming together. The jurisdictions I have written down here are the usual tax hells: Spain, Canada, Australia, Germany.

Essentially, it's like any activity. If you do enough of it personally, there's a risk it becomes a business activity. They look at things like whether it's a full-time activity, your sole/primary source of income, and so on. If your activities mimic those of a company, there is a non-zero risk you're taxed as a company. Buy and sell a couple of things on Ebay and no one bats an eye. Make it a multi-million dollar activity and the tax man cometh.

Didn't have a reason to look into this in much detail before, but it seems enforcement is mostly to extract social security contributions that wouldn't be due if you're paying just PIT/CGT. PIT/CGT is higher than CIT in many cases so the tax authority has no interest taxing you less. It's all about finding reasons to tax you more and in new ways.

Toggle signature
This is the probably the answer to your question.