Dubai is dead, any alternative to the free zone 9% tax?
- Thread starter JonnyStekkino
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I don't understand the difference between freezone companies and offshore. I have a RAK I assume it's the same. It's offshore, I can't do business in UAE and doesn't give residency, employees etc.
You also mention that they are not subject to tax, but everyone says it is. My accountant insists about the 3M AED but everywhere i read over 375K. And I read that it might be risk as at the end they might not give the Business relief and this will result paying 9% tax. So, why have this stress too when one can move somewhere else easily with clear terms?
Offshore companies:
-Cannot have physical presence in the UAE. Their office must be outside the UAE.
-Are not authorised to issue resident visas.
-Cannot directly operate any business activity in the UAE. However, they can be a shareholder of any UAE mainland or freezone company, enabling them to enter the UAE market and conduct business activities through such subsidiary companies.
-Often used as holding or asset companies for other business organizations which operate inside or outside the UAE.
-Not subject to VAT registration
Freezone companies:
-Can do business in the freezone, but not in the mainland.
-Can issue resident visas for shareholders and employees
-Typically required to have an office in their freezone.
-Subject to VAT registration (if they meet the criteria)
And well, offshore companies have been quite unsual lately, and they are - as far as I know - only issued by three UAE jursidictions: RAK International Corporate Centre (RAK ICC), Jebel Ali Free Zone and Ajman Free Zone. It is possible that "everybody" is aware of the freezone rules, since freezone company has been the totally dominant company form (along with mainland company), but that few people know about offshore companies and the rules that apply to them.
Hundreds of thanks @Cloudbanck!
I assume then that it's offshore as I clearly know that it can't issue visas. So you say that those have no tax at all? My accountant says that can go to 3M AED (less than that) and the tax will be 0% with the Small Business Relief. Also, last year I paid a lot for Audit as he told me that now Rak requires Auditing.
Am i missing anything?
thank you
Read this thread: Does the new UAE tax apply for RAKICC offshore companies?
So seems consensus is for non-residents of the UAE there is no corp tax for offshore companies. But for residents of UAE owning offshore companies, there is possibly corp tax, but not clear yet.
And Id suggest to change accountant regardless of taxation of offshore companies. Your accountant does not seem to explain things clearly or be on top of things.
So seems consensus is for non-residents of the UAE there is no corp tax for offshore companies. But for residents of UAE owning offshore companies, there is possibly corp tax, but not clear yet.
And Id suggest to change accountant regardless of taxation of offshore companies. Your accountant does not seem to explain things clearly or be on top of things.
That makes perfect sense since as tax resident you are most likely managing and controlling the (offshore) entity from UAE.
https://www.offshorecorptalk.com/th...r-rakicc-offshore-companies.43740/post-288961
By default offshore entities shouldn't get TRC in UAE and be liable for corporate tax.
Assuming you appoint non-resident as director of offshore entity could help to mitigate tax risk if you are UAE tax resident yourself , and act only as a passive shareholder.
is it better to have UAE resident or non uae resident for rak offshore???
Last edited: Jan 26, 2024
Sorry I didn't clarify I mean is it better to have UAE resident or NON resident director in rakcc offshore?
Last edited: Jan 26, 2024
If you have a UAE resident director for RAKICC offshore company, it could theoretically expose the company to UAE tax (CIT).
Thank you @Don !
From now on you mean, or I might be having issues for the previous years I had him?
As previous years the tax was 0% should be ok, correct?
2. So as I understand, in order to be on the safe side with the current situation, what can be done is use the UAE company to invoice up to the 375k AED which is tax free (correct?) and then start moving away and close it.
yes.. you can determine the date when your company might have obligation to register for corporation tax and submit tax returns.
This threshold applies to taxable profits
Just to share with the forum (likely has been mentioned in other threads), it seems small business relief for revenue (and not profit) below 3 000 000 AED is not eligible for a free zone person.
https://cms-lawnow.com/en/ealerts/2023/04/uae-corporate-tax-small-business-relief-criteria
I suggest to make sure to earn more than 3 mil AED not to feel bitter about it 🙂
https://cms-lawnow.com/en/ealerts/2023/04/uae-corporate-tax-small-business-relief-criteria
I suggest to make sure to earn more than 3 mil AED not to feel bitter about it 🙂
honestly until 1M USD it can be tax free with expenses and salary. Maybe more than that, 400-500k AED salary / month is ok I think depend on your role in the company.
Why shall I do that and keep an offshore they is grey list in Europe, pay a lot to maintain it, get risks for my customers in Europe too and pay 9% tax, instead of opening a company in Europe Malta, Cyprus, Ireland, etc?
Can take salary from offshore rak as shareholder
From my experience during several years in Panama up to about 2010, it depends on who you are in terms of safety, but from personal observation, Dubai is a LOT safer than Panama. Consider Panama's neighbor...If you get into a dispute with the politically connected locals...you may get a visit from the PTJ...or worse...a couple of guys with helmets on bikes doing drive-by shootings 😳
Today, it's best to ask "credible" locals in Panama and take a trip down there to experience it for yourself.
Also, Dubai is a lot more "opulent" than Panama (for lack of a better term) 😉
I have been to Panama. Dubai is much more luxury and much more safer.
In Panama there are slums in city. Street shootings etc
If you're from Europe, I suggest avoiding it... But if you still want to go there, stay in Costa del Este where you can have a luxury life if you want (and have the money)... but please learn how to live in Latam before deciding to live there because even doe is not the most dangerous place in Latam, it's still higher than what Europeans are used to. On the other hand if you're from the US then it's ok since most big cities in the US are most dangerous than Panama (and specially the zone I'm saying).
Here is a picture from Street View of the zone I'm saying
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