Dubai Mainland vs Freezone for IT : Pros and Cons?

[gatrader]

Hello everyone,

I've been pondering why some consultants don't often suggest setting up a company in Mainland. I'm particularly interested in understanding the potential downsides for an IT company. Here are a few specific questions that I have:

1. VAT (5%): Is it true that a Mainland company is subject to VAT (5%) while this requirement does not apply to companies in free zones?
2. Banking: I've heard that setting up a bank account is much easier for Mainland companies.
3. Accounting Obligations: Are there any significant accounting obligations that differ between Mainland companies and those in Freezones?

I would greatly appreciate insights or answers to these questions from anyone who has experience or knowledge in this area.

Thank you in advance for your contributions!

 

[troubled soul]

Dubai Mainland subjected to New 9% Corporate tax.....Freezone with international income does not have tax .....Hope this helps

1. VAT (5%): Is it true that a Mainland company is subject to VAT (5%) while this requirement does not apply to companies in free zones?

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If your company regardless of mailand or Freezone Subjected to VAT if you doing business locally and your customer are local

Banking: I've heard that setting up a bank account is much easier for Mainland companies.
Click to expand...

It is like Trust me bro....Bro science....Not the bank policy.....

Accounting Obligations: Are there any significant accounting obligations that differ between Mainland companies and those in Freezones?
Click to expand...

wait for new rules and regulation....As far as I know It is still unclear that Freezone company with international income required to file audit....wait and watch ...

 

[gatrader]

azb1 said:
Dubai Mainland subjected to New 9% Corporate tax.....Freezone with international income does not have tax .....Hope this helps


If your company regardless of mailand or Freezone Subjected to VAT if you doing business locally and your customer are local


It is like Trust me bro....Bro science....Not the bank policy.....

wait for new rules and regulation....As far as I know It is still unclear that Freezone company with international income required to file audit....wait and watch ...
Click to expand...

Can anyone provide insights on whether the 9% tax applies to IT services offered outside of Dubai or the UAE?

I appreciate any information or expertise you can share on this topic. Thank you for your help!

 

[troubled soul]

gatrader said:
Can anyone provide insights on whether the 9% tax applies to IT services offered outside of Dubai or the UAE?

I appreciate any information or expertise you can share on this topic. Thank you for your help!
Click to expand...

UAE.....Consider all your income outside Middle east will be safe bet

 

[gatrader]

azb1 said:
UAE.....Consider all your income outside Middle east will be safe bet
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But this is true (9% taxes if the incomes is UAE generated) for over 375,000 AED, correct?

 

[troubled soul]

gatrader said:
But this is true (9% taxes if the incomes is UAE generated) for over 375,000 AED, correct?
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https://mof.gov.ae/ministry-of-fina...l-business-relief-for-corporate-tax-purposes/
AED3 million

 

[gatrader]

azb1 said:
https://mof.gov.ae/ministry-of-fina...l-business-relief-for-corporate-tax-purposes/
AED3 million
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Oh ok! So it means that until 3m AED even if the IT income is derived from UAE , there is no taxation ?

 

[troubled soul]

gatrader said:
Oh ok! So it means that until 3m AED even if the IT income is derived from UAE , there is no taxation ?
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yes

 

[joffreylol]

Yes 3 mil dhs until 2026. Then it's 1 mil dhs turnover, first 375k aed of profit are tax free.

 

[gatrader]

If a client resident in the UAE buys from a Freezone or Mainland, 5% VAT should be paid?

 

[JustAnotherNomad]

azb1 said:
Freezone with international income does not have tax
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Not true, no such thing has been announced so far. It also seems quite unlikely, considering that even Fred no longer claims this.
@gatrader There's a long discussion about UAE corporate tax here:
https://www.offshorecorptalk.com/threads/uae-clarification-of-freezone-qualifying-income.41414/

gatrader said:
If a client resident in the UAE buys from a Freezone or Mainland, 5% VAT should be paid?
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Yes. If the client is a company, obviously they would be able to receive a refund for the VAT (input VAT).