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

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 and︁ regulation....As far as I know It is still unclear that Freezone company with international income︂ required to file audit....wait and watch ...

 

[gatrader]

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

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

 

[troubled soul]

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

 

[gatrader]

But this is true (9% taxes if the incomes is UAE generated) for over‍ 375,000 AED, correct?

 

[troubled soul]

https://mof.gov.ae/ministry-of-fina...l-business-relief-for-corporate-tax-purposes/
AED3 million

 

[gatrader]

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

 

[troubled soul]

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]

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/

Yes. If the client is⁣ a company, obviously they would be able to receive a refund for the VAT (input⁢ VAT).