Physical substance of visa motivated freezone companies in UAE
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Just called the Department of Economy and︁ Tourism (Dubai Government), in charge of trade/commercial licenses.
A license is not needed when trading︂ or investing personal funds - even as a main activity (explicitly asked). An extra confirmation︃ can come from the SCA or CBUAE if needed. I would prefer to have a︄ document though (if someone has one).
Even in the case where the Commercial Transaction Law︂ didn't concern trading (own funds, no clients, main activity), not sure trading belongs to the︃ Personal Investment category though.
Quite unfortunately, the corporate tax guide (natural persons) only mentions, as︄ an example (p.21), the case of a long term investment in securities.
The second example︅ related to the resale of a car is interesting though, as the argument is: no︆ corporate tax "as the sale of the car is on the personal account of the︇ natural person and does not require a License"
Still struggling with it, any help would︈ be appreciated even in dm
Nb: the example of the car might not be sufficient︉ though; buying cars cheap and reselling them at a higher price on a frequent basis︊ could possibly be seen as a commercial business, even if a personal account is used.︋
A license is not needed when trading︂ or investing personal funds - even as a main activity (explicitly asked). An extra confirmation︃ can come from the SCA or CBUAE if needed. I would prefer to have a︄ document though (if someone has one).
Even in the case where the Commercial Transaction Law︂ didn't concern trading (own funds, no clients, main activity), not sure trading belongs to the︃ Personal Investment category though.
Quite unfortunately, the corporate tax guide (natural persons) only mentions, as︄ an example (p.21), the case of a long term investment in securities.
The second example︅ related to the resale of a car is interesting though, as the argument is: no︆ corporate tax "as the sale of the car is on the personal account of the︇ natural person and does not require a License"
Still struggling with it, any help would︈ be appreciated even in dm
Nb: the example of the car might not be sufficient︉ though; buying cars cheap and reselling them at a higher price on a frequent basis︊ could possibly be seen as a commercial business, even if a personal account is used.︋
Thank you Thomas.︆
So can we say that trading/crypto trading with personal funds is tax-free even if the︇ treshold is exceeded?
So can we say that trading/crypto trading with personal funds is tax-free even if the︇ treshold is exceeded?
The current understanding is that trading can't be seen as a (passive) investment and, aside this, could also be seen as a commercial business. No license needed, but the personal investment exemption in the corporate tax law is unlikely to apply.
Any other view based on sources is obviously welcome. Also, still no view on the treatment of crypto to crypto transactions.
Any other view based on sources is obviously welcome. Also, still no view on the treatment of crypto to crypto transactions.
Hi Thomas67,
Does it mean we can take any kind of visa (either through Freezone or freelancer visa) and trade in stocks, derivatives on any regulated exchanges using personal funds? What is the risk of violation of the activity (and potential visa︀ renewal) defined by Freezone company or freelancer if trading profits are the primary source of︁ income?
I reached out to the SCA and they told that their permission is not︂ required to trade in stocks, derivatives in international markets.
Does it mean we can take any kind of visa (either through Freezone or freelancer visa) and trade in stocks, derivatives on any regulated exchanges using personal funds? What is the risk of violation of the activity (and potential visa︀ renewal) defined by Freezone company or freelancer if trading profits are the primary source of︁ income?
I reached out to the SCA and they told that their permission is not︂ required to trade in stocks, derivatives in international markets.
The more I read/learn about it, the more complex it becomes (also with the introduction of the CIT and︀ its practical implications). You should definitely be fine (I believe) if you're setting up a︁ prop trading company, have the appropriate licenses, depending on the instruments, and use locally regulated︂ intermediaries. This will also ensure the origin of funds is clear and legit.
Fee free︃ to investigate/consider other options, they might be much more risky (in UAE compared to other︄ countries).
SCA doesn't cover the scope of international brokers, nor the possible legal impacts it︅ might have would you use one.
Visa can be obtained with any type of company/freelance︆ activity. A company can invest its capital, but trading requires a license.
Here above I'm︇ mentioning no license is needed, but there's a contradiction with the commercial transaction law (speculative︈ activity, virtual assets, ...) labelling the activity as commercial business - likely requiring a commercial︉ license, such as a proprietary trading license.
Nb to the readers: no comment stating no︊ license or company is needed (in 2024-2025) without an explicit source/reference please.
Fee free︃ to investigate/consider other options, they might be much more risky (in UAE compared to other︄ countries).
SCA doesn't cover the scope of international brokers, nor the possible legal impacts it︅ might have would you use one.
Visa can be obtained with any type of company/freelance︆ activity. A company can invest its capital, but trading requires a license.
Here above I'm︇ mentioning no license is needed, but there's a contradiction with the commercial transaction law (speculative︈ activity, virtual assets, ...) labelling the activity as commercial business - likely requiring a commercial︉ license, such as a proprietary trading license.
Nb to the readers: no comment stating no︊ license or company is needed (in 2024-2025) without an explicit source/reference please.
This is the definition of personal investment in FTA︆ Decree. Probably implies there are activities that can be treated as commercial without needing a︇ license. (If we interpret it in plain English).
I was planning to trade in personal︈ account using personal funds (after obtaining a freelancer visa or LLC visa). I have talked︉ to multiple business set up consultants. They told that you can use LLC or freelancer︊ visa as a vehicle to reside in UAE and trade in personal account. Do you︋ see this option as risky?
I was planning to trade in personal︈ account using personal funds (after obtaining a freelancer visa or LLC visa). I have talked︉ to multiple business set up consultants. They told that you can use LLC or freelancer︊ visa as a vehicle to reside in UAE and trade in personal account. Do you︋ see this option as risky?
For me there's indeed a distinction between investing (long term/passive) and︀ active trading. Business set up consultants want to close a deal (the set up fees),︁ there aren't responsible of what you do as natural person. Only a lawyer (not only︂ tax advisor) can answer your question. I've at least described what I believe is the︃ safest.
This thread also discusses the topic: https://www.offshorecorptalk.com/th...ks-cryptos-with-own-funds-in-dubai-uae.44800/
So far difficult to gather explicit sources/references︄ instead of opinions.
This thread also discusses the topic: https://www.offshorecorptalk.com/th...ks-cryptos-with-own-funds-in-dubai-uae.44800/
So far difficult to gather explicit sources/references︄ instead of opinions.
That's the problem with the UAE: Ask five people, get six answers. You can apply for a ruling from the FTA, but I wouldn't put that much faith in that either. If they change their mind a day later, what will you do? Sue them? Haha!
In the UAE, you are always one step away from prison - I don't think it's an accident. They will always be able to find someone behind bars whom they don't like. I would never do business there.
Live there, yes. Set up an entity there? Never.
In the UAE, you are always one step away from prison - I don't think it's an accident. They will always be able to find someone behind bars whom they don't like. I would never do business there.
Live there, yes. Set up an entity there? Never.
True. I concur. Any activity that requires active involvement is generally considered active business according to the spirit of the law. I am perfectly fine with my activity classified as commercial in nature and paying corporate tax (9%) on profits [Even when trading in personal account with personal funds].
I am only planning to trade stocks, futures and options (equity derivatives) on US and European exchanges. No trading in crypto.
My chief concern is whether my activity needs an explicit license.
I read one of your older︀ messages in some other thread where you mentioned talking to DED and they confirmed that︁ no license is required for trading in personal account with own funds and also it︂ being primary activity. After reading that, I thought of taking LLC license or freelancer license︃ and then trade in personal account.
I spoke to a practicing CA in UAE. He︄ told me that active trading (short term and /or derivatives trading) is treated as business︅ activity and liable to corporate tax even when carried out as a natural person.
I am only planning to trade stocks, futures and options (equity derivatives) on US and European exchanges. No trading in crypto.
My chief concern is whether my activity needs an explicit license.
I read one of your older︀ messages in some other thread where you mentioned talking to DED and they confirmed that︁ no license is required for trading in personal account with own funds and also it︂ being primary activity. After reading that, I thought of taking LLC license or freelancer license︃ and then trade in personal account.
I spoke to a practicing CA in UAE. He︄ told me that active trading (short term and /or derivatives trading) is treated as business︅ activity and liable to corporate tax even when carried out as a natural person.
At this stage I'm not quite sure I can︁ trust what DED indicated on the phone to be honest. First because it's possible the︂ guy didn't know and just provided the most logical answer (satisfaction score), secondly because only︃ official texts/decrees/rules can be used to defend yourself.
The view of the accountant you've contacted︄ is quite useful I believe. It would confirm the main source I have at this︅ stage on the topic, i.e. the commercial transaction law section 1, chapter 1, articles 4-5.︆
One document is missing for now, a decree stating that any commercial business requires a︇ commercial license (and is hence de facto regulated). It might not necessarily be a decree︈ though, since there are specific regulators. Hopefully will I find it, or can any reader︉ contribute.
In terms of instruments (the underlying behind the derivative is relevant) my first conviction,︊ based on different articles read so far, was that Forex trading absolutely requires a company︋ and a locally regulated broker: to make the activity legit - and clarify the origin︌ of funds (a highly important aspect in UAE - AML and fight against terrorism financing)︍ right away and not a posteriori. In other words, forex trading in other conditions seems︎ illegal (risks to be assessed).
Now, I'm wondering if the Forex trading case shouldn't be️ extended to any type of trading. For stocks the good news is Interactive Brokers has set up a branch in UAE/Dubai end of last year. Bad news is, if trading requires licenses, a company, locally regulated brokers/exchanges, many traders in UAE could face issues at some point. Hence the importance of working on the topic and be protected by sources/lawyers text opinions, etc...
The view of the accountant you've contacted︄ is quite useful I believe. It would confirm the main source I have at this︅ stage on the topic, i.e. the commercial transaction law section 1, chapter 1, articles 4-5.︆
One document is missing for now, a decree stating that any commercial business requires a︇ commercial license (and is hence de facto regulated). It might not necessarily be a decree︈ though, since there are specific regulators. Hopefully will I find it, or can any reader︉ contribute.
In terms of instruments (the underlying behind the derivative is relevant) my first conviction,︊ based on different articles read so far, was that Forex trading absolutely requires a company︋ and a locally regulated broker: to make the activity legit - and clarify the origin︌ of funds (a highly important aspect in UAE - AML and fight against terrorism financing)︍ right away and not a posteriori. In other words, forex trading in other conditions seems︎ illegal (risks to be assessed).
Now, I'm wondering if the Forex trading case shouldn't be️ extended to any type of trading. For stocks the good news is Interactive Brokers has set up a branch in UAE/Dubai end of last year. Bad news is, if trading requires licenses, a company, locally regulated brokers/exchanges, many traders in UAE could face issues at some point. Hence the importance of working on the topic and be protected by sources/lawyers text opinions, etc...
There is a huge difference between theory and practice in the UAE. Especially since the new “tax regulations” took place, I personally know a dozen traders who trade privately and without a company. 80% of people who have set up a company for this sole purpose, consider it pointless in retrospect. If I were you, I would save the money for the company, especially if it has no “purpose” and is primarily intended for the visa. The company only complicates everything, especially banking and if you trade in any form with “crypto”. (Have fun explaining this to the commercial bank, unfortunately they are very conservative︀ on the subject). There are companies that offer you VISAs or you can get a︁ freelancer VISA.
Yes, this is what I would also do.︂
- Get some freelancer visa or get some other kind of visa (friend "employs you in︃ his company or something"). If you go with freelancer visa - do not to mention︄ anything like that - do it for some coding/media work or something like that.
- Do not form a company as that's expensive to keep just for visa and also expensive︅ or if you miss on something fines can be high. So I would avoid this︆ at all cost. Also it slows you down in case of 5. (see below)
- Trade with your own funds
- Keep let's say 50% of the funds in a decent foreign︇ bank
- In case anything bad happens with this setup - do what everybody else does︈ - buy a one way ticket and get the f**k out of there and never︉ return.
Thanks for your view. The whole point is︂ that it very likely depends on the type of operations, as described. If all your︃ friends are swing traders/mid term investors (while of course managing their own money) there is︄ indeed no point in setting up a company as the activity wouldn't be seen as︅ a business.
I agree with all the rest, including the suggestion of getting a freelance︆ visa (already done in my case). Abd to answer the main question of this thread,︇ I believe the freelance activity or the freezone company can have the visa as sole︈ purpose. Though in my case I'll eventually convert it to a real consultancy activity which︉ will then add substance.
I agree with all the rest, including the suggestion of getting a freelance︆ visa (already done in my case). Abd to answer the main question of this thread,︇ I believe the freelance activity or the freezone company can have the visa as sole︈ purpose. Though in my case I'll eventually convert it to a real consultancy activity which︉ will then add substance.
Isn't there a reliable and professional service agent any longer in UAE that knows what is going on and doable in company formation and tax matters ?
How would it be if you get 6 different answers and you go with one of them and it shows it is wrong, what are the authorities︀ saying if you can proof that you got 6 different answers in written?
How would it be if you get 6 different answers and you go with one of them and it shows it is wrong, what are the authorities︀ saying if you can proof that you got 6 different answers in written?
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