If the US LLC is owned by the UAE company, then there can be up to 30% branch profit tax in the US.
Questions about UAE Freezone
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If the US LLC is owned by the UAE company, then there can be up to 30% branch profit tax in the US.
No branch profit tax if no activity in US and sole member is a foreign company. I added a screen grab from the rules someplace else on this forum.
Edit just found it
Your answer does actually help a lot more than you know 😀 Thanks a ton.
You assumed right, I have no partners or businesses in the UAE, mostly in the US.
However, I'm confused, why did you need to create a US LLC? Wouldn't it be easier to withdraw from your affiliate partners/platforms directly into your UAE bank account with no intermediary? (is there something I'm missing here ?)
This is huge. Indeed it makes all the difference in the world. Thanks for bringing that to our attention.
So, just to confirm, affiliate marketing activities will be subjected to the 9% tax no matter what? right?
If it is not in the "Accepted Activities", then where is it in the "Excluded Activities"?
I hear that there are different tax laws and exemptions across other free zone cities in UAE. Does this new law of activities apply to all those cities?
Correct, but if there are US clients, there is a risk that the IRS will say you have "activity in the US" (ECI).
A lot of people fly under the radar, but it's a risk. You can completely avoid that risk by either not having US clients or owning a US LLC as a person instead of as a company.
I quote from Ministerial Decision 139:
Article (3) Excluded Activities
1. For the purposes of Cabinet Decision No. 55 of 2023 referred to above, the following activities shall be considered Excluded Activities:
(a) Any transactions with natural persons, except transactions in relation to the Qualifying Activities specified under paragraphs (d), (f), (g) and (j) of Clause (1) of Article (2) of this Decision.
Article (2) Qualifying Activities
1. For the purposes of Cabinet Decision No. 55 of 2023 referred to above, and subject to Clause (2) of this Article and Article (3) of this Decision, the following activities conducted by a Qualifying Free Zone Person shall be considered Qualifying Activities:
(d) Ownership, management and operation of Ships.
(f) Fund management services that are subject to the regulatory oversight of the competent authority in the State.
(g) Wealth and investment management services that are subject to the regulatory over sight of the competent authority in the State.
(i) Treasury and financing services to Related Parties.
How can the "affiliate marketing" provided to individuals be CIT free then?
Affiliate marketng is not provided to invidiuals but to businesses.
You don't "sell" to individuals.
It's the eCommerce that does the selling.
I asked my FZ and they said that I cannot pay myself a salary as I am an "investor" - So even If I paid myself a monthly salary, It will be still taxable 9%. Can you please confirm?
Wow, what a shitshow. The funny thing is, even for freelancers, some freezones give you an "investor" visa, and then you have to declare the UBO of your freelance business. And if it's true that you can't even pay yourself a salary on a freelance visa... lol.
That's bizarre. I've got an employee contract through my FZ - definitely not an investor
lol .. they published a half baked law that doesn't really make sense for many cases. Hope they make iterations to it to make sense for freezones and freelancers that don't conduct business in UAE.
I just registered my company here about 3 weeks ago, then after getting my personal/business bank accounts setuped and all that, I started having a remorse synonym lol.
Do you have partners on your business? Or Is it just you?
That's correct - they did mess up your Residence Visa then.
Because we did your Setup and strucured everything in the right way.
Getting an Investor Visa through a Freezone Company almost never makes sense - unless you need to have it for home country immigration like Phillipine Citizens - it has only downside with Banking, Insurance and now with structuring 0% Corporate Tax.
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That is sad .. Is there a way this could be changed or fixed? I am the only owner of the company.
Should be possible but best contact your Freezone about it - I assume it's a small Emirate Freezone - they are pushing - for whatever reason - Investor Visas.
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Thanks .. I asked the FZ today and they said it is possible but I have to introduce another partner with me on the company - so one is investor and the other one is employee or manager.
Confirmed -
And for your better understanding, you could have set up differently and to employed yourself. Many others advantages such as using bank leverage using your financial flux from UAE.
How can I employ myself? Like what would be the setup?
Maybe next year before renewal - I just setup-ed and got my visa less than a month ago. I don't want to pay another 16-20K AED for this again.
Will it be easy to migrate the company to another freezone with the same name, banking .. etc?
Last edited: Jun 16, 2023
I think if you are making less than $300-500k/yr in Dubai, it might not even be worth it though. Due to such high cost of living. Unless you're willing to grind it out at a 35m2 studio for $1k/mo. You'll be paying tax indirectly in everything else. $60 for a round trip Uber to the mall, $50 per meal out (for a single person) etc. To live a decent life, 1-2 bedrooms, eat out whenever you want etc, you'll easily spend $20k/mo here in Dubai vs $5k/mo in SEA or something.
Open to reasons why this might be incorrect way of thinking...
Last edited: Jun 16, 2023
That is not exactly true - $20k in Dubai is way too much, of course it depends on your lifestyle but $20k is still too much for a single person.
I think $5k/mo is very reasonable amount for a single person on Dubai.
Last edited: Jun 16, 2023
Id say around $ 10k/month. 5 is on the low end. Its not even 20k aed which disappear very fast.
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