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UAE clarification of Freezone Qualifying Income

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First , People let Responses this form with "make freezone tax free again"..... kindly submit‌ your response may this change the mind of Ruler ...
https://mof.gov.ae/free-zone-public-consultation/
Secondly May be very‍ Good News for E-commerce and Dropshipping will be considered Qualifying Income.
If I understand correctly....⁠

Can anybody can confirm that this paragraph is for E-commerce and︊ Dropshipping ?

Seems , 99% of @Fred customers really do not need⁣ to pay tax.....

Sorry in advance If I mention something wrong......as my understanding of English⁢ and corporate law are limited...
Thanks
 
B2C is explicitly an excluded activity, so it is taxed. So no dropshipping.
I also‌ don't see how manufacturing of physical goods is relevant for 99% of Fred's clients, but‍ maybe I'm missing something here.
 
for nominee director you can use services based in Seychelles for example
a lot of‌ nominee directors come from there
can someone confirm this will not cause pe/cfc issues in‍ Seychelles? in my understanding it will not
 
Sorry to hijack a little this thread, but this seems to be the most active‌ thread on the current situation in the UAE. As many of you, I'm trying to‍ understand if it's still worth it to keep an entity in a free zone or⁠ not. And in my case it's not a matter of CIT (since I don't go⁤ above 3M AED revenue, neither 375k AED profits), rather accounting and audit costs. The accountants⁣ obviously are trying to get advantage of the situation and all says that audit is⁢ mandatory, but on the government FAQ page it seems that audits for free zone entities︀ are mandatory only for whoever wants to benefit from the 0% CIT.
Does anyone know︁ if that applies to the other businesses as well?
Audit and accounting costs make a︂ big difference for small businesses.
 
Many of accountants are not︂ updated here and it seems from my past experience and current situation they dont know︃ much about their own field. Things are evolving here on daily basis, from latest scenario︄ if your freezone business does not qualify for 50 years corporate tax exempt than your︅ tax returns will be filed as mainland company which means no audit required but you︆ have to do the bookkeeping. For bookkeeping you can hire freelancers which will do the︇ job at lower rates.

If your business is filled as mainland then you can opt︈ for small business relief if you revenue is less than 3 million aed.
 
Thanks for the response @madihrb. So no audit for now for a company that‌ is not a qualifying free zone entity. The small business relief means I don't pay‍ CIT mainly, doesn't it?
 
From current scenario you will just⁠ file return and avoid CIT (Small Relief). Things are on early stages, they will get⁤ more clear after few months.
 
There was a honest suggestion to a UAE FZ company owners not to register for‌ a VAT in another thread and @Fred declared that 99% of the companies do not‍ do it according with his personal experience, so I believe he as well as his⁠ customers did not register their companies for a VAT also.

Though CIT is here now,⁤ so at least accounting supposed to be done and at most audit.

Therefore I am⁣ wondering, what do you think are a possible solutions for those who did not register⁢ for VAT (but reached 375K+ threshold) in a following two cases:

1. A company liquidation︀ (audit will show 375K+ turnover)
2. Accounting reports submission (it will also show 375K+ turnover)︁

Let's keep in mind, the longer owner keeps a silence ignoring a VAT registration, the︂ more penalties one gets in case information will be revealed.
 
which freezones are qualifying for 50 years corporate tax exempt⁤ ?
can you provide more details and source of information ?
Thanks
 
Almost all of‍ them did, examples are DMCC, Fujairah Creative City which claimed they are giving 50 years⁠ guarantee of personal and corporate tax.

Check about section 2013 press release from DMCC:
https://cms.dmcc.ae/application/files/9614/8059/3118/DMCC_10th2013.pdf
As they said:

Now they are⁢ saying we never broke the promise, you will be tax exempt if you are having︀ qualified activities. They know oil income will go way in coming years, so their strategy︁ is to slowly introduce taxes, its matter of 4-5 years personal income tax will be︂ introduced. Personally I have lost trust, I will be out of UAE around 2025, its︃ better to pay higher taxes and have peace of mind rather living in uncertain environment.︄
 
1 - SMF (Small Business Relief)⁠ - Exemption for Small Businesses

SMF, which stands for Small Business Relief, provides a significant⁤ benefit to small companies and start-ups in Dubai. This exemption is valid until December 31,⁣ 2026, and is applicable to businesses with an annual turnover of up to 3M AED.⁢ The key advantage of SMF is that qualifying companies will be granted a 100% exemption︀ from Income Tax (IS).

However, it's crucial to pay attention to Article 21 - Small︁ Business Relief, particularly in relation to Paragraph a). This provision states that the revenue of︂ the taxable person for the relevant tax period and previous tax periods must not exceed︃ a threshold to be set by the Minister.

One point that requires clarification is whether︄ this exemption will be applicable from the very first year of business operations or if︅ there is a waiting period of two fiscal years before it takes effect. The language︆ used, referring to "periods" in plural, leaves room for interpretation.

Given the evolving nature of︇ regulations and policies in Dubai, it is essential to approach the current situation with caution.︈ While it's evident that Dubai is making significant strides in its development, there are still︉ many details and information subject to change.
 
" Natural persons will be subject to Corporate Tax as a “Resident Person” on income‌ from both domestic and foreign sources, but only in so far as such income is‍ derived from a Business or Business Activity conducted by the natural person in the UAE.⁠ Any other income earned by a natural person would not be within the scope of⁤ Corporate Tax. "

is it correct ?

Source : Federal Tax Authority - Corporate Tax⁣ Topics
 
I don’t know if this is⁣ correct.

The image shows that if you only conduct business outside UAE, you don’t have⁢ to register for CT.

What I have read before is that EVERYONE needs to register︀ for CT.
 
It's for a natural person, so a human and not a company. And I think it‌ is correct that if a natural person doesnt do any business in the UAE he‍ or she isnt subject to corporate tax in the UAE (even if resident in the⁠ UAE).
 
In official freezone seminar on Corporate tax, experts are also look confused...Very poor explanation. when‌ the participant is asking relevant & clear question ( example Holding of shares & securities)‍ , the panel is answering in a vague and confusing manner with irrelevant area

Even some not official saying that FZ company who doesn’t serve clients within UAE falls under⁠ qualifying income.
 
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