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UAE company advice needed

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Estek

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May 30, 2020
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Hi Everyone.

Long story short. I have a business in my country and wanted to reduce my taxes on personal income. So through on person here in forum I have found a lawyer and he gave me advice to open UAE company in IFZA zone and manage my business through this company. So that I will pay 0% on my personal income.
I did it. Now I have company. But only now ( yeahh correct I am stupid ) I started to think will it be correct from UAE legislation if I just manage my business from UAE company and pay myself salary/dividends? I have no spending in UAE company, all spends care my business and I want to send significant amount of my funds to my home bank account.
So I don't wanna fall in troubles and make UAE government thinking that I am just laundering money.
So any comments appreciated.
 
do you live in the UAE or how the hell will you make it 0%‌ on personal tax if you live outside the UAE?

I mean if you live in‍ a country where you already pat 0% taxes then you don't need that setup, so⁠ I understand you must live in a country where you pay tax.
 
You understand correctly. I was just naive when lawyer said that I will⁤ have the visa and government in my country will treat this as I have residence⁣ in Dubai

So if I︊ withdraw cash outside UAE the UAE Government will judge me and this will lead to︋ more problems?
 
Sorry but here I want to⁠ get involved, it is totally naive to think that you can put something up abroad⁤ that you own or which is 95% likely that you own and believe that the⁣ tax administration in 2020 jumps on this one.

They are going to rip you apart,⁢ you get fines and you may not even escape a prison sentence. All the crap︀ I have read about various constellations that are obviously owned by a person who lives︁ in a country where you pay taxes but make money in an offshore company is︂ pure fiction and theroy. I have tried it and still have pain in the back.︃

I am not saying that there are no constellations where it is possible to avoid︄ personal taxation but it is not as easy as it is suggested here!
 
Yes EE. So as per⁤ CFC rules my home company will know (knowing) that I am having company in UAE⁣ or the UAE government send (have sent) the information to my country as per CFC⁢ rules?
 
if they‍ participate and maintain CFC your home country know the company belonging to you now!! Think⁠ about it, I would hit this guy that set the company up for you hard!⁤
 
Thank you for your reply admin.︃
Now I see how stupid I was to think that and I really feel pain︄ for losing $12k for incorporation + trip to UAE.
I realised that here bank system︅ is not stupid and my deeds will lead to more pain and even prison. That’s︆ why I wrote here and wanted to get more information of that.
It seems that︇ ordinary people here are smarter than some “lawyer” who wants just get the money and︈ don’t care what clients will face later.
 
Exactly.

Even if you⁠ don't take out any cash for you personally from the UAE Company, as long as⁤ you are the only person who owns the company, worst case the financial authorities in⁣ your home country will rate it as a solo entrepreneurship thing and make the whole⁢ income fully taxable.

Also I assume you spent more than 183 days in your home︀ country this year, this will make you fully taxable this year in your home country,︁ unless you spent already 2month outside of your home country you won't make it this︂ year.

This leaves you with 2 options

1) If you don't have any revenue in︃ your UAE company this year, let the company rest till next year, then move away︄ from your home country. In case you made any revenue this year, declare it to︅ your authorities and really get help from an professional tax consutalt / accountant
2) If︆ you don't want to leave your home country next year, you can keep the company︇ but you need to report it to the authorities which makes the whole thing basically︈ useless. Best option if you don't wanna leave is close it

If you wanna move︉ to UAE there cheaper setups than the one you currently have.
 
Yes you pay 50% tax on your ordinary salary. Lets say 4000 EUR Per months. Thats‌ 48.000 EUR in salary Per year and of that you will pay 24.000 EUR tax.‍ The rest you will pay out as dividends and only pay 20% tax.
If you⁠ dont earn significantly more than 4000 eur Per month then a UAE setup is never⁤ the way, or any other setup. Its simply too expensive to relocate.
 
If you have a UAE residency visa, the UAE probably won’t report anything to your‌ home country. So as long as you don’t pay out any money to yourself, your‍ home country won’t know about it. Probably. There are no guarantees here. Of course it’s⁠ still taxable in your home country without substance in the UAE and if you try⁤ to hide the existence of the company, that’s probably illegal.
So in theory, it could⁣ work But if they find out, you might go to jail.

UAE + Estonia generally⁢ is a bad idea. Because Estonia will charge 20% tax if you haven’t paid any︀ tax, even if you have substance. Pay just 1% tax and Estonia will usually be︁ cool with it:
https://www.offshorecorptalk.com/threads/tax-free-residency-in-estonia.29531/
But again, that will also require substance.

Are you willing to︂ move to a different country? If not, you can choose only 2 out of 3:︃
[ ] cheap
[ ] legal
[ ] big tax savings
Take your pick.
 
2) Sooner or later your local authorities will discover that. What should happen to⁣ you when you arrive in UAE? You didn't do anything wrong there
 
UAE will not care AT ALL. Your only potential issue is Estonia.
If you have‌ a company in the UAE and you don’t send any money to your accounts in‍ Estonia, the Estonian authorities will probably never find out. But that doesn’t mean it’s legal⁠ or advisable.
If you use a UAE debit/credit card to buy stuff outside of Estonia,⁤ nobody will care. If you use such a card in Estonia, the risk is higher.⁣
 
I was talking about when I have done already and that sum is very⁠ very very big.
 
Sorry I can not follow you. You said‍ you opened the company (Paid all bills) and didn't make any revenue yet. So you⁠ didn't do anything wrong
 
What you have done isn’t illegal if you didn’t save any taxes (see 2 out‌ of 3 above - you can check cheap and legal, $12k would still be cheap).‍ You can generally expect that the UAE won’t care about you at all. They are⁠ happy they got your $12k.
 
Ok. And I cannot invoice⁤ my EE company with UAE company only with some another country to hide UAE company⁣ from EE government?
You think UAE bank won’t care also about that just I withdrawing⁢ cash (not in EE)?
 
Nobody in the UAE will care. No bank, nobody. You can do what you want.‌
Everybody in Estonia will care.
 
You can do‍ what you want. But if/when your EE company is audited, there will be a rude⁠ awakening.
 
1. Withdraw money from EE company and pay taxes in Estonia for that money
2. Close/Dont⁠ use EE company any more
3. Fix your residency visa and move to Dubai
4. Use your Dubai company and pay no taxes on future revenue

In Dubai you can⁤ of course withdraw in cash use company card or whatever you want, its your money,⁣ no taxes = no care.
 
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