UAE (Dubai) Expats: What moves will you make with the new UAE tax laws?

[FreedomSearcher]

UAE (Dubai) Expats: What moves will you make with the new UAE tax laws?

Many of us didn't expect the UAE to start taxing income on free zone companies.

What steps will you take to lower/minimize your tax liability?

Curious to know.

 

[troubled soul]

Dubai Freezone and any sort company registration not worth now ....Even they give‌ some exception after "public consultation" ......As they broke 50 year tax free promise....I just lose‍ faith on them....Yes Property Golden visa with personal tax free arrangement is still Good...

It is worst than Your First love/crush broke your heart...and make friendship with⁠ your enemy.........This "breach of trust" from UAE ruler is just unbearable for me
Still there is some⁣ structure available...
1)USA LLC + Territorial tax free residency (There is still some hope you⁢ can run USA LLC tax free from UAE...Finger Crossed)
2)UK LLP + Territorial tax free︀ residency (But required two partner)
3)Estonia or Georgia Company (Corporate tax zero , "reasonable" tax︁ free salary, But withholding tax apply )
4)HK company (Foreign income tax free + getting︂ Tax Free certificate is headache + HK co Running cost is high )
5)Caribbean company︃

Expert please add more structure If available ...It will be very helpful for many

 

[Jocus]

It is rather simple: accounting and filing now is mandatory. Audit only if you are‌ above a certain level. 0-375,000/year = tax at 0%. Above, 9% of the PROFITS. So‍ many ways to reduce profits in a company. No need to panic.

 

[FreedomSearcher]

Would a $1M salary if the company makes $1.5M profit/year be considered realistic?⁠

 

[Martin Everson]

It will fall foul of UAE's GAAR.

I discussed it below why‍ this is not possible.

https://www.offshorecorptalk.com/th...-freezone-qualifying-income.41414/post-261289

 

[Don]

I would argue thats⁠ actually a common salary for nominees (in oil industry, as UAE citizen)

 

[Martin Everson]

So $1m salary on $1.5m pre tax profit. You‍ think you will get away with paying out therefore 67% of your pre tax profit⁠ as a salary...lol?

I would love to see you argue that this is not a⁤ clear abusive practice designed to reduce your tax base. You would 100% not win...lol. There⁣ is a big difference of a $1m salary on $50m of profits over $1m on⁢ $1.5m in profits.

 

[jafo]

Not a chance of me "winning" against the same self-appointed unproductive gang⁢ members under the ruse of "government" whose income is derived from the taxes they collect︀ from me. rof/%

PS. Of course, there is ALWAYS an exception to the rule, but it︁ requires that:
(1) There are NO witnesses
(2) *and* there are NO cameras
(3) *and*︂ I have a shovel
ange¤%&

 

[uranium]

One thing I don't understand about authorities in UAE
They built best system for expats‌ to come live in Dubai and run a tax free business
Everything was simple and‍ straightforward
Expats started living in Dubai. Buying property, cars. They brought alot of money to⁠ UAE.
Now if 9% tax is real. UAE will loose all these expats and all⁤ apartments will be empty and domino effect will start for the economy.
Do you think⁣ they are ready to loose everything just for 9% ?
That 9% was already included⁢ in prices of all products you buy
It doesn't make sense for ruler of UAE︀ to destroy his entire business model just for 9%.

 

[jafo]

100% agree! I don't understand it either!

 

[Don]

Maybe in the business plan you had 50 million, but you had⁢ overshoot a bit, but bonuses still needed to be paid as you met the KPI-s.︀ Plus you had a huge receivable from Somalia that you had to write-off due to︁ unclear situation in the region, resulting in the business barely breaking even.
Alhamdulilah you are︂ still healthy and well, and have donated regularly to a local charity. InshaAllah next year︃ business will get better and be more profitable.

 

[yngmind]

US LLC will be taxed in the UAE too.

What kind of territorial︄ tax-free residency are you talking about? To maintain the residency status, you will have to︅ live in those places = managing your company from there = the territorial system makes︆ no sense because you're managing a company from that country = you're taxed.

The thing︇ I don't like about the UAE is the Air quality and nature.

Most of my︈ friends, including me, got bronchitis living in Dubai. I have asthma symptoms now.

So, every︉ entrepreneur expat living in the UAE is sacrificing the most important thing you have -︊ your health, in exchange for 0% tax, and now you will have to sacrifice your︋ health + pay taxes living in the desert with powered on a/c 24/7.

Possible solutions:︌
- 0% corporate tax company + Perpetual traveler (if you don't hold citizenship of a︍ developed country like Germany, UK, Australia etc, generally if your home country is not strict︎ about it and have only 183 days test.)

- Cyprus Non-Dom status (no tax on️ dividends for 17 years), good air quality, nature 🙂 It can be boring for some people‌
Other non-dom countries.

Monaco?

 

[Martin Everson]

Yes.

They will look at it as a haircut on the dirty‍ money which they know funds the UAE market. There are very few places on earth⁠ you can move to so easily and launder vast amounts of money so easily and⁤ they know it.

They clearly feel that 9% tax won't be enough to cause most⁣ shady residents to want to leave. And they maybe right but time will tell.

 

[Asmodeus]

Malta Non Dom, Ireland Non Dom.
But i︇ think the best setup currently for most people is Thailand + US LLC (or any︈ other 0% company if you don't want "US" exposure.)

For now i will stay in︉ UAE. I can just send people to Seychelles, Cayman etc. to provide enough substance and︊ hire as Director to avoid PE in UAE.
UAE is just way too easy to︋ deal with Crypto cashouts and wire the money out wherever you want even without a︌ company setup.

 

[jafo]

Pardon my ignorance, but aside from the occasional vacation in the UAE in the months‌ of January, I am a completely ignorant person vis-à-vis the UAE.
Is this common knowledge or⁤ do you have the right connections? 🙄

 

[madihrb]

Well personally I think Dubai works better and different than other arab states. Dubai want to︀ become one of the important global cities, but the problem is federal matters are controlled︁ by Abu Dhabi, the emirate which is around 80% GDP of UAE. Dubai just have︂ to obey big brother Abu Dhabi even at loss of reputation it made in last︃ few decades.

 

[uranium]

And Abu dhabi has to obey big⁣ brother Fatf to get off Grey list.

 

[madihrb]

I personally dont think Abu Dhabi cares about FATF. Oil money‍ will flow even they are blacklisted, check Russia even after sanctions its oil revenue are⁠ flowing smoothly. UAE is just following its roadmap to diversify the income. In 2018 they⁤ introduced VAT, in 2023 they introduced Corporate Tax, in coming 5 years may be in⁣ 2028 they will introduce Income Tax. All these taxes will get them more money than⁢ they got from oil.

 

[uranium]

Do they realize they won't get more expats and that⁢ everyone is leaving now?
I wonder what will happen to all villas and apartments. Dubai︀ real estate crash is coming

 

[apres777]

I already shared my view on this recent developments of the UAE in another thread when︀ it came to the UAE being blacklisted by European Commission AML.

"The decision has nothing︁ to do with KYC or AML in my opinion - it's all about politics and︂ pressure as the UAE is not participating in the sanctions against Russia. This is of︃ course a thorn in the EU's side and a desperate attempt by the EU to︄ achieve its goal."

The UAE has "done" many things which are a thorn in the︅ EU's side (especially recently with the conflict arising in Ukraine), to counteract this now and︆ take the wind out of its sails the UAE has to take what in your︇ eyes might be a drastic step and at least lay down some ground rules.

Let's be honest, 9% will not harm people seriously, and there will certainly be ways to︈ deal with this "problem". I'm pretty sure some creative tax advisors will find a suitable︉ solution, even if obviously not everything is clear and easy at this point I wouldn't︊ rush anything.

Even the UAE sometimes has to compromise to avoid a geopolitical confrontation with︋ "Big Players" in international trade.

What's the point of 0% CIT if you're going to︌ be cut off from payments and business outside the UAE for the next couple of︍ years.