UAE + LLC
- Thread starter Cari
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Not confirmed yet but based on the FAQ provided by the MOF, it seems likely that a US LLC is considered an incorporated partnership and 9% CIT would apply.
https://mof.gov.ae/corporate-tax-faq/
https://mof.gov.ae/corporate-tax-faq/
A flow-through entity will likely be treated similar to an unincorporated partnership - Either considered a taxable person or each partner will be treated separately as subject to CIT.
Unincorporated Partnership will not be considered a taxable person in its own right provided it is not a Juridical Person (corporate entity).
Where a Unincorporated Partnership elects to be treated as a Taxable Person in its own right, its decision is irrevocable once approved, and any︀ change in the partnership composition must be notified to the Federal Tax Authority within 20︁ business days.
A Foreign Partnership that is treated as an Unincorporated Partnership must submit an︂ annual declaration confirming that it is not taxed under foreign jurisdiction laws, and each partner︃ is taxed individually based on their share of income.
Unincorporated Partnership will not be considered a taxable person in its own right provided it is not a Juridical Person (corporate entity).
Where a Unincorporated Partnership elects to be treated as a Taxable Person in its own right, its decision is irrevocable once approved, and any︀ change in the partnership composition must be notified to the Federal Tax Authority within 20︁ business days.
A Foreign Partnership that is treated as an Unincorporated Partnership must submit an︂ annual declaration confirming that it is not taxed under foreign jurisdiction laws, and each partner︃ is taxed individually based on their share of income.
It is not a loophole, if treated as unincorporated (which I think makes sense, since that s what they are), the owner resident in the UAE must still register and pay tax if the turnover is above 1M AED.
If we look at the FAQ:
On the basis of needing two︁ persons, it seems that single-member LLC can't be a partnership under UAE law.
I don't︂ see any other provisions in the FAQ that would indicate an LLC (single member or︃ not) that would make it considered pass-through. Based on the very loose guidance available and︄ general lack of clarity, it's hard to say for sure. Time will tell.
On the basis of needing two︁ persons, it seems that single-member LLC can't be a partnership under UAE law.
I don't︂ see any other provisions in the FAQ that would indicate an LLC (single member or︃ not) that would make it considered pass-through. Based on the very loose guidance available and︄ general lack of clarity, it's hard to say for sure. Time will tell.
Agreed.
Just speculating, and extrapolating from the FAQ for unincorporated partnerships, a single member US LLC can be said to be a foreign unincorporated non-partnership. Would make sense if the single member is treated like one of the partners in a foreign unincorporated partnership, but we dont know for sure.
Just speculating, and extrapolating from the FAQ for unincorporated partnerships, a single member US LLC can be said to be a foreign unincorporated non-partnership. Would make sense if the single member is treated like one of the partners in a foreign unincorporated partnership, but we dont know for sure.
Checked from the official source (regarding partnerships).
Single member US LLC being treated like partnership is my assumption only, which might be wrong, but regardless I believe that one way or another it will fit into the framework of UAE CT law.
Single member US LLC being treated like partnership is my assumption only, which might be wrong, but regardless I believe that one way or another it will fit into the framework of UAE CT law.
Yes, although I believe its more complex than this.
If the LLC is engaged in a business that is considered to be "taxable" in the UAE, you should determine whether the LLC itself is subject to tax.
Consider if the entity has a permanent establishment in UAE, if it exceeds the profit threshold, etc.
https://taxsummaries.pwc.com/united-arab-emirates/corporate/corporate-residence
Individuals will not be subject to corporate tax. As a result, any income from employment, real estate, investments in shares, and other personal income unrelated︀ to a trade or business in the UAE will be exempt from corporate tax.
If the LLC is engaged in a business that is considered to be "taxable" in the UAE, you should determine whether the LLC itself is subject to tax.
Consider if the entity has a permanent establishment in UAE, if it exceeds the profit threshold, etc.
https://taxsummaries.pwc.com/united-arab-emirates/corporate/corporate-residence
Individuals will not be subject to corporate tax. As a result, any income from employment, real estate, investments in shares, and other personal income unrelated︀ to a trade or business in the UAE will be exempt from corporate tax.
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