UAE to introduce 9% corporate tax on business profits from June 1, 2023 (FZCO REMAINS 0%)

[rowena]

I don't think it is going to happen. You don't have to rent a real‍ office or hire an employee to run the business even if you really live in⁠ UAE.

FZs issues freelance(sole-trader) licenses, which means you can't hire an employee. Another example is⁤ SHAMS FZ in Sharjah. They only have flexi desk options because they don't have real⁣ office spaces, so you can't have real office space.

I expect less strict rules and⁢ more importance of individual tax certificates. I also expect all sole businesses like freelance permits︀ or mainland sole proprietorship companies will be exempted from corporate tax because they're not corporate.︁ They should be taxed under income tax which remans 0%.

Update: It looks like mainland︂ sole proprietorship and even Freezone-based freelance licenses are subject to CT. Still waiting for detailed︃ information but this makes freelance licenses useless.

 

[MiddleEuroAsia]

yeaaaaaaah, no, just︃ because the FZs doesn't have strict substance requirement, it will mean that the banks will︄ accept that, remember that it was already very hard to open a bank account for︅ a rak or a Sharjah company before, now it's just impossible. banks only accept Dubai︆ companies and that's even is not sure thing, it's based on a case by case︇ basis.

thank god that I have build my relationships in Dubai before the shitstorm that's︈ about to come. (Also attending Events that's hold by Emirati business men/women and "donating" for︉ their "charities" here and there to get your name out and networking helps too )︊

But I gotta say it, I just hate these dumb fucks that's ruining the offshore︋ business for all of us, Greedy mfs keep coming to dubai, no substance, hotel bills,︌ fake bs, no business plan, shitty 50$ website, no social media or any social proof︍ at all. Absolutely nothing. and they just keep transferring 500k-700k every month and sometimes more︎ without anything to back these numbers on, and you wander why we hear news like️ this!
like come on, if you are gonna do something with this money, at least‌ be a little bit smart about it, hire people, have substance and don't be a‍ cheap f**k crying about the 0.20 fees that the bank will get from you, like⁠ Jesus Christ man.

I have been in this region for so long, I know what's⁤ about to come, they will 100% go after the FZ companies, but not like what⁣ you imagine, they will look hard for the substance requirement, then they will require you⁢ to stay longer or get your visa revoked, and so on and so forth. believe︀ it or not, the UAE doesn't need your money or "experience", they moved past this︁ phase a long time ago. They just want to show the business world how business︂ friendly they are with their "mature laws" and regulations. they want to be the HQs︃ capital of the world.

And as much as I hate regulations and governments interfering with︄ businesses, this is far from "over" regulation that you see in other countries, and this︅ will be a good thing in the long run, because news like this deter the︆ dumb fucks from coming to Dubai and instead, going after other jurisdictions like Seychelles, Belize︇ or whatever crappy jurisdiction they chose to incorporate in.

For the rest of us, as︈ long as you have proper substance, keeping records (Even if you don't need to), building︉ relationships with banks, networking with other business people based in the UAE and the MENA︊ region in general, you are good to go.

But for the other dumb fucks, keep︋ fucking yourself and I hope I see the Interpol ram your house at 3 am,︌ dragging your to the north pole and keep you there right where you belong -︍ "off-shore" and far away enough from the rest of us 🙂

 

[zzzzzz]

UAE in 2015: zero taxes for the next 50 years!
UAE in 2025: just kidding!‌

 

[andrew28fl]

With the complexity of banking in UAE, and costs associated‍ with Freezone companies/licenses/expensive resources, isn't it best just to live in UAE (through real estate⁠ investment) and operate your business out of a Single Member US LLC or a UK⁤ LLC? Your business entities are basically tax free, because it's a pass through entity and⁣ taxes get passed on to the owner of the LLC. UAE where the owner resides⁢ has no personal income tax, so your income (and hence your LLC's income) is all︀ tax free.

Of course, this doesn't apply to people who want to conduct business in︁ the UAE (hire employees, sign leases etc). But for digital business owners, I think this︂ is the best set up. Any experts, please poke holes in this.

 

[MiddleEuroAsia]

That's not true, it all depends on the country you are resident in⁢ and how they treat US LLC or a UK LLP.
If they treat them as︀ a corporation, they will tax them like a corporation, but if they treat them Like︁ an opaque entity - like how the UK and Canada treat US LLC - then︂ the company would be taxed at a personal level.

In the UAE, the status is︃ not clear, some says it's opaque, while others say it's not, but it usually didn't︄ matter since both personal and corporate tax were 0%, but would that change? I don't︅ know! the clear thing was that if you have a foreign company that does business︆ in the mainland or a GCC country, you need to register for VAT, and if︇ you don't do business in the mainland or a GCC country, your vat is 0%︈ and you can apply for a vat "exemption", so you don't have to file for︉ VAT every year. But you will find that some people just don't care and don't︊ register for vat, so there's that.

The question is, would the UAE government keep this︋ system? I have no idea, maybe they will only focus on local Companies, and maybe︌ they will start cracking down on foreign companies that satisfy "PE" rules in the UAE,︍ but then again, these companies usually don't do business in the mainland nor the GCC,︎ So what would they tax? and how would they do it if their laws says️ otherwise?

right now, it's all just theories and predictions, and no one knows wtf is‌ going on in Bin zayed's and bin rashid's minds, only time will tell.

 

[rowena]

Impossible? You can easily open a bank account for Sharjah FZ⁤ company in Dubai, it is not different than Dubai FZ.

 

[MiddleEuroAsia]

If you have a‍ good relationship with the bank, then sure, but for newcomers with no minimum deposit nor⁠ a bullet proof business plan (majority of wantrepeneurs), then it's very hard if not impossible,⁤ the bank has nothing to gain from you, so why bother?

 

[kriyazen]

IMHO UAE just needs the money. By the way for an FZ company, to my‌ knowledge, at least a hot desk space is always required. Unless it is some sort‍ of "Offshore" FZ company, good luck to open a bank account with that.

 

[MiddleEuroAsia]

From this article:︁ UAE corporate tax: Free zone based businesses with mainland operations to come under tax regime︂

"Non-residents who conduct a business activity in a GCC country through a permanent establishment are︃ subject to corporate tax."

So, it seems that if your foreign companies do business in︄ the GCC (including mainland), your company will be subject to the new Corporate tax, otherwise,︅ no tax is paid if you only do business outside of the UAE and the︆ GCC.

 

[Fred]

Thie issue with︁ all this UK LTD, US LLC or Ireland LTD setups you only get EMI banking︂ without having a Resident Director.

For most serious entrepreneurs that's not a option and what︃ we see in our inquiries is that usually the people want to move away from︄ such setups due to lack of decent reliable retail banking with fully fledged banks.
Nop - that's gone.

Mashreqbank that was the only bank still considering them closed the door last year december -︆ was the only major Bank still considering them - now you are looking at bottom︇ of the barrel banks like Bank Alfalah.

Yes - for︉ Freezone Companies and they keep what they promised. We don't understand why this fact was︊ ignored the last years from some Corporate Service Provider telling some bullsh*t to get people︋ for a Mainland Company when it wasn't necessary - well here comes the bill.

Imagine you as CSP do setup last week a Mainland Company for a client - well︌ happy birthday.

Pay attention to who's word you are following otherwise you can get burned︍ easily in the UAE.

 

[MiddleEuroAsia]

False. The money is‌ the last thing they are looking for, they need Global businesses (including regional ones in‍ the MENA countries) and specially multinationals, to move their HQs to the UAE, so they⁠ have the same legitimacy that the legacy brand countries/cities have (e.g. Switzerland, Singapore, Hong Kong,⁤ New York, london...etc).
they want people to perceive them as a global, innovative business hub,⁣ not another tax heaven, oil-run state.
hot desk (or flexi desk), virtual offices and all of that, will︂ only get you far, you need either of these three things to start a relationship︃ with most banks:
1- real substance
2- higher deposits
3- investing some money into some︄ BS investment product that the bank offers you.

If you have none of that and︅ you were able to open a bank account in Dubai, then all props to you,︆ but for most people in this forum, they will need either of these 3 things︇ to get things going.

Not necessarily true, for example, with a US LLC - and if you︉ have US customers/suppliers, you can get a highly transactional bank account with a credit line︊ and everything, For example, I had no problem opening a corporate account with Citibank in︋ Miami for my US LLC, it was easier than the boogeyman news that you hear︌ online, and if you don't like travelling, go with neo banks like Brex, their FDIC︍ insurance is very good, they say and I quote "with brex, you can choose︎ how your money is stored. You can elect to keep your deposits at a Brex️ partner bank, and if you do, you’ll be eligible for FDIC insurance up to $1,750,000‌ in total. The other option is to invest your deposits into a government money‍ market mutual fund. You can also use any combination of these two options."
For me, there are no issues with them so far, ACH transfers from brex to mercury⁠ and vice versa works like a charm.

So, it's not really that black and white,⁤ and majority of the time, you will find good options if you do your homework⁣ on the ground.

Can't agree more, MFs at creative zone kept spam mailing calling me about how "easy"︅ it is to open a Dubai mainland company, and How I was missing out, they︆ are pushing for the "mainland" narrative and i don't know why! but whatever, I blocked︇ them, so I don't hear their nonsense again 🙂

 

[rowena]

I opened a Mashreq bank account for Sharjah FZ 1.5 years ago in⁠ 2 weeks. The Sharjaz FZ company has no office and no flexi desk. Maybe they⁤ considered my business very safe but it was 1.5 years ago it can be different⁣ now as you mentioned.

 

[MiddleEuroAsia]

I mean, mashreq is trash, and they always⁤ accepted whatever, FAB, ENBD, ADCB are a different story.
your circumstances are also different, If⁣ my memory serves me right, I think you deal mainly with marketplaces such as amazon,⁢ etsy..etc. So, it's different than other E-commerce stores that do lots of third-party transactions.

in addition, 1.5 years ago, is massively different than what happens in the UAE today, and︀ rest assured that it will only get harder from here on.

 

[rowena]

Mashreq has the best online banking⁢ in UAE. They updated their retail mobile app and website. It is very modern now︀ and better than most of western banks. FAB, ENBD, and ADCB all of them make︁ me crazy because they have 2010 year online banking.

Yes correct and I live in UAE.

I agree things are changing︉ quickly.

 

[lacomaco]

Guys, did you have a look at the “harmful tax regimes” by OECD? Quite a‌ lot of them were free zones and they are now forcing to amend local legislation‍ and to tax them. I am not sure that all UAE FreeZones will remain tax⁠ free… And forget what was announced, I do not care about PR only the written⁤ law

 

[ShillGates]

would be helpful to post a link to whatever⁣ you refer to?

 

[lacomaco]

https://www.oecd.org/tax/beps/harmf...er-review-results-on-preferential-regimes.pdfThat is the latest

 

[ShillGates]

i dont see uae in there?
blablablabla blablablabal characters to do my post

 

[lacomaco]

I am not so sure I understand your second sentence… BTW I‍ was referring to the OECD attacking other countries’ free zones if that was not clear⁠

 

[ShillGates]

we need to write enough letters and words to post something, hence me blablablbalbala characters‌ to make up my post.....(didnt mean blablablabla to you)