UAE (Dubai)

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Dubai is the historic trading hub in the Middle East and Africa and the most business-friendly city in MEA with simple import/export policies and no trade barriers. Due to its strategic location and well developed shipping sector, the city currently hosts several international trading, freight and shipping companies. Dubai also boasts highly developed logistics and transportation infrastructure, making the city a perfect choise for product distribution. Furhermore, the city allows duty free exports to 17 Middle Eastern countries which encourages foreign investors to opt for offshore company formation in Dubai.

  • The most popular Dubai business vehicles include the LLC, the free zone company and the branch office
  • In Dubai, only a free zone company can be wholly foreign owned. An LLC must be 51% owned by a local shareholder
  • A Dubai LLC can trade within the UAE. However, a Dubai free zone company may only transact within the UAE through resident agents
  • There is no corporate income taxes or withholding taxes in Dubai
Population: 2.657 million (UAE: 9.27million)
Form of government: Absolute monarchy Emir: Mohammed bin Rashid Al Maktoum
Official & spoken languages: Arabic (+English in Business)
Currency: Dirham (AED)
Time zone: GET (UTC+4)
GDP (PPP): US 82.9 billion
GDP (PPP)/per capita: US 24,866
Average salary: AED 140,379 (USD 38,000/year)
Unemployment: 0.30%
Major trading partners: Iran, India, Saudi Arabia, Oman, and Switzerland Suplliers: China, United States, India, Germany and Japan

 

Advantages of doing business in Dubai, UAE

  • A Dubai company faces no company tax, personal tax, withholding taxes, import/export taxes and capital gains tax. However, the 5% VAT was introduces in January 1, 2018
  • Our Clients may also use Dubai’s offshore entity to registar a legally tax exempt company to extract funds in the form of dividends, management fees, and royalties from regional subsidiaries
  • Resident business also benefit from the city’s 66 international double tax treaties which help reduce the withholding tax on foreign remittances
  • Dubai is ranked as the best jurisdiction in the world by tje World bank for “paying taxes” metric
  • Dubai is the undisputed financial capital of the MEA region. The city’s financial centre (DIFC) is used by several bank and non-bank financial institutions, insurance firms and asset management firms

Disadvantages of doing business in Dubai, UAE

  • All Dubai mainland companies must appoint a UAE national as the 51% shareholder. Most of our clients choose to proceed with nominee shareholder services offered by Novasigma Accounting & Law partner companies
  • Most company visas and licenses are sponsored by UAE nationals, giving the latter indirect control over Dubai business
  • It can be expensive to register a company in Dubai, UAE due to nominee shareholder costs, multiple government fees, notarization and legalization costs and mandatory office space rentals
  • If creditors petition winding up a Dubai, UAE company and the court auditors find incomplete accounting records explaining insolvency, then shareholders and directors will personally pay outstanding company liabilities.
  • A business in Dubai may suffer as the city in uniquely susceptible to a terrorist attact. A terrorist attack would have a devastating impact on the property prices, on the economy, on foreign investment and business confidence

Free-Trade zones in Dubai, UAE

Free-trade zones in the United Arab Emirates are areas that have a special tax, customs and imports regime and are governed by their own framework of regulations (with the exception of UAE criminal law). The UAE has several free zones across Dubai, Abu Dhabi, Sharjah, Fujairah, Ajman, Ras al Khaimah and Um Al Qwain. Free zones may be broadly categorized as sea port free zones, airport free zones, and mainland free zones. Free-trade zone exemptions are:

  • Corporate tax exemptions for up to 50 years
  • 100% foreign ownership of the enterprise
  • 100% import and export tax exemptions
  • 100% repatriation of capital and profits
  • No personal income taxes
  • Assistance with labor recruitment, and additional support services, such as sponsorship and housing.

Each Free Zone is designed around one or more business industry categories and only offers licenses to companies within those categories. An independent Free Zone Authority (FZA) governs each free zone, and is the agency responsible for issuing FTZ operating licenses and assisting companies with establishing their business in the FTZ.

Investors can either register a new company in the form of a Free Zone Establishment (FZE) or simply establish a branch or representative office of their existing or parent company based within the UAE or abroad. An FZE is a limited liability company governed by the rules and regulations of the Free Zone in which it is established. Except for acquiring nationality in the UAE, the provisions of the Commercial Companies Law (CCL) do not apply to FZEs, provided that the Free Zones have special provisions regulating such companies.

List of Dubai Free-Trade zones

 

The World Bank “Ease of doing Business -ranking” UAE

Overall rank 2018: rank 26th (change in rank: 0)
– Starting a business: rank 53 (average processing time 1 days)
– Dealing with construction permits: rank 4 (no change) – average processing time 49 days
– Getting electricity: rank 4 (average installation time 28 days)
– Registering property: rank 11 average processing time 1.5 day
– Getting credit: rank 101 (change -4)
– Protecting minority investors: rank 9 (change +39)
– Paying taxes: rank 1 (average company tax from profits 15,9%, average time used for taxation 12 hours per year)
– Trading across borders rank 85 (change -1)
– Enforcing contract: rank 25 (average 495 days, average cost from standing amount 20,1%)
– Resolving Insolvency: rank 104 (Average processing time: 3.2 years)

 

Why to become a tax resident in Dubai, UAE

The tax-free haven of the Emirate of Dubai is gaining more and more popularity among the representatives of private businesses and individual entrepreneurs, who wish to live and work in a comfortable environment with minimal tax payments. It is not a secret that the features of the jurisdiction provide the exemption from both income taxation of private persons and corporate taxation of companies. There are no taxes on income, taxes on income from capital, taxes on the selling of the properties, inheritance taxes and etc.

Due to such specifics, the jurisdiction of Dubai competes successfully with the traditional tax havens all around the world. As a nice bonus for private business there is the possibility to optimize the taxable base at the international level via international taxation agreements. Moreover, the jurisdiction is not included in the “black” offshore lists of the international organizations which fight against money laundering.

Advantages that are provided in the United Arab Emirates by the tax resident status:

  1. Safe and comfortable living for residents and members of their families
  2. High level of education and availability of the advanced educational institutions
  3. Tax privileges for those holding the tax resident status, including the legal persons
  4. Possibility to obtain a residence visa for all family members
  5. Right of freedom of movement on the territory of the Persian Gulf States
  6. Great perspectives for business development and etc.

Rates for different activities are as follow:

  • Income Tax: 0 percent
  • Value-added Tax: 5 percent (since January 1, 2018)
  • Corporate Tax: 0 percent (gas and oil companies 55%, branches of foreign banks 20%)
  • Capital Gains and Interest: 0 percent
  • Property Tax: 5 percent (All property owners must pay 5% of the average rental value in their area)

UAE does not have any federal income tax. An income tax decree has been enacted by each Emirate, but in practice, the enforcement of these decrees is restricted to foreign banks and to oil companies.

How to Obtain Tax Residency in DUBAI

First of all, it is necessary to list the documentation which may be required for obtaining a residence visa, in particular:

  • Copies of valid foreign passports;
  • Copy of marriage certificate;
  • Copies of birth certificate of children.

This set of documents is standard and can be extended depending on each specific situation.

Ways to obtain a residence visa in Dubai:
There are several simple but effective ways to obtain a tax resident status in Dubai, in particular:

  • Obtaining a visa via registering a local company;
  • Obtaining a visa via acquisition of the immovable property on the territory of the Emirate;
  • Visa approval on the basis of an employment contract.

Each of these methods has its own peculiarities and requirements. Let’s consider in more detail the most popular ones.

Obtaining a visa via registering a local company:
This method can be divided into several sequential steps, which include the following operations:

  • Submission of application with all the relevant documentation;
  • Registration of a local company in the chosen jurisdiction (free trade zones);
  • Visa application for owners, company executives and members of their families.

It should be noted that the registration of a company on the local market of the United Arab Emirates – it is the opportunity to obtain an investor visa for owners and work visa for employees. Besides the main advantages of this method one can include the fact that to obtain visa in UAE it is not necessary to carry out real economic or commercial activity in the territory of the Emirate. In other words, you can register a local company only for the purpose of obtaining a visa for yourself and for members of your family.

Obtaining a visa via acquisition of the immovable property on the territory of the Emirate

The real estate market of the United Arab Emirates shows a relative stability and is a little bit subjected to the external influences and global financial crises. These particular indicators have provided the inflow of the foreign investors and large-scale development of building in Dubai. Experts say that real estate in Dubai, regardless of the category, has a stable tendency to rise in price, what makes it a great investment tool.

Foreign citizens are allowed to purchase real estate of any category and class in Dubai. The only restriction is the specialized territories, where such transactions are permissible. Land lots of these categories can be acquired only by citizens of the country. All the other property possesses a “Freehold” status. In fact these are almost all new areas, which are allocated for investment construction.

The real estate market of the Emirate of Dubai is ready to offer both the apartments of economy class, and luxury dwelling on the coast. It all depends on your wishes and financial possibilities.

Changes in the current legislation became an important addition to the purchasing of property in UAE by foreign citizens, and in particular it is the introduction of a state Register of testaments. If in the past, the foreign businessmen, who invested in Dubai real estate, were anxious due to the fact that hereditary right was governed by the Shariah, today the situation is different. Registration of a testament in the country register allows the owner not to worry about who will obtain the property after his death, and the rights of heirs are protected at the legislative level.

As to the obtaining a tax resident status via the purchasing of real estate, there are certain conditions which are required to be fulfilled. In particular, the purchased real estate property must cost at least 1 million Dirhams, and the monthly income of the applicant for obtaining visa must be at least 10 thousand Dirhams. Those who meet the stated requirements, are granted a residence visa for one year with the possibility of further extension.

 

Freedom Index: UAE

Overall rank 2018: 56th (59/100 points)
– Property rights: 55/100 points
– Freedom from taxes: 95/100 points
– Freedom of speech/religion: 25/100 points
– Limited government: 76/100 points
– Gun rights: 38/100 points
– Drug rights: 10/100 points
– Freedom from corruption: 70/100 points
– Freedom from inflation: 81/100 points
– Business freedom: 80/100 points

 

Corporate Taxes in Dubai (UAE)

  • Residence: In practice, a company that is incorporated in the UEA is considered resident, provided: (1) all of the shares of the company are beneficially owned by residents of the UEA, or (2) all or substantially all of the company’s income is derived by the company from the active conduct of a trade or business other than an investment business in the UES; and (3) all or substantially all of the value of the company’s property is attributable to property used in that trade or business.
  • Basis: Income tax decrees have been issued by five of the seven Emirates (i.e Abu Dhabi, Dubai, Ajman, Umm Al Qaiwan, Ras Al Khaiman and Fujairah), but currently only are enforced on the income of oil and foreign banks and certain petrochemicals companies under specific government concession agreements, at all rates of 50% / 55% (Dubai / Abu Dhabi)
  • Taxable income: There are no taxes imposed on the income of companies, except for oil and gas exploration and production companies and branches of foreign banks.
  • Taxation of dividends: No
  • Losses: N/A
  • Foreign tax credit: No
  • Participation exemption: No
  • VAT surtax: No
  • Alternative minimum tax: No
Taxable income: 0%/20%55% There are no taxes imposed on the income of companies, except for oil and gas exploration and production companies and branches of foreign banks.
Taxation of dividends:
VAT registration: A business must register for VAT if its taxable supplies and imports exceeds AED 375,000 per annum (USD 100,000). It is optional for businesses whose supplies and imports exceed AED 187,500 per annum.
– VAT Rates: The standard rate is 5%, for more information please visit: https://government.ae
Surtax: No
Alternative minimum tax: No
Withholding tax (general):
– From Dividends No
– From Royalties No
– From Interests No
– Technical services No
Transfer tax: No
Capital gains tax: Capital gains are taxable as business income at the regular corporate income tax rate.
Real property tax: 5 percent (All property owners must pay 5% of the average rental value in their area)
Social security: The UEA does not impose social security taxes on foreign employees. Employer pension contributions for national employees are 12.5% of the “contribution calculation salary”. In addition, national employee contributions are levied at 5% of the contribution calculation salary.
Payroll tax: No
Stamp duty: No
Capital duty: No
Tax treaties: The UEA has concluded around 60 income tax treaties
Anti-avoidance rules:
– Transfer pricing No
– Thin capitalization rule No
– Disclosure requirements Annual financial statements must be filled with the Ministry of Commerce by companies and branches located outside the free trade zones. Entities located within a free trade zone report to the free zone authority of the relevant zone. These entities have never officially been requested to file or report financial statements to any ministry/authority located outside the free zone.

Compliance for corporation:

There are no compliance obligations on companies in the UEA

  • Tax year:
  • Consolidated returns:
  • Filling requirements:
  • Penalties:
  • Rulings:
  • Tax authorities: Ministry of Finance

Personal Taxation in Dubai, UAE 2018

  • Personal taxation basis: Individuals are not taxed on their income.
  • Tax Residence:
  • A Filling status:
  • Income tax rates in Dubai:
  • Social security payments in Dubai: The UEA does not impose social security taxes on foreign employees. Employer pension contributions for national employees are 12.5% of the “contribution calculation salary”. In addition, national employee contributions are levied at 5% of the contribution calculation salary.
  • Inheritance/estate tax in Dubai: There is no inheritance tax regime. Inheritance , in the absence of a will, is deal with in accordance with Islamic Shariá principles
  • Net wealth/net worth tax in Dubai: No

Our Services in Dubai, UAE

Consulting & advisory services for foreign and UAE based entities

  • Due diligence process
  • Foreign Market entry & Supplier search
  • Business Plans & Descriptions
  • Development & Capital Advisory
  • International Tax Planning
  • Funding & Investor Search
  • Business Restructuring via Offshore entities
  • Exit Strategy & IPO
  • Problem solving in UAE | by Novasigma Accounting & Law partner office

PLEASE CONTACT US TO SCHEDULE A MEETING WITH THE NOVASIGMA CONSULTANT

Incorporation, administration & business services in Dubai, UAE

Incorporation services in Dubai, UAE

  • New company formations in Dubai (LLC or Free Zone company)
  • Ready-Made Dubai companies
  • Company Closures and liquidations in Dubai

Company administration in Dubai

  • Legal registration address service for a Dubai company
  • Company secretarial service for a Dubai company
  • Nominee director services
  • Nominee shareholder services

PLEASE CONTACT US TO SCHEDULE A MEETING WITH THE NOVASIGMA CONSULTANT

Additional business services in Dubai (by Novasigma Certified Partners)

  • Virtual office services in Dubai
  • Hosting services
  • Real estate in Dubai (offices, trade facilities, industrial)

Accounting, bookkeeping & audit for a Dubai entity

Some of the common domestic accounting services we provide in Dubai include

  • Bookkeeping and accounting
  • Invoicing and payments
  • Annual accounts
  • Monthly Reconciliation
  • Monthly financial statements (including balance sheet and income statement)
  • Payroll services
  • Income and tax return
  • Management accounts

Value Added Tax (VAT)

  • VAT registration
  • Advice on VAT scheme options
  • VAT returns and declarations

Audit

  • Annual accounts in view of an annual audit and attend accounting audits

PLEASE CONTACT US TO SCHEDULE A MEETING WITH THE NOVASIGMA CONSULTANT

Legal services for Dubai companies and business owners

Legal services in Dubai for all Novasigma Clients including companies and their owners and directors

Our team of lawyers, associates and legal advisers to assist our clients with a business and tax planning, overseas business operations, risk management and other legal matters. Primarily focused on business transactions, Novasigma Accounting & Law corporate attorneys are a great asset to a small and large businesses. With a background on corporate law, our corporate lawyers and legal advisers have an in depth knowledge on the transactions that may put your business at risk of litigation. These include contracts and negotiations, taxation laws, business structuring, buy/sell agreements, and intellectual property, among others.

PLEASE CONTACT US FOR MORE INFORMATION ABOUT LEGAL SERVICES IN DUBAI

Banking, financial and insurance services in Dubai

Banking services in Dubai, UAE

  • Business bank accounts
  • Personal bank account opening for business owners
  • Payment service providers
  • Investment solutions
  • Alternative banking solutions

Insurance services in Dubai, UAE

  • Insurances for corporations
  • Insurances for business owners and their families

PLEASE CONTACT US FOR MORE INFORMATION ABOUT BANKING & FINANCIAL SERVICES IN DUBAI, UAE

Tax residencies & Immigration services

  • Meeting with Novasigma before applying Dubai residency
  • Assistance in applying a tax residency from Dubai
  • Personal bank account in Dubai

PLEASE CONTACT US TO SCHEDULE A MEETING WITH THE NOVASIGMA CONSULTANT

 


News and Business Opportunities in UAE

  • WHAT SHOULD YOU CONSIDER WHEN ESTABLISHING A COMPANY IN DUBAI
  • High Net Worth Individuals (HNW) immigration soars 16% in 2017
  • UAE introduced VAT - What does it mean for your business in Dubai?
  • Free-trade zones in dubai
    Free-Trade Zones in Dubai

 


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