The United Arab Emirates is one of the most popular countries among entrepreneurs and individuals. Here, it seems, there is everything for a beautiful life and to continue working. But first you need to get acquainted with the benefits of the state taxation system, which is somewhat different from the rest. The following points can be used as an example:

  • no income tax rate in UAE on profits of companies in the UAE;
  • the simple procedure of registration of enterprises;
  • special conditions for hiring local employees.

The adopted system of paying taxes attracted investors and entrepreneurs, but at the moment the legislation has become different. The fixed rate has changed, but the interest in the residence Visa for Dubai has not disappeared. To explain the situation and to learn more about the innovations will help an expert of Immigrant Invest Zlata Erlach.

The tax system for residents of the UAE

Official citizenship presupposes the fulfillment of the conditions of the law, which also relate to the taxation system. Individuals, legal entities and corporations are required to pay fees according to the applicable directives. The list of taxes includes:

  • income tax;
  • individual;
  • corporate tax in UAE;
  • tourism;
  • inheritance;
  • transfer of property.

The list is not complete, but the task of foreign entrepreneurs is to study the peculiarities of the advantages of corporate tax for non-residents of the state or people with a residence permit.

Corporate tax: what it is

Corporate tax is present in the legislative system in one form or another. In some cases, company owners are exempt from paying it. It is impossible to completely abandon this type of taxation, since the funds are directed to the development of the state and the financing of important industries. 

The UAE government has decided to review its laws and make some changes to the current system. The current system of direct tax allows:

  • Increase the flow of investment, while strengthening its position on the world stage;
  • accelerate the development of important sectors of the economy;
  • to implement changes that are aimed at achieving the goals at an accelerated pace.

The new system of payment of taxes in UAE for business comes into force gradually, as such innovations require costs from the government. According to the decree, the first companies that are obliged to pay ST begin to follow the changed rules in the new fiscal year.

The start date depends on several factors: specifics of services provided by companies, specifics of destination, export, import and many others. For this reason, the system will become relevant for some companies from June 1, for others from July 1, 2023. Thus, taxes will be levied on the annual revenue, which will be received during the new fiscal year.

Who gets on the list of businesses

The main challenge for the UAE is to maintain transparency in the tax system and the payment of duties. For this purpose, the government allocates certain resources that will allow the process to be controlled in the best possible way in accordance with international policies.

The corporate tax will be imposed on all businesses that are engaged in business activities. The exception to the above rules will be organizations that are engaged in natural resource extraction. The previous corporate tax rules will apply to such companies.

Those companies, which will be affected by the new system, should take into account that the amount of UAE personal income tax affects the profitability of the organization:

  • up to 105 thousand dollars (375 thousand AED) the flat rate will be 0%;
  • income above this amount will be taxed at a tax rate in UAE at 9%.

In addition, the system will continue to be modified and supplemented by new amendments. At the moment, the government intends to change taxation for small businesses and organizations, and in the future will move to large international companies with large revenues.

Taxation for foreign companies

The issue of double taxation is acute, so countries make agreements to avoid paying UAE income tax twice. Companies whose owners are residents or citizens of 137 countries are on the list of those who are exempt from paying taxes in the UAE, but are required to make payments under the current legislation of the country of residence (registration).

All types of taxes in the United Arab Emirates

Foreigners are taxed under a separate system, but there are a number of situations where the UAE tax system applies to them as well. Duty is not charged in cases where non-resident receive pension payments. Capital gains tax UAE, which was not received from the sale of the company, is also not taxed.

Payment according to the current taxation system is made in the following cases:

  1. Transfer of property. The rate depends on the UAE region. Both parties who enter into the transaction participate in the payment of the commission. Often the buyer is required to pay transfer fees.
  2. Real estate rentals. The amount of the fee varies from 2 to 10%. UAE tax depends on the region of the country, as well as the type of property (residential, commercial). In some cases, the citizens of the Emirates do not pay tax, and emigrants in the same situation pay it at a rate of 3%.
  3. Value Added Tax. VAT is paid at the rate of 5%. Businesses must undergo a mandatory registration procedure in the event that the income is more than 105 thousand dollars. If the profit is less than the established minimum, it is voluntary to be added to the register.

Foreigners can not do without the help of Arab law firms, consultants, accountants and other representatives. This is due to the fact that efforts must be made to avoid double taxation on both sides. It is difficult to understand a system that is confusing even in one’s own country, what to say about someone else’s?

Recommendations for foreign companies in the UAE

Transferring your organization to another country is always a complicated process. The procedure consists of many stages, starting with the registration of enterprises. The task of entrepreneurs who have decided to take this step is to prepare for future changes and UAE tax as much as possible.

First of all, it is recommended to make a plan of action. This will allow you to use your resources correctly and avoid additional costs. Planning includes the distribution of tasks and partial outsourcing of management. This way you can achieve results faster.

You can get answers to your questions and clarify the requirements for foreign companies on your own. It is enough to read the contents of 

Investment programs allow you to get a second citizenship for making an investment. Requirements for foreign investors vary, so it’s worth taking the time to study the conditions and requirements for applicants for a second passport

Official citizenship will allow benefiting from the favorable taxation system, which is designed for citizens of the country. In addition, the investor will have the opportunity to avoid obtaining visa documents to visit other states of the European Union or the Schengen area.

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