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RAK ICC withholding tax on US investments

C

Clank

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Oct 11, 2020
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#1
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Hello,

I’m considering opening an RAK ICC to hold some stocks and property.

I have a question regarding the US withholding tax. Is the tax based on the country of incorporation or the country where the UBO of the company is resident?

RAK ICC companies are specifically created to be offshore without any substance or links to the UAE so they are always tax resident in the country of the UBO.
 
#3
Jbb1 said:
Hello,

I’m considering opening an RAK ICC to hold some stocks and property.

I have a question regarding the US withholding tax. Is the tax based on the country of incorporation or the country where the UBO of the company is resident?

RAK ICC companies are specifically created to be offshore without any substance or links to the UAE so they are always tax resident in the country of the UBO.
Click to expand...
You should register your RAK ICC with the local chambre of commerce in your country of residence and get a tax id number for it as well.
 
#5
Jbb1 said:
Hello,

I’m considering opening an RAK ICC to hold some stocks and property.

I have a question regarding the US withholding tax. Is the tax based on the country of incorporation or the country where the UBO of the company is resident?

RAK ICC companies are specifically created to be offshore without any substance or links to the UAE so they are always tax resident in the country of the UBO.
Click to expand...
With UAE companies, normally, the non-treaty rate of 30% WHT should be applied unless you can get a tax residence certificate for the company, somewhere else.

RAK ICC stands for RAK International Corporate Centre. They provide multiple types of structures.

offshore company is RAK ICC IBC which is not eligible to apply for a Tax Residency Certificate in UAE, or trade in UAE.
Jbb1 said:
Is this a requirement for withholding taxes?
Click to expand...
Yes, in order to benefit from treaty rates you normally need a tax residence certificate.
 
#6
Jbb1 said:
Is this a requirement for withholding taxes?
Click to expand...
Yes, you need to company to be tax resident in the country you want to treaty benefits to apply of course. A pass trough entity might be a better option if that is not what you are looking for.

What is your country of residence if I may ask.
 
#7
Mr Gus said:
Yes, you need to company to be tax resident in the country you want to treaty benefits to apply of course. A pass trough entity might be a better option if that is not what you are looking for.

What is your country of residence if I may ask.
Click to expand...
Thailand, I have also thought about a UK LLP.

The main reason I’m looking for this setup is to avoid estate taxes.
 
#11
Sounds like a lot of hassle just to avoid estate tax. Plus will be harder to open broker accounts.

Maybe move to stocks domiciled else?

For example: instead of owning VT, switch to VWRA - same s**t, but you avoid estate tax and stop paying dividend tax (30%) as well.
 
#13
So, rest of world income is not taxed, it passes through to rak icc holdco and is taxed at 0%.

US income taxed at 21% if c-corp then after that, passes through to UAE at 0%.

In this setup, can 90 or even 95% of the revenue go to UAE or would this raise questions?

The 90/95% would be rest of world income
 
#14
Frankie said:
Sounds like a lot of hassle just to avoid estate tax. Plus will be harder to open broker accounts.

Maybe move to stocks domiciled else?

For example: instead of owning VT, switch to VWRA - same s**t, but you avoid estate tax and stop paying dividend tax (30%) as well.
Click to expand...
Local banks like wio offer a full range of products, as well as ibkr being in UAE. They have an office also in DIFC I think
 
#15
Mr Gus said:
You should register your RAK ICC with the local chambre of commerce in your country of residence and get a tax id number for it as well.
Click to expand...
What if the chamber of commerce is listed in a territorial tax region like Thailand or Malaysia, and no money is remitted

Keeping money in wise for example and using apple pay technically keeps funds offshore, in my understanding. It's only if remitted to a local bank account in your name
 
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#18
FZSAAS said:
Why so? Have you had bad experience there?
Click to expand...

It's just a banana republic. Expect lots of fees that previously were not disclosed. Also "cancellation fees" if you don't want to renew.
People you will be dealing with are mostly completely clueless. No rule of law.
It's just not a professional business environment. And the reputation is bad.
 
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