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Does UAE classify foreign companies as local Taxable residents?

#41
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Don said:
It depends, it could be

in UAE CIT is up to 9%
In Qatar, CIT is generally 10%
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A UAE company pays UAE corporate tax by default. If additionally Qatar deems the company as being tax resident in Qatar then there could be tax in both countries. In this case a double tax treaty between Qatar and the UAE (or some GCC treaty) could determine that tax is only payable in one of the two countries.

And if Qatar doesnt deem the company in question to be tax resident in Qatar, then it only pays tax in the UAE.

But in no case will there be no corporate tax.


A more interesting case is a Dutch citizen with an Emirates id living in the UAE at least 9 months per year, and owning a single member US LLC. This US LLC has a three person board with two board members who are residents in Bahrain, and the dutch guy. All board meetings take place in Bahrain and board meeting minutes are duly taken.
The US LLC has no office in the UAE, is managed from a laptop and sells services online to a small number of clients all over the world with very long contracts.

Will the US LLC have effective management and control in the UAE and pay UAE corp tax?
 
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#42
Cloudbanck said:
A UAE company pays UAE corporate tax by default. If additionally Qatar deems the company as being tax resident in Qatar then there could be tax in both countries. In this case a double tax treaty between Qatar and the UAE (or some GCC treaty) could determine that tax is only payable in one of the two countries.

And if Qatar doesnt deem the company in question to be tax resident in Qatar, then it only pays tax in the UAE.

But in no case will there be no corporate tax.
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Certain activities are exempt from tax in the UAE. Qatar has territorial tax, so foreign-source income should not be taxed.
Cloudbanck said:
A more interesting case is a Dutch citizen with an Emirates id living in the UAE at least 9 months per year, and owning a single member US LLC. This US LLC has a three person board with two board members who are residents in Bahrain, and the dutch guy. All board meetings take place in Bahrain and board meeting minutes are duly taken.
The US LLC has no office in the UAE, is managed from a laptop and sells services online to a small number of clients all over the world with very long contracts.

Will the US LLC have effective management and control in the UAE and pay UAE corp tax?
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If the board oversees global operations and makes strategic decisions in the UAE, it could be liable for taxes there.
If you keep, e.g., a local warehouse in UAE, it will most often be just a PE (provided management is elsewhere).
 
#43
Don said:
makes strategic decisions in the UAE
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What if one is thinking hard on a decision in UAE, but then goes to Bahrain and makes it finally there? From the perspective of tax authorities, what is considered the trigger for "committing to a strategic decision" and how could they investigate it?
 
#44
Chroft said:
What if one is thinking hard on a decision in UAE, but then goes to Bahrain and makes it finally there? From the perspective of tax authorities, what is considered the trigger for "committing to a strategic decision" and how could they investigate it?
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I think they will just look at the paperwork of where the decisions took place (e.g. minutes of board meetings) and where the decision makers are residents.
 
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#45
Cloudbanck said:
I think they will just look at the paperwork of where the decisions took place (e.g. minutes of board meetings) and where the decision makers are residents.
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Let us go further and consider a scenario where the minutes were signed in Bahrain. The formal decision maker is a resident of Singapore and has the position of general manager, as appointed by the director. The director is a UAE resident, but at the same time he has limited the scope of his responsibility by an internal corporate resolution and excluded for himself the right to make strategic decisions and participate in the control of the company's activities - transferring these functions to the general manager. What assessment can the UAE tax authorities make in this case?
 
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#47
jafo said:
You ask every employee in the UAE (n) this separately, and you will get (n²) answers. Why? They do NOT face any punishment for their mistakes.
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It is even worse. I have asked much more simple questions to local people in the UAE who consider themselves lawyers and received different answers, sometimes even contradictory ones.
 
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#50
JackAlabama said:
the case is clear on this.
Your company is going to be treated as Uae company hence making it, which I quote you "to go through all those audits and BS with UAE tax department".

Youd need manager and employees offshore and you just getting dividend checks to be in the clear.
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You mean it is not worth it to use your UAE company for doing business online diretcly? to much work and hassle?
 
#51
dany said:
You mean it is not worth it to use your UAE company for doing business online diretcly? to much work and hassle?
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No, i dont mean that.
it can still be totally worthwhile if you want to stay in uae for long. Work on your business expenses and you depending on your overall income profile it may still be worth it.
 
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#52
okay, what I mean if you don't live in the UAE and don't have plans to live there but you only want the company to be there say for privacy reasons.
 
#53
dany said:
okay, what I mean if you don't live in the UAE and don't have plans to live there but you only want the company to be there say for privacy reasons.
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If you do not plan to live in UAE nor make any business with locals there is no reason to have a company there nowadays, since you will pay the 9% CIT and on top have to keep accounting and also be subject to audits.

If you want privacy you can opt in for a US LLC in Wyoming (or New Mexico) for example and nominate a manager resident in a tax free or territorial tax country to manage it, privacy and tax wise it would be better.
 
#54
BerlusconiSchmidt said:
I managed to set up a company in a reputable jurisdiction that will not tax any of my company income thanks to an approved Tax exemption.
I am NOW looking to move into the UAE, my wife will have a job there and there is no income tax along with other benefits, we are originally from NZ.

My main question is: can I keep the same offshore company structure I am using, to run my online business and pay myself a salary while I live in the UAE?


I do not want to set up a UAE company for the following reasons:
- I am already paying and have paid a lot of money to set up my offshore company structure
- Payment gateway options are way less available and more restricted, I know this since I have been in the ecom business for 10 years
- I do not want to go through all those audits and BS with UAE tax department
- I do not want to pay 9% corporate tax, I am paying 0% corporate tax now thanks to the exemption I got, I wouldn't move to Dubai to pay more tax, sounds insane.

Can I live in the UAE 9 months a year, and pay myself from the offshore company dividends and a salary tax free without the UAE considering
my offshore company a tax resident of the UAE and forcing me to pay the 9% corporate tax?


Company turnover: $3M a year
100% ecommerce and online services
100% of clients are outside of the UAE
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If possible best would be to get same company that sponsors your wife visa to sponsor you too for which you could possibly pay them a fee or find a different company that can do same. And then don't take salary from company u have 0 tax just when you need money take a loan from your company also called as Drawings. So u run other company as it is and live in UAE using the visa.

So tell me what way did u manage to get the 0% tax entity? Which country and do they have no reporting requirements like annual return, audits etc?
 
#55
#57
TheCryptoAnt said:
In paper yes, foreign corps will be taxed at 9% because of CFC.
In practice (so far), nobody is asking questions.
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I think only PE rules as there are no CFC rules in UAE.
https://www.pwc.com/m1/en/tax/documents/doing-business-guides/dbiu-new.pdf said:
There are no CFC rules in the UAE.
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But for the PE, we recently discussed that there isn't really a PE concept in the GCC as it was widely tax-free and the law is fairly new:
J

Post in thread 'My New 0% tax Setup in Qatar'

andrew28fl said:
If the US LLC has a PE in Qatar, wouldn't it be treated as a Qatari company, meaning 10% tax? Or do you use a Qatar Freezone company structure? OP, please elaborate.
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I don't think GCC countries really have a concept of "PE". The UAE is probably the first to really implement this.
But then again, would you really want to be the one to find out?
If Qatar freezone companies are 0%, why not set up one there and then use that to bill your US LLC? Seems like a safer approach to me.
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#58
daniels27 said:
I think only PE rules as there are no CFC rules in UAE.
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word

Overall what Im trying to say is that 'this is Dubai habibi, no taxes here, no questions neither (at least for now)
 
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