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?
 
Reactions: Chroft
#42
Certain activities are exempt from tax in the UAE. Qatar has territorial tax, so foreign-source income should not be taxed.
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).
 
#44
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.
 
Reactions: Chroft and Don
#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.
 
Reactions: jafo
#50
You mean it is not worth it to use your UAE company for doing business online diretcly? to much work and hassle?
 
#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
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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