Our valued sponsor

Unique Payment

RAK ICC withholding tax on US investments

#21
Register now
You must login or register to view hidden content on this page.
JustAnotherNomad said:
@TheCryptoAnt probably has some input here.
Click to expand...

word, I did in the first post but seems like the conversation deviated a bit.

FZSAAS said:
Have you found anything similar to a RAK holdco or similar?
Click to expand...

Pls answer the following questions:

- Where are you physically? (even if only in paper; tell me what you are gonna tell IBKR)
- Where is the property?
- Where are the stocks?
- Any other plans you have for the holding?
 
#24
Don said:
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.

Yes, in order to benefit from treaty rates you normally need a tax residence certificate.
Click to expand...
Would Thailand offer a solution with it's non remittance rules?
 
#25
FZSAAS said:
Would Thailand offer a solution with it's non remittance rules?
Click to expand...
I need to correct myself here. RAK ICC IBC is still by default subject to UAE tax, might be at 0% though.
Dont take what you find here as legal advice.
And things in UAE keep changing all the time. For example in October treatment of unincorporated entities changed.
 
#27
Don said:
I need to correct myself here. RAK ICC IBC is still by default subject to UAE tax, might be at 0% though.
Dont take what you find here as legal advice.
And things in UAE keep changing all the time. For example in October treatment of unincorporated entities changed.
Click to expand...
Thanks mate, verifying with multiple sources, here being one.

Number of entities involved. At the moment, rak icc is still 0% CT.
 
#28
JustAnotherNomad said:
What changed?
Click to expand...
Under Article 16(7) of the UAE Corporate Tax Law, a foreign partnership must meet specific conditions to qualify for tax transparency relief:
• Condition (a): ‘The Foreign Partnership is not subject to tax under the laws of the foreign jurisdiction’.
• Condition (b): ‘Each partner in the Foreign Partnership is individually subject to tax with regards to their distributive share of any income of the Foreign Partnership as and when the income is received by or accrued to the Foreign Partnership’.
Earlier the Minister ruled that ‘each partner in the Foreign Partnership will be considered to be subject to tax if they would be subject to tax on their distributive share of any income in the Foreign Partnership in the jurisdiction in which the partner is a tax resident’.

This (literal) interpretation of Condition (b) places an additional burden in situations where partnerships consist of multiple partners, some of whom may:
• Not be “individually subject to tax” on their distributive share of income, and/or
• Be taxed in their jurisdiction of residence only when the partnership distributes income, rather than when the income is received or accrued by the partnership.
If even a single partner is not subject to tax on the partnership's income within the specified timeframe in their jurisdiction of residence, the entire partnership is rendered opaque. While this requirement is undoubtedly burdensome, it is mandated by law and must be strictly observed.
 
#31
Clank 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...
Based on FTA regulation provided to RAKICC, offshore companies are UAE tax resident as well as mainland and Freezone companies.
Even RAKICC offshore companies has to register for CT and file a tax return.
UAE does not have a DTT with USA.
Therefoee a full withholding tax is applicable.

This is not a good setup.

If you form a single member LLC and f the most of the LLC income is pasive, a withholding tax has to be applied to income passed through LLC to a single owner.

Forming a US Corp does not make sense as well.
It will be taxt at US CT rate. And to dividends will be applicable a full rate withholding tax.

It is not important where a foreign company is incorporated nor where UBO resides. The only important fact is a tax residency of the enrity.

So if you form RAKICC company, it will be at least tax resident in the UAE. It can be a tax resident in other country. Based on CFC rules.
 
  • Like
Reactions: Don
#32
In this case it's selling an app, stocks would only be later.

Tax resident in Thailand. No UAE funds remitted. Territorial tax system at present.

In my case is it better to remit rest of the world sales and a commission from the llc to fzco or to the holdco in rak?

Holdco in rak could charge an ip licensing fee to us llc before remission.

US LLC currently a c-corp with a ubo as a person. Can remit profits to person after 21% paid in US on US income only.
 
#33
FZSAAS said:
In this case it's selling an app, stocks would only be later.

Tax resident in Thailand. No UAE funds remitted. Territorial tax system at present.

In my case is it better to remit rest of the world sales and a commission from the llc to fzco or to the holdco in rak?

Holdco in rak could charge an ip licensing fee to us llc before remission.

US LLC currently a c-corp with a ubo as a person. Can remit profits to person after 21% paid in US on US income only.
Click to expand...

I think you are complicating this set up for no reason. A disregarded LLC will do just fine for you.
Theres no need for a holding here imo, nor to incorporate a C-corp.
 
#38
  • Like
Reactions: daniels27
#39
TheCryptoAnt said:
idk if Delaware has state taxes? most people use Wyoming for this reason.
could work too idk, Google a bit whats the best state for you but overall the solution is the same; a simple disregarded US LLC will cover your bases.
Click to expand...
Yes, it does. But if it is disregarded, you won't have to pay. Honestly, Delaware does not make much sense unless you are looking for investors. Wyoming is much cheaper in most cases with much less hassle. Just close the Delaware and open a WY LLC.
 
  • Like
Reactions: ilke and TheCryptoAnt
#40
So a WY LLC can be owned by rak icc holdco and federal tax rate on profits of US income only is at 21%
 
Register now
You must login or register to view hidden content on this page.
You must log in or register to reply here.
The Kingdom Bank

Forum Announcement

Latest Threads

The Kingdom Bank
Top Bottom
Back