Shocking Truth: Dubai's Luxury Ghost Towers & Looming Bankruptcy!

[BarleyMalt]

Well firstly they have no experience in tax, don't really want it, however its been foisted on them by the central banks (also EU) and other interfering busybodies who absolutely hate the fact that UAE has this ZERO TAX regime - it doesn't fit well with the strategies of all the Ali Babas.
It has also been complicated by all the FZ areas with different rules as they are individula Emirates vying for business. Apart from Dubai with its Jebal Ali and JLT FZ areas, there is also Sharjah, Ajman, and Ras Al Khaimah with its Free Zones and all had to be brought in line.

Secondly with regard to comments about if you have problems, yes its true, but more than 80% of us are foreign expats and do you think right now your rights are any better in the UK, Australia, USA, Canada etc all of them eroding free speech day by day, and also your right to express disagreement with elected (corrupt) politicians and their decisions/policies etc etc
Here we know our place, so get on with life and don't comment on Govt/Religion .. also don't be naughty and remember this is a Muslim country. i.e. Have respect and show it to the the majority of the population, who are indeed Muslim.
(Yes, I do notice the moron newcomers (M+F) wandering around Shopping Malls dressed in tight sports gear with all their body tattoos on show).

I have no idea about how their government work. But I think that given their incompetence, the most efficient and cost-effective way for them would have been to call Deloitte Intl., write them a decent check to figure out everything in 2 months, and call it done. Instead, they were like headless chickens running around for a year.

Regarding the rest, Shariah law is one thing, living in a dictatorship with 0 rights is something else. You have a beef (or just a car accident) with a local, you can to prison, no lawyer, 0 rights.

Or could get 4 years of prison because you stepped on a microparticle of cannabis. Or because of stupid policemen that think that your melatonin tablets are crack.
http://news.bbc.co.uk/2/hi/uk_news/7234786.stm
Or have a nervous breakdown and be murdered by the police in prison
https://www.dailymail.co.uk/news/ar...died-beaten-starved-Dubai-police-station.html
Or be jailed for life because the ruling family wanted to steal your prime real estate.
Or be jailed for life because you owe 1000$
https://archive.is/fohFK
All of those cases would not happen in the Western world. And even if you don't agree with the ruling power, usually you don't go to prison (UK showed recently that it wants to be like the UAE though).

So, yeah, I mean for spineless zoomers and Russian IT freelancers with shaven buttholes and whose reference is Putin's Russia, it may feel totally fine, but I wouldn't say that it's such a great and free place.

 

[jafo]

Russian IT freelancers with shaven buttholes

Seems like you’ve done a hairy deep dive into very personal and dark-hole research.
Should we be concerned about your field of expertise?

 

[BarleyMalt]

Seems like you’ve done a hairy deep dive into very personal and dark-hole research.
Should we be concerned about your field of expertise?

I actually know a beautician who worked in Dubai and told me that she used to perform very often such treatment on various demographics, including the one mentioned in the post!

 

[LFGC]

As long as the UAE can maintain their generous tax policies, they will have some appeal. As the other western countries get more and more indebted, with growing liabilities linked mainly to aging population, the already high fiscal pressure will only increase. Skilled talent, who will bear most of the burden, is already leaving those places (as we see in this forum), and will end up in fiscal havens. The global economy needs a place like the UAE, with ultra-low tax, good connectivity, safe environment and flexible banking.

There is a compelling case for other countries to emulate what the UAE did, but they already have a first-mover advantage and an installed position in the global mind share. You have to realize that every sub-30 years old making six figs in Europe knows only one fiscal haven - Dubai/UAE. We are dinosaurs discussing the merits and subtle nuances of various destinations. Zoomers just go to Dubai.

Saudi Arabia wants to replicate this with Neom, but is currently on the path of failure as it dreamt too big. I think that a city-state in Asia, like Hong Kong back in the days, could be a very serious competitor. Especially if they avoid UAE's idiosyncrasies (extreme weather, empty country, shariah law, slow bureaucracy) and try hard to be global-minded.

The reality is that almost all global tech is still centered in the US, UK, and China, not the UAE, or any other similar centers. Little skilled talent is actually leaving. UAE is still not even on the map in terms of global tech. If anything it is mostly influencers, OnlyFans, Russians that are plagued by sanctions in their home countries and mostly amateur entrepreneurs more so than any mega cap tech founders, engineers, and so on.

As an example, NYC alone has more VC funded digital asset companies than UAE does in total. London is not far behind and has some of the largest and most well known companies in the digital asset space. The gap widens even further when other industries are mentioned such as AI, semiconductors, and more all of which the US leads in by miles and miles. Top talent world wide is still immigrating to the US for nothing other than dollars, nobody cares about the faux freedom and democracy in the US. .

Simply put, talent, and capital do not care about progressive tax policies. It doesn't matter, founders, partners in funds, and so on pay minimal taxes even in the highest tax jurisdictions. On the amounts they're earning investing outweighs any tax burdens and access to capital afford such vast wealth that whatever taxes are paid is a small price to pay for the ability to earn such wealth in the first place. Furthermore, employees are compensated with stock too. Not to mention, the UAE cannot possibly offer the same levels of capital the US, UK, and China still can given the fact the USD and RMB and GBP to a lesser degree are prominent trade and reserve currencies.

 

[GPT]

The reality is that almost all global tech is still centered in the US, UK, and China, not the UAE, or any other similar centers. Little skilled talent is actually leaving. UAE is still not even on the map in terms of global tech. If anything it is mostly influencers, OnlyFans, Russians that are plagued by sanctions in their home countries and mostly amateur entrepreneurs more so than any mega cap tech founders, engineers, and so on.

As an example, NYC alone has more VC funded digital asset companies than UAE does in total. London is not far behind and has some of the largest and most well known companies in the digital asset space. The gap widens even further when other industries are mentioned such as AI, semiconductors, and more all of which the US leads in by miles and miles. Top talent world wide is still immigrating to the US for nothing other than dollars, nobody cares about the faux freedom and democracy in the US. .

Simply put, talent, and capital do not care about progressive tax policies. It doesn't matter, founders, partners in funds, and so on pay minimal taxes even in the highest tax jurisdictions. On the amounts they're earning investing outweighs any tax burdens and access to capital afford such vast wealth that whatever taxes are paid is a small price to pay for the ability to earn such wealth in the first place. Furthermore, employees are compensated with stock too. Not to mention, the UAE cannot possibly offer the same levels of capital the US, UK, and China still can given the fact the USD and RMB and GBP to a lesser degree are prominent trade and reserve currencies.

Even though I agree with you on the above, it is also very clear that the U.S. and GB are not the dominant financial powerhouses anymore.

Yes the USD is the global reserve currency for the moment. If you follow however what is happening on the global economical field then it’s becoming clear that the USD as the reserve currency is under pressure.

Eventhough most of the VC funding takes place in the US and USD, it is not necessarily tied to the USD.

Tax wise, indeed, no one gives a f**k once the Maslow needs are satisfied and there is still disposable income left.

Tax optimization, planning etc are concepts that normally start for most corporates and people once they’ve experienced double taxation, a run in with the law because of conflict of law principles or one of the many other triggers.

For large corporates it’s also not a goal in itself (although it sometimes looks like it), in many cases it starts with looking into options because of international expansion.

Much of the VC funds then indeed go offshore. Many US corporates, when going international, used in the past for that matter the „Double Dutch Irish Sandwich“ because when you do expand, everyone prefers to find the easiest and cheapest way.

So, yes I agree with you in the sense of VC funding, and the moment such a backed company goes international then taxes become a thing. All you need to do is look at Facebook Starbucks Subway Apple Microsoft and dozens others in tech, finance, F&B, entertainment, sports, real estate to name a few.

Last but not least, VC providers want a good return as well. Good returns are quicker achieved with proper tax planning. What you don’t have to pay in taxes etc. so the company may look US on the outside. Are they US on the inside? In other words, do you know where their HQ is for fiscal purposes?

 

[jafo]

once the Maslow needs are satisfied

#Bingoooooooooooo!!! 100% this!
In the early 1980s, I knew already about "tax optimization" because the European colony I was born on was a massive tax haven. Still, I was so broke and hungry as a teenager that the USA was the place to be for computer, software, and electrical engineering. I didn't give AF about taxes because I had no taxable income anyway. To be frank, I had no income.

NGL, I was a net negative at that moment. The college took a significant risk with me with that academic scholarship.

 

[LFGC]

Corporate tax planning versus individual are wholly different. A small business owner in the US can easily open a foreign subsidiary and keep profits off shore with a very simple setup that costs almost nothing to maintain. Without the necessity of renouncing citizenship, acquiring residency, or alternative citizenship. Corporations and investment funds have been avoiding or optimizing taxes forever and that won't change. There are and endless list of structures from feeder funds for hedge funds in the Cayman Islands to various IP schemes using Ireland, Netherlands, even most recently Poland. However, as mentioned, the currently glorified jurisdictions like UAE are not taking top talent away from traditional jurisdictions like US, UK, CN, despite all the economical, political, and other quality of life issues in these countries. For those with existing wealth that is a different story, many traditional families, those that exited, and so on that are living own passive income are far more sensitive to choosing a tax optimized domicile or structure.

 

[manukahoney]

glorified jurisdictions like UAE are not taking top talent away from traditional jurisdictions like US, UK, CN, despite all the economical, political, and other quality of life issues in these countries. For those with existing wealth that is a different story, many traditional families, those that exited, and so on that are living own passive income are far more sensitive to choosing a tax optimized domicile or structure.

This.
You don't move to a tax heaven to get rich. You move there to protect and grow your wealth. Many fail to understand the difference and forget that 100% of 0 is still 0.

 

[LFGC]

This.
You don't move to a tax heaven to get rich. You move there to protect and grow your wealth. Many fail to understand the difference and forget that 100% of 0 is still 0.

Exactly, a recent trend has been founders, general partners, or similar redomiciling, while of course the rest of the employees remain in a financial or tech center with high taxes. In the US, which is much different than the rest of the world, the movement from California and New York, has been a colossal disaster with many fleeing back. The cost of living due to a variety of factors such as real estate bubble in Florida and home owners insurance costs have created a situation where those that have moved actually make less now than they did paying high taxes in NY and CA. Their employer also paid them less in FL and TX due to the lack of state income tax, so they lost a lot more than expected given the cost of living.

 

[GPT]

Corporate tax planning versus individual are wholly different. A small business owner in the US can easily open a foreign subsidiary and keep profits off shore with a very simple setup that costs almost nothing to maintain. Without the necessity of renouncing citizenship, acquiring residency, or alternative citizenship. Corporations and investment funds have been avoiding or optimizing taxes forever and that won't change. There are and endless list of structures from feeder funds for hedge funds in the Cayman Islands to various IP schemes using Ireland, Netherlands, even most recently Poland. However, as mentioned, the currently glorified jurisdictions like UAE are not taking top talent away from traditional jurisdictions like US, UK, CN, despite all the economical, political, and other quality of life issues in these countries. For those with existing wealth that is a different story, many traditional families, those that exited, and so on that are living own passive income are far more sensitive to choosing a tax optimized domicile or structure.

Partly yes. Partly no.

The days of just moving offshore as a small entrepreneur and not moving yourself these days means being treated transparent.

Result is that you still will be taxed and then the offshore setup is just an expensive exercise. Sometimes it actually can be useful regardless of the expenses when it’s not about tax planning but about asset protection.

Gone are the days to just open an offshore and shift money from a to b to save tax. Ofcourse it works on the surface until tax authorities look into it. I hope you have a good accountant and lawyer at that point in time. (The above applies to all first world countries nowadays).

 

[LFGC]

Partly yes. Partly no.

The days of just moving offshore as a small entrepreneur and not moving yourself these days means being treated transparent.

Result is that you still will be taxed and then the offshore setup is just an expensive exercise. Sometimes it actually can be useful regardless of the expenses when it’s not about tax planning but about asset protection.

Gone are the days to just open an offshore and shift money from a to b to save tax. Ofcourse it works on the surface until tax authorities look into it. I hope you have a good accountant and lawyer at that point in time. (The above applies to all first world countries nowadays).

That woefully incorrect. You're confusing two different concepts. Opening an offshore company and opening a corporate bank account that reports back to your home country via CRS, in the case of Americans FATCA, to avoid taxes is not what I described. Anyone from any country can open a foreign subsidiary of a domestic corporation and shield income from taxes via licensing of IP in a low tax jurisdiction as an example. This money cannot be repatriated, but that is fine as it is most often invested, reinvested, or repatriated during tax holidays. Such structures are fully complaint, not expensive and are popular even for Americans with SMEs. There is no "tax authority to look into it". It is completely transparent. Furthermore, depending on business type, one may not even need to go through any such difficulty. As those with real estate depreciation, unrealized gains, or similar can entirely legally avoid taxes through borrowing and offsetting income with depreciation.

 

[GPT]

That woefully incorrect. You're confusing two different concepts. Opening an offshore company and opening a corporate bank account that reports back to your home country via CRS, in the case of Americans FATCA, to avoid taxes is not what I described. Anyone from any country can open a foreign subsidiary of a domestic corporation and shield income from taxes via licensing of IP in a low tax jurisdiction as an example. This money cannot be repatriated, but that is fine as it is most often invested, reinvested, or repatriated during tax holidays. Such structures are fully complaint, not expensive and are popular even for Americans with SMEs. There is no "tax authority to look into it". It is completely transparent. Furthermore, depending on business type, one may not even need to go through any such difficulty. As those with real estate depreciation, unrealized gains, or similar can entirely legally avoid taxes through borrowing and offsetting income with depreciation.

In theory you are correct. Practically however. I’m sorry, those days are gone.

You forget a very important substance and presence. Those two container words are enforced everywhere. Effectively the smalltime entrepreneur doesn’t have enough turnover to justify the cost of being compliant.

I’m not talking about a bank account, nor about opening the offshore and use IP etc. I’m talking about any offshore nowadays where presence and substance is needed.

Only old ones (pre 2020) currently still ok. New ones, forget it. Even Dubai (commercial real estate is booming currently because of it) requires physical presence when people are employed. Yes shared office facilities work. But hey, those are also not for free.

For the larger medium sized companies it still can make sense to go offshore. In many cases it’s more worthwhile to look at domestic solutions. Especially if you only do it to save some taxes.

 

[LFGC]

Small time entrepreneurs never ever had any ability to avoid taxes, they still do not, and will never. Short of maybe a few uncompliant ones, but that carries additional restrictions such as being able to invest that money as it then becomes visible. So in the end these evaders pay with inflation and lack of investment upside. You need a business with a turn over of at least $1-2M per year to consider any sort of tax optimization strategies. As for your post, not true, the substance test is irrelevant for example for US companies. The GILTI (Global Intangible Low-Taxed Income (GILTI): How Calculation Works) tax on foreign owned subsidiaries of US companies deemed controlled foreign companies is 10-13% which is still VERY low and allows for the what I described in my previous post.

There is no need to have any sort of substance, substance defined as nonsensical offices, nominee directors, all of which are in almost all cases solely for the purpose of establishing substance and do not actually have any sort of business function. It is similar in almost other jurisdictions.

It is important to note, tax authorities push a lot of fear mongering to the public. The US IRS is grossly underfunded, similarly most tax agencies such as HMRC and many others are as well. Audits are VERY low, single digit percentages of audits for SMEs usually, not to mention, audits mostly focus on large (500+ employees) multinationals with deep pockets for settlements. Tax authorities do not travel to foreign countries to see if an address is a dedicated office or shared office. Tax authorities use predictable and tried methods of matching reported transactions from vendors to reported revenues on returns.

There are no domestic solutions, the solution is to pay your taxes and work towards building a bigger business and avoiding taxes or having a one off liquidity event where in which case you become wealthy enough to pay 20% and invest the rest and live off of the passive income. Moving to different states or countries may be counterproductive; deal flow, talent, general proximity to your business and its interests should most often be considered.

 

[GPT]

Small time entrepreneurs never ever had any ability to avoid taxes, they still do not, and will never. Short of maybe a few uncompliant ones, but that carries additional restrictions such as being able to invest that money as it then becomes visible. So in the end these evaders pay with inflation and lack of investment upside. You need a business with a turn over of at least $1-2M per year to consider any sort of tax optimization strategies. As for your post, not true, the substance test is irrelevant for example for US companies. The GILTI (Global Intangible Low-Taxed Income (GILTI): How Calculation Works) tax on foreign owned subsidiaries of US companies deemed controlled foreign companies is 10-13% which is still VERY low and allows for the what I described in my previous post.

There is no need to have any sort of substance, substance defined as nonsensical offices, nominee directors, all of which are in almost all cases solely for the purpose of establishing substance and do not actually have any sort of business function. It is similar in almost other jurisdictions.

It is important to note, tax authorities push a lot of fear mongering to the public. The US IRS is grossly underfunded, similarly most tax agencies such as HMRC and many others are as well. Audits are VERY low, single digit percentages of audits for SMEs usually, not to mention, audits mostly focus on large (500+ employees) multinationals with deep pockets for settlements. Tax authorities do not travel to foreign countries to see if an address is a dedicated office or shared office. Tax authorities use predictable and tried methods of matching reported transactions from vendors to reported revenues on returns.

There are no domestic solutions, the solution is to pay your taxes and work towards building a bigger business and avoiding taxes or having a one off liquidity event where in which case you become wealthy enough to pay 20% and invest the rest and live off of the passive income. Moving to different states or countries may be counterproductive; deal flow, talent, general proximity to your business and its interests should most often be considered.

Couple of things.

SME’s is something you mention and I reply to.

Substance presence isn’t dependent on the onshore tax authorities only. The offshores nowadays can even require it. Dubai being an example. And that means extra costs for that M in the SME. Most M’s are not interested in frontloading. The want ROI on every dollar spent.

Domestic solutions are very present. Speak to any fiscal specialist and you will find out. Also in the USA, UK and many other if not all first world countries. Very specifically for the 1-3M profit you have lots of options. From 3M and upwards going offshore for tax reasons is definitely a good option.

If you go offshore for asset protection, different context. Then even 1 dollar in assets can be worth the cost.

The common part of what you say was definitely factual. You do miss what happened in the last couple of years / since 2020-2021.

Tax authorities being understaffed etc. It literally doesn’t matter. All they need to do is open the case and they can with the tricks they have up their sleeves extend it for easily a decade if not more before reaching a conclusion.

Things have changed and continue to change daily. Never underestimate tax authorities. That will end up costing dearly. The Wild West days are long gone.

I’m leaving it at this. I have no interest in yes / no games.

 

[clemens]

Things have changed and continue to change daily. Never underestimate tax authorities. That will end up costing dearly. The Wild West days are long gone.

yeah you can find a few good threads about OCT guys that did, they regret I guarantee you.