UAE clarification of Freezone Qualifying Income

[Konstanz]

Sorry but we must not be talking about the same statements.

"No matter if you are doing E-Commerce or Marketing Services - it's a Qualifying Activity and therefore 0% Corporate Tax."

and

"
E-Commerce Qualifying Activity: Manufacturing or Processing of Goods (b)

Marketing Services Qualifying Activity: Any activities that are ancillary that are listed in paragraphs (a) to (l)"

finished by

"We are happy to confirm that 99% of DLS Dubai Clients remain 0% Corporate Tax !"


This is misguiding to say the very least. It's somewhat offensive and almost embarrassing to read.

Yes. It's very unprofessional. But Fred is marketing man , not lawyer.
It's the same with all introducers. No professional lawyer would make such assumptions.
Unless we know more from the government almost all activity in UAE is taxable by 9% cit period.

 

[alessio]

With all my respect,

It seems that @Fred has been helping many individuals successfully set up their businesses in Dubai without encountering any issues.

While Fred may not be a tax expert like consultants from professional firms such as PWC who charge high fees for their services, he offers comprehensive assistance at a fraction of the cost for a very large number which took advantage of it.

Although Fred might have made a statement without being completely certain, it was likely due to the pressure and limited ability to reply and explain the situation accurately.

Nevertheless, Fred acknowledged the need for further research and consultation before providing a more informed response, which demonstrates his commitment to delivering accurate information.

In conclusion, while I am not affiliated with @Fred, I am well acquainted with the UAE and its previous practices, which often involved finding creative solutions to overcome challenges. For instance, opening a business bank account used to be a difficult process for many, but Fred has managed to provide his clients with a more efficient experience compared to those who are still waiting after a year for their FZCO banking services.

 

[Alonzo]

Grandfathered provisions were agreed upon BFEORE they abolished this. Others can still live in many cantons including Zug. With the S24, you can be in Zurich in 30 minutes while traveling in comfort.

Are you telling me that you are exempt from the new law that abolished lump sum tax in Zurich? It's hard to believe.
CH didn't abolish at the federal level so you can still pay the lump sum at federal level but cantonal and communal is at normal rates.

 

[Konstanz]

With all my respect,

It seems that @Fred has been helping many individuals successfully set up their businesses in Dubai without encountering any issues.

While Fred may not be a tax expert like consultants from professional firms such as PWC who charge high fees for their services, he offers comprehensive assistance at a fraction of the cost for a very large number which took advantage of it.

Although Fred might have made a statement without being completely certain, it was likely due to the pressure and limited ability to reply and explain the situation accurately.

Nevertheless, Fred acknowledged the need for further research and consultation before providing a more informed response, which demonstrates his commitment to delivering accurate information.

In conclusion, while I am not affiliated with @Fred, I am well acquainted with the UAE and its previous practices, which often involved finding creative solutions to overcome challenges. For instance, opening a business bank account used to be a difficult process for many, but Fred has managed to provide his clients with a more efficient experience compared to those who are still waiting after a year for their FZCO banking services.

Hello Fred from different account or Fred employee.

 

[jafo]

Are you telling me that you are exempt from the new law that abolished lump sum tax in Zurich? It's hard to believe.
CH didn't abolish at the federal level so you can still pay the lump sum at federal level but cantonal and communal is at normal rates.

This is NOT some banana republic. These are educated and sophisticated people. They don't wake up one day and turn around, scribble some words on paper, screw their long-term customers with bait & switch, and shoot themselves in the foot.

These are savvy business people that recognize an opportunity and seize it.

If you are earning zero from John and John wants to transfer his business to your area and you will earn a few million without doing jack sh1t while not spending a penny on John, are you going to tell John to go pound sand?

 

[alessio]

Guys, it's like you s**t on people once you don't need them anymore !

You are happy to get Fred advises for years and to tag him anytime Dubai is written in this forum, at anytime, without spend one penny to a lawyer - and you can't support when someone make one small mistake.

I am not related to him at all, just saying we all made a big pressure to him in order to get a instant reply. Even biggest tax cabinet made 5 to 6 days to bring on the table final update about their full understanding of the law, with a full team of guys eating/sleeping/dreaming tax.

The reality is Fred's client's are not really impacted globally and it's just an important move from UAE to become a worldwide player with others big business hub.

Definitely the issue up to this is the admins who needs to remove/update his post currently switch ON with wrong informations.

What I suggest is to determine here the final state - and to ask admin to post it to replace it from the one done by Fred

 

[Konstanz]

Guys, it's like you s**t on people once you don't need them anymore !

You are happy to get Fred advises for years and to tag him anytime Dubai is written in this forum, at anytime, without spend one penny to a lawyer - and you can't support when someone make one small mistake.

I am not related to him at all, just saying we all made a big pressure to him in order to get a instant reply. Even biggest tax cabinet made 5 to 6 days to bring on the table final update about their full understanding of the law, with a full team of guys eating/sleeping/dreaming tax.

The reality is Fred's client's are not really impacted globally and it's just an important move from UAE to become a worldwide player with others big business hub.

Definitely the issue up to this is the admins who needs to remove/update his post currently switch ON with wrong informations.

What I suggest is to determine here the final state - and to ask admin to post it to replace it from the one done by Fred

No one blames him of nothing. At least me.
But why to spread misinformation about this CIT?
He told himself he got pressure from his customers. I am not his customer. I just discuss things on forum..

 

[towel]

UAE still one of the best places to get an official non crs account. This is still a big bonus for the people that need it. Once you got your money in that account get creative

 

[Konstanz]

UAE still one of the best places to get an official non crs account. This is still a big bonus for the people that need it. Once you got your money in that account get creative

Yes. Still tax free pass for what you get into your account. Crypto trading etc

 

[Alonzo]

This is NOT some banana republic. These are educated and sophisticated people. They don't wake up one day and turn around, scribble some words on paper, screw their long-term customers with bait & switch, and shoot themselves in the foot.

These are savvy business people that recognize an opportunity and seize it.

If you are earning zero from John and John wants to transfer his business to your area and you will earn a few million without doing jack sh1t while not spending a penny on John, are you going to tell John to go pound sand?

No wonder CH always favors the wealthy lol.

So if I understand it correctly, lump sum taxpayers who settled in ZH before the abolition are exempt from this new law but the newcomers can't benefit from it anymore. Hmmm If that's true then good

 

[Fred]

As I understand people who incorporate in Dubai don't want any accounting, reporting, audits or taxes (even 1%). Because it''s no point. Unless you are Russian and don't have other choice.
I just don't see this work

Well - then you can opt for being handled as a Mainland Company - no need for auditing and 3M AED small business relief - 0% tax till 01.01.2027.

@Au999 mentioned this yesterday here but we have the impression no one really realized it or did understand it:

https://www.offshorecorptalk.com/threads/new-big-dubai-fzco-benefit.41495/
We gonna call this in our new blog article in the upcoming days "Escape-clause"

See here - Ministerial Decision No. 82 of 2023

So what you do then in the decision making process in the first step is "NO" to Qualifying Freezone Person and you are opting to become a Mainland Company with No Audit requirements, 3M AED small business relief till 01.01.2027 an first 100k$ Profit Tax Free.

We gonna call this in our new blog article "Escape-clause".

Whats the 15% marge? Youre considering a 15% margin over the revenue?

Correct - average business has 15% profit margin - for "Small Margin Business" we would recommend the earlier mentioned "worst case tax" and for "High Margin Business" the "Escape-clause".

And how does this work with your sticky where you say all this qualified income thing is jadda jadda and in reality digital marketing is manufacture of goods?

Not at all but as our sticky get's either ignored away, not recognized or frames as "DLS Dubai" can't be neutral - we mention you based on your comments how the reality looks like.

Again our statement is:
We assume that the Excluded Activities is an exhaustive list, and that the activities not mentioned automatically belong to the Qualifying Activities.
This results in a Free Zone Company (FZCO) having a 0% Corporate Tax Rate.

Why?

Because everything else doesn't make any sense if you make yourself familiar with the vision of the UAE leaders.

Do they want to attract companies producing metal goods or do they want Blockchain Startups, AI and everything which is actually coming up?

Do they plan to have Air Taxis or are they planning to have again Public Rides on Camels as an Taxi Replacement?

Just see the Vision 2030:

https://en.wikipedia.org/wiki/Cultural_policy_in_Abu_Dhabi#The_Abu_Dhabi_Vision_2030_Master_Plan
Some of you even mention it themselves:

Feels like they are doing 1970s style thinking, that manufacturing of physical products is what matters.

In reality manufacturing is on steady decrease as % of world GDP, and the whole world is losing manufacturing jobs. The world produces more stuff, but it does so ever more efficiently using less people and more automation.

So again our Blog Article will be structured in 3 points:

1. Our statement and why we see the things we do
2. "Escape-clause"
3. "Worst Case Tax"

For everyone who after this Blog Article still thinks that Dubai FZCO is dead - well then let us know how your life goes in Cayman Islands, Bahamas or Vanuatu and even the Banking Situation would be interesting. Maybe some of you guys would then relocate to Bermuda or Somali - I doubt that some Talabat Rider there delivers you in the night tooth paste or some Pakistani washs your car 4 times a month for 25$ but 0% Tax it's then for sure.

EDIT:
Just posted and literally 10 new comments - @alessio yes that's typical for forums but don't worry most our clients think like you do - it's just unusual that they take the time to fight ghosts in a forum - I do of course as this is part of the business however at some point you gonna call it a day as real life is more important.

@Konstanz if someone checks all your posts he gonna see that you are bashing UAE since the beginning we are around - all good from my side as well - no bad feelings.

But @Konstanz honestly in your earlier post you claim I'm using fake accounts and in the next post you are like "No one blames him of nothing. At least me" - Come On

@bedouin you were earlier in this thread not amused that IFZA didn't sent you any e-mail in regards to CT - just look around - no Freezone did so far - they have a roundtable next week Monday as they have for there own taste too less information to make an Official Statement - no one did - no DMCC, no JAFZA etc.

We can do this as a Private Company in a faster and more straightforward way - especially in a Forum like here.

 

[Konstanz]

For everyone who after this Blog Article still thinks that Dubai FZCO is dead - well then let us know how your life goes in Cayman Islands, Bahamas or Vanuatu and even the Banking Situation would be interesting. Maybe some of you guys would then relocate to Bermuda or Somali - I doubt that some Talabat Rider there delivers you in the night tooth paste or some Pakistani washs your car 4 times a month for 25$ but 0% Tax it's then for sure.

It's very subjective. Dubai is not cheap place if you really want to live European quality life. Overall it would be more expensive
So yes, I doubt Europeans would continue incorporating companies there. Russians yes they will, because they dont have alternatives

 

[jafo]

No wonder CH always favors the wealthy lol.

So if I understand it correctly, lump sum taxpayers who settled in ZH before the abolition are exempt from this new law but the newcomers can't benefit from it anymore. Hmmm If that's true then good

I would say more: What do the newcomers have to offer Zurich or any other canton?
It's on a case-by-case basis, shrouded in secrecy. I have a neighbor in Monaco who recently came to Zurich while still maintaining Monaco as his principal residency. He cut a deal upfront before coming over. He won't comment, but he's in Bahnhofstrasse almost every day at Sprüngli.

 

[Marzio]

All these FZ are totally empty. I have been at couple of them.

Thanks for letting us know your thorough experience with UAE companies.

Now it's clear where you are coming from.

Job positions? This forum is not for job seekers in Dubai who work at hotels. Maybe you are in a wrong forum?

Or maybe should I start a crowfunding project so you can have your very own support teacher? I'm sure some drawings will help you.

Yes you pay 35% tax in Malta, but maybe you get possibility to get pension and normal public health care? This is talking about job positions if you want

Again, you are trying so hard to be right that your answers don't make sense. In your genius logic somebody would prefer to pay 35% tax in Malta just because one day (maybe) he will enjoy some pension? What about investing in a private retirement plan with the money that he will save in taxes by being employed in Dubai?

 

[JohnLocke]

I'm paying a total of 8.63% corporate tax now and living among my own people in Zug & Zurich, Switzerland!!! No minimum stay etc etc

Yes, the only reason why somebody would move to UAE is 0% tax and no declarations/reporting

I have to say this thread consists of very static positions. And when I read comments like those above, I have to say that they are again personal opinions and views!Switzerland is hugely expensive to live in, I spent 2 years researching, if you don't have 2M+ Euros in the bank then forget it. Dubai is a super cool place to be for young people or for those who haven't started a family yet or run pure business without family.

That's how I see it. All that crap about Dubai being good or bad must be up to the individual. We have all found our place in this world. Someone is about to find it and it could easily be that YOU are not satisfied with Dubai and would rather live in the Bahamas, Switzerland or Cyprus, but therefore it may well be that there are others who love it.
And all comments about who sponsors the forum or oak I think you should pack up and avoid posting! Why?

1. If we didn't have a main sponsor like DLS Dubai, you could forget about posting here, the forum will not survive! Then you can use all your energy on other media.

2. You make it a personal attack against the forum and our sponsors, I do not accept that.

And points 1 and 2 are not up for discussion, I will press the WARN and BAN buttons without hesitation if this continues.

Offshorecorptalk is for everyone, we believe in freedom of expression. We believe that there is a need for OffshoreCorpTalk to stand up to the ever-changing value where control, monitoring and much other bad things are taking on more and more. Personal freedom is being robbed from us.

Watch our Video which is more relevant than ever before!

Now back to TOPIC - everything else will be deleted.​

 

[Sols]

Do you REALLY believe that having an offer for a position in Dubai could be anywhere near comparable with an offering for a position in Malta or Cyprus where there's fu@*ing 35% income tax bracket.

Having done decent amount international hiring, I can tell you with absolute certainty that it's far easier to attract talent to Malta and Cyprus than to UAE. Malta and Cyprus have much more to offer that the average person, family, or household values. UAE's strength is low tax. Other than that, all the benefits of Dubai (shopping, experiences, cuisine) are one flight away from both Malta and Cyprus.

A 50,000 EUR/year job in Malta and Cyprus might only net you around 3,100 EUR/month after taxes. Sure, you would get 4,100 EUR/month in Dubai. What are you going to do with an extra 1,000? In reality, the net difference is even smaller when you factor in higher costs of living in Dubai. Higher salary ranges have a lot of incentives that lower the effective tax burden for your C-suites, department heads, et cetera.

Dubai will remain attractive for one/few-person companies and wealthy individuals that don't want to worry about paying much if any tax, though. If you are OK with the way of life in Dubai, it can solve a lot of headaches for a lot of people.

 

[Marzio]

I can tell you with absolute certainty that it's far easier to attract talent to Malta and Cyprus than to UAE

This is 180° opposite of my experience when looking for junior sales with a fixed + commission based income contract.

Malta and Cyprus have much more to offer that the average person, family, or household values

Different demographics, different value.

 

[Konstanz]

I did not want to offend anyone. I am sorry if I made someone feel bad.
These static positions are just from my own experience, the people I know who have Dubai residence, company in Dubai etc. I myself have consulting service company in Dubai.
But the fact is we have to agree UAE is no longer tax free. Unless government send us more clarifications about qualified activities.
Yes, I agree you can play around with deductions, optimize it.

About staff hiring yes Malta is popular place to hire online casinos staff. Cyprus has lot of people working in forex industry.
Yes there are good qualified workers in Dubai, but it costs way more to hire such staff

The most strong part of Dubai was always tax free status in my subjective opinion.

 

[troubled soul]

DMCC...The top and most reputed...Freezone mention all the time in their all promotional Literature that

50-year guaranteed 0% corporate and personal income tax

I attach the proof and You can also find online many literature they are shamelessly giving "Guaranteed " of tax free status for 50 years.....Most free zone mention this in their official literature....Now What happened to this guaranteed ?
Learn lesson hard way......
Never trust Islamic psycho beduins.......
I remember the @JohnnyDoe quote.....

Actually there are not many countries left where slavery is actively pursued by the government.
If one feels good living in a desert ruled by psycho beduins, then fine, just don’t complain when s**t happens.

salute to wisdom of @Martin Everson and @JohnnyDoe ..
Always take experience person advice seriously....both always warned us about this.....But Childishly me and other people do not take it seriously ..
The government can and will change the rules at any time, and you will be left holding the bag. Welcome to the real world People.....

 

[JustAnotherNomad]

Yeah, anything "free for life" in UAE, you know it will cost something after a month. Such guarantees aren't worth anything in the UAE.
Try getting a "free for life" credit card - one month later, they will change the rules. You can sue them if you don't like it, good luck.