UAE clarification of Freezone Qualifying Income

#521
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First , People let Responses this form with "make freezone tax free again"..... kindly submit your response may this change the mind of Ruler ...
https://mof.gov.ae/free-zone-public-consultation/
Secondly May be very Good News for E-commerce and Dropshipping will be considered Qualifying Income.
If I understand correctly....


Can anybody can confirm that this paragraph is for E-commerce and Dropshipping ?




Seems , 99% of @Fred customers really do not need to pay tax.....

Sorry in advance If I mention something wrong......as my understanding of English and corporate law are limited...
Thanks
 
#525
Sorry to hijack a little this thread, but this seems to be the most active thread on the current situation in the UAE. As many of you, I'm trying to understand if it's still worth it to keep an entity in a free zone or not. And in my case it's not a matter of CIT (since I don't go above 3M AED revenue, neither 375k AED profits), rather accounting and audit costs. The accountants obviously are trying to get advantage of the situation and all says that audit is mandatory, but on the government FAQ page it seems that audits for free zone entities are mandatory only for whoever wants to benefit from the 0% CIT.
Does anyone know if that applies to the other businesses as well?
Audit and accounting costs make a big difference for small businesses.
 
Reactions: troubled soul
#526
Many of accountants are not updated here and it seems from my past experience and current situation they dont know much about their own field. Things are evolving here on daily basis, from latest scenario if your freezone business does not qualify for 50 years corporate tax exempt than your tax returns will be filed as mainland company which means no audit required but you have to do the bookkeeping. For bookkeeping you can hire freelancers which will do the job at lower rates.

If your business is filled as mainland then you can opt for small business relief if you revenue is less than 3 million aed.
 
#529
There was a honest suggestion to a UAE FZ company owners not to register for a VAT in another thread and @Fred declared that 99% of the companies do not do it according with his personal experience, so I believe he as well as his customers did not register their companies for a VAT also.

Though CIT is here now, so at least accounting supposed to be done and at most audit.

Therefore I am wondering, what do you think are a possible solutions for those who did not register for VAT (but reached 375K+ threshold) in a following two cases:

1. A company liquidation (audit will show 375K+ turnover)
2. Accounting reports submission (it will also show 375K+ turnover)

Let's keep in mind, the longer owner keeps a silence ignoring a VAT registration, the more penalties one gets in case information will be revealed.
 
#530
which freezones are qualifying for 50 years corporate tax exempt ?
can you provide more details and source of information ?
Thanks
 
#531
azb1 said:
which freezones are qualifying for 50 years corporate tax exempt ?
can you provide more details and source of information ?
Thanks
Click to expand...
Almost all of them did, examples are DMCC, Fujairah Creative City which claimed they are giving 50 years guarantee of personal and corporate tax.

Check about section 2013 press release from DMCC:
https://cms.dmcc.ae/application/files/9614/8059/3118/DMCC_10th2013.pdf
As they said:

Now they are saying we never broke the promise, you will be tax exempt if you are having qualified activities. They know oil income will go way in coming years, so their strategy is to slowly introduce taxes, its matter of 4-5 years personal income tax will be introduced. Personally I have lost trust, I will be out of UAE around 2025, its better to pay higher taxes and have peace of mind rather living in uncertain environment.
 
Reactions: JustAnotherNomad and troubled soul
#534
Cristero said:
Thanks for the response @madihrb. So no audit for now for a company that is not a qualifying free zone entity. The small business relief means I don't pay CIT mainly, doesn't it?
Click to expand...
1 - SMF (Small Business Relief) - Exemption for Small Businesses

SMF, which stands for Small Business Relief, provides a significant benefit to small companies and start-ups in Dubai. This exemption is valid until December 31, 2026, and is applicable to businesses with an annual turnover of up to 3M AED. The key advantage of SMF is that qualifying companies will be granted a 100% exemption from Income Tax (IS).

However, it's crucial to pay attention to Article 21 - Small Business Relief, particularly in relation to Paragraph a). This provision states that the revenue of the taxable person for the relevant tax period and previous tax periods must not exceed a threshold to be set by the Minister.

One point that requires clarification is whether this exemption will be applicable from the very first year of business operations or if there is a waiting period of two fiscal years before it takes effect. The language used, referring to "periods" in plural, leaves room for interpretation.

Given the evolving nature of regulations and policies in Dubai, it is essential to approach the current situation with caution. While it's evident that Dubai is making significant strides in its development, there are still many details and information subject to change.
 
#535
In my case, I'm pretty far away from any reasonable company revenue threshold I think
 
#536


" Natural persons will be subject to Corporate Tax as a “Resident Person” on income from both domestic and foreign sources, but only in so far as such income is derived from a Business or Business Activity conducted by the natural person in the UAE. Any other income earned by a natural person would not be within the scope of Corporate Tax. "

is it correct ?

Source : Federal Tax Authority - Corporate Tax Topics
 
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#537
I don’t know if this is correct.

The image shows that if you only conduct business outside UAE, you don’t have to register for CT.

What I have read before is that EVERYONE needs to register for CT.
 
#540
In official freezone seminar on Corporate tax, experts are also look confused...Very poor explanation. when the participant is asking relevant & clear question ( example Holding of shares & securities) , the panel is answering in a vague and confusing manner with irrelevant area

Even some not official saying that FZ company who doesn’t serve clients within UAE falls under qualifying income.
 
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