UAE freezone company audit

[sergeylim88]

@Fred is there any official information what is considered substance in this case?
if the director has resident visa, that should be enough of substance along with flexi desk...

 

[Martin Everson]

@Fred is there any official information what is considered substance in this case?

UAE Government:

https://mof.gov.ae/economic-substance-regulations/

KPMG:

https://kpmg.com/ae/en/home/service...conomic-substance-regulations-in-the-uae.html

 

[sergeylim88]

kpmg document is substance requirements for companies doing relevant activities, requirements introduced by oecd if i recall right
i am not sure if the relevant activities related substance will play any role for corporate tax exemption/qualification for 0% rate, as i can see so far this part is not clear yet

 

[Fred]

kpmg document is substance requirements for companies doing relevant activities, requirements introduced by oecd if i recall right
i am not sure if the relevant activities related substance will play any role for corporate tax exemption/qualification for 0% rate, as i can see so far this part is not clear yet

100% correct @sergeylim88 !

What you are referring to isn't clarified yet same as qualified income.

But guys - taking this in consideration - not even 3 months before the 01.06.2023 so many essential things are not clear yet - this speaks for itself how things look in reality.

Just do the math - everyone going crazy about 01.06.2023 now is just loosing in opportunity - fact.

 

[turtle]

Qualified income isn't clarified yet and the authority never mentioned that ESR requirement but company audit most probably will be a requirement.

 

[sergeylim88]

do you happen to have any information or any explanation of when does financial year of the company start?
how can i determine when my starts? is that determined by the registration date, or it is a choice?
@Fred or anyone who might know something??

 

[JackAlabama]

Qualified income isn't clarified yet and the authority never mentioned that ESR requirement but company audit most probably will be a requirement.

"most probably" is just a guess.
Nothing is specified, it is more likely it wont be for FZCO.

do you happen to have any information or any explanation of when does financial year of the company start?
how can i determine when my starts? is that determined by the registration date, or it is a choice?
@Fred or anyone who might know something??

It is written in IFZA MoM. It is a choice.

 

[turtle]

"most probably" is just a guess.
Nothing is specified, it is more likely it wont be for FZCO.

It's not just a guess. FTA specified this matter in the public consultation document a few months ago.

• The UAE CT regime will require a Free Zone Person to have audited financial statements if it wants to benefit from the 0% CT regime.

https://www2.deloitte.com/ae/en/pag...c-consultation-document-on-corporate-tax.html

 

[GeneralGogol]

Again no Tax Free Residence and EU - banking is a pain.

Non-dom in Cyprus is tax free. 0% on dividends, 0% capital gains.

UAE corporate banking is also not so easy- it seems that to get corporate banking in UAE it takes 2-3 months at least.

Why not go to Kosovo for this where you have:

I guess the only reason I can think of is "bad reputation"? I am probably not informed enough. It does sound good.

 

[Fred]

UAE corporate banking is also not so easy- it seems that to get corporate banking in UAE it takes 2-3 months at least.

That's not true unless you do it first time in your life and haven't chosen a good CSP.

 

[GeneralGogol]

That's not true unless you do it first time in your life and haven't chosen a good CSP.

That's what your own customers are writing in their testimonials... between 3 weeks to 3 months depending on the complexity\risk level of the business. Which is pretty good, this is not an attack on you.

And of course this is only if you've done everything else correctly. Let's also not forget that your money is stuck in a dictatorship so effectively you're paying to have transactional banking, which you can also get using EMIs. Nobody in his right mind will keep 7-8 figures in Dubai unless they're 1. stupid 2. criminal that fears extradition.

 

[Fred]

That's what your own customers are writing in their testimonials... between 3 weeks to 3 months depending on the complexity\risk level of the business. Which is pretty good, this is not an attack on you.

And of course this is only if you've done everything else correctly. Let's also not forget that your money is stuck in a dictatorship so effectively you're paying to have transactional banking, which you can also get using EMIs. Nobody in his right mind will keep 7-8 figures in Dubai unless they're 1. stupid 2. criminal that fears extradition.

There is a logical thinking mistake in there or from 1-2 years back - current trunaround time is 10-14 days maximum - in this time you get either approval or rejection.

It's honest client feedback which is good - however when someone is a week in Dubai and comes 3 months later to pick up a Business Debit Card the subjective opening time for him is 3 months but the compliance running time itself is 10-14 days.

 

[alexrinse]

I did mine with Fred and it took 14 days in total (with the bank itself).

 

[JimBeam]

You can also live in Cyprus and operate offshore companies the same way half the people there do and pay 0% tax.
No substance, audit or anything required. And if you got 6 fig you can even get some solid banking in reputable jurisdiction (and use EMIs for transactional banking).

How do you get 0% tax.
Are talking about CIT or PIT?

 

[JackAlabama]

It's not just a guess. FTA specified this matter in the public consultation document a few months ago.


https://www2.deloitte.com/ae/en/pag...c-consultation-document-on-corporate-tax.html

You quote a deloite source.
https://mof.gov.ae/corporate-tax-faq/ nothing written here resp. ongoing.
But I certainly wont stop you if you want to audit.

 

[Bill D]

You quote a deloite source.
https://mof.gov.ae/corporate-tax-faq/ nothing written here resp. ongoing.
But I certainly wont stop you if you want to audit.

from what I heard from 2 consultants audit on all years is anyways mandatory at liquidation

 

[turtle]

You quote a deloite source.
https://mof.gov.ae/corporate-tax-faq/ nothing written here resp. ongoing.
But I certainly wont stop you if you want to audit.

Deloitte is one of the most reputable accounting firms in the world but if you want an official source check the PDF I attached. The document is released by the Ministry of Finance UAE and gives a good insight about what is coming.

1. Whether the financial statements of a business are required to be audited by an accredited audit firm is and will continue to be determined by applicable company laws and regulations. However, the UAE CT regime will require a Free Zone Person to have audited financial statements if it wants to benefit from the 0% CT regime.

 

[GrumpyMess]

Non-dom in Cyprus is tax free. 0% on dividends, 0% capital gains.

Does that apply to stock trading under a personal account?

 

[lifeisfun]

Deloitte is one of the most reputable accounting firms in the world but if you want an official source check the PDF I attached. The document is released by the Ministry of Finance UAE and gives a good insight about what is coming.

Based on point 10.16:
FREEZONE COMPANY TO BE ELIGIBLE TO BENEFIT FROM 0 % CIT, COMPANY HAS TO MAINTAIN AUDITED FINANCIAL STATEMENTS.
So, UAE Freezone company does not make sense any more.
Especialy when substance is required.
Costs of accounting and audit are comparable to many other jurisdictions. When you add costs of substance, costs are too high for any small and medium companies.
Costs of operations will make UAE Freezone companies uncompetitive.
Let make some small calculations:
Ecommerce business with 5K USD transactions, turnover 100K USD.
UAE costs:
License: 5K USD
Costs of substance: 7K USD
Accounting: 5K USD
Audit: 5K USD
Loss in a difference in a CC processing fees in comparison to other countries: 2K USD
In total: 24K

If you want to have costs of up to 24 % just to maintain ypur business (without real business expenses), you do not have to have a company in UAE.

I know, Fred will write now a lot of nice words abour UAE.

But do you know what counts?
MATH not words.

 

[JimBeam]

The way I see it: Dubai never was never the best choice for businesses making less than 200k in NET revenues/year.
Actually, a break-even would be around 100k/year or so but the biggest positive effect would start around 200k/year.