UAE Mainland or FreeZone?

[Don]

So does it means you can get an Estonian company without having any transaction there? I mean I don't want to do accounting and taxing in Estonia.
I know Wise is not supporting UAE. But with an FZ company can you get an account with Payset and Currenxie?

You dont need to necessarily open a branch, but that could help even more.
Its important to consider the legal structure of the UAE company, e.g., if you can get long term visa in EU for the director that could be sufficient, or appoint a EU tax resident director.
One of the simplest solution I can think of is to get a digital nomad visa, e.g. in Estonia.

I have got this information from an EMI, as I wanted to prequalify the company before even incorporating a new company in UAE which will actually do business only in EUR and with EU clients, and it will have UAE citizen and resident directors and shareholders.

 

[SCI]

If you can break up the 2 months in Dubai to 1 month every 6 months then that would be your default. UK LLP/LTD is good if you do not do invoice UK Companies.
Thai authorities do not ask for Tax ID but the benefit of using a UK entity is they issue you one by default.

Freezones in the UAE to use are IFZA and SHAMS. The others are difficult to get bank accounts. DMCC is the best but very expensive purelyforprestige. It does come with benefits like being able to use the DMCC building and lounge depending on your set up.

UAE tax is applicable on profits above the threshold. If you pay yourself a salary (tax free) and minus expenses that it brings you below the threshold "no tax applicable".

For example

You made AED 1M revenue

650,000 salary

1,000,000 - 650,000= 350,000

expenses 150,000

350,000-150,000= 200,000

You are now below the threshold

Salary is the key to staying below the threshold as you can pay yourself whatever you want.

Not to be confused with dividends as it won't work.

 

[Yakooza]

Another question with WIO can you open a PayPal Business account? PayPal is a must.

 

[AtMo]

Thai authorities do not ask for Tax ID but the benefit of using a UK entity is they issue you one by default.

Hey. I'm planning to form a UK LLP and get a UAE residency certificate as tax ID in case the EMIs ask for my tax residency.

But as you mentioned UK entity issues a tax ID, Is it for the UK LLP or is it for me as UBO as well?

Do you think it is still needed for me to get a UAE residency certificate in my case please?

 

[lacomaco]

If you can break up the 2 months in Dubai to 1 month every 6 months then that would be your default. UK LLP/LTD is good if you do not do invoice UK Companies.
Thai authorities do not ask for Tax ID but the benefit of using a UK entity is they issue you one by default.

Freezones in the UAE to use are IFZA and SHAMS. The others are difficult to get bank accounts. DMCC is the best but very expensive purelyforprestige. It does come with benefits like being able to use the DMCC building and lounge depending on your set up.

UAE tax is applicable on profits above the threshold. If you pay yourself a salary (tax free) and minus expenses that it brings you below the threshold "no tax applicable".

For example

You made AED 1M revenue

650,000 salary

1,000,000 - 650,000= 350,000

expenses 150,000

350,000-150,000= 200,000

You are now below the threshold

Salary is the key to staying below the threshold as you can pay yourself whatever you want.

Not to be confused with dividends as it won't work.

That is quite a dangerous proposition. No company pays out 65% of its revenue to a director as salary, it is against GAAP rules and I think pure tax evasion

 

[Don]

That is quite a dangerous proposition. No company pays out 65% of its revenue to a director as salary, it is against GAAP rules and I think pure tax evasion

I believe this becomes an issue when you do it for a few years without proper explanations. One year you can probably get away with if you have a good story to back that up.

 

[Henn and Rich]

If you have a mainland company you can actually open accounts with EU based EMI-s.
They will require from the director of UAE company to have residence, visa or some tie with EU to do it.
One good option to get it is establishing a branch office in Estonia for the UAE company. The branch office can be opened online and the CIT is 0% until distribution.
Branch manager can also get visa and residence permit in EU.

Really? Do you have a list of EMI's for which this is possible? I have mainland companies in the UAE and I have very big ties to the EU

I would like to explore this, but preferably without establishing any form of branch company in Estonia or in the EU

 

[JimBeam]

Another question with WIO can you open a PayPal Business account? PayPal is a must.

Yes, you can.
We have it and use it daily.
3 years - 0 issues.

 

[Lord Palmerstone]

Banking in the UAE has become quite difficult, especially for free zones. Reason being is you have the FATF grey list and the most incompetent bankers ever earning $600 on average monthly and they are so scared of being fired, that they just deny/delay each application. These bankers usually tend to belong to the same South east asian country as well...

It really depends on the license activity, and virtual office space is no longer a go - you need a real physical office and the bank will come to inspect the office (or at the very least ask for photo/video proof).

WIO is great, but it's just a digital bank from FAB. As they are quite new, they are focusing on SMEs and have little KYC and you can open an account pretty fast.

I personally do use WIO and am very happy with it. But I do feel they are just being nice to SMEs now as they want to enlist as many clients as they can. I am sure later they will ramp up the KYC and it will be harder to be onboarded and send/receive wires without too many questions..


Mainland is usually still the easiest to get banking with. Freezones you can be waiting for up to a year... or more.

Started a FZ company in early June, got the owner (my friend and colleague) medically tested and received Residence and an EID No. within 8 days (the physical card came after 2 weeks).
Company bank a/c with Mashreq done (with help) also in a week.
All of this was organised with a lawyer friend --- the cost from the FZ Dhs19,000, his fees Dhs5000.

 

[Henn and Rich]

which FZ? what license activity?

 

[Ancova]

Greetings all!

IFZA has different EMI's that they have partnerships with. I would suggest you to email [email protected] for all information (its a free service for IFZA License holders).

 

[SCI]

That is quite a dangerous proposition. No company pays out 65% of its revenue to a director as salary, it is against GAAP rules and I think pure tax evasion

So before the new turnover rules came into effect. How do you think the UAE company owners paid themselves? Please separate Europe from the Middle East.

Hey. I'm planning to form a UK LLP and get a UAE residency certificate as tax ID in case the EMIs ask for my tax residency.

But as you mentioned UK entity issues a tax ID, Is it for the UK LLP or is it for me as UBO as well?

Do you think it is still needed for me to get a UAE residency certificate in my case please?

The Tax ID would be for the company not a personal one.
In the UAE you would have to do the minimum residency requirements which I think is 180+ days.

From the time I spent in Thailand going by what other Expats did They used their UK company Tax ID and never had a problem.

 

[lacomaco]

So before the new turnover rules came into effect. How do you think the UAE company owners paid themselves? Please separate Europe from the Middle East.


The Tax ID would be for the company not a personal one.
In the UAE you would have to do the minimum residency requirements which I think is 180+ days.

From the time I spent in Thailand going by what other Expats did They used their UK company Tax ID and never had a problem.

What you did in a fully zero-tax system had no consequence whatsoever - except if your auditors wanted to recarachterize the cost. Now it is totally different and I am quite sure that what you propose is very dangerous

What you did in a fully zero-tax system had no consequence whatsoever - except if your auditors wanted to recarachterize the cost. Now it is totally different and I am quite sure that what you propose is very dangerous

And I do not understand this separate Europe from the Middle East remark

 

[SCI]

What you did in a fully zero-tax system had no consequence whatsoever - except if your auditors wanted to recarachterize the cost. Now it is totally different and I am quite sure that what you propose is very dangerous


And I do not understand this separate Europe from the Middle East remark

I would suggest you check with any local accountant. As it stands right now it works. Of course there will be pressure from the outside world to change that. There is also no transfer pricing rules either.

The people who write the script of the new tax law were English or Schooled in the Western World. They knew they had to make it look right but zre not going to advertise the loophole. You have at least 10 more years of UAE attraction as a tax haven. With the development of BRICS and more autonomy from the West. Who knows but Qatar and Saudi will do what they want and no one will say anything. Just like it has always been.

Notwithstanding the new Saudi Tax free and Qatar Tax free environment coming into play.

Separate the Middle East from the nonsense in Europe!!

 

[lacomaco]

I would suggest you check with any local accountant. As it stands right now it works. Of course there will be pressure from the outside world to change that. There is also no transfer pricing rules either.

The people who write the script of the new tax law were English or Schooled in the Western World. They knew they had to make it look right but zre not going to advertise the loophole. You have at least 10 more years of UAE attraction as a tax haven. With the development of BRICS and more autonomy from the West. Who knows but Qatar and Saudi will do what they want and no one will say anything. Just like it has always been.

Notwithstanding the new Saudi Tax free and Qatar Tax free environment coming into play.

Separate the Middle East from the nonsense in Europe!!

I have exactly the opposite view with reference to taking this risk: yes, separate the Middle East from Europe on the courts level - if the tax authority will rule against you (for which accounting and audit-wide they would be probably right), how do you see your chances to win against them? UAE courts ruling in favour of this huge (in their mind) tax evasion committed by a foreigner… And BTW I already have 6 years’ of audited FS in the UAE so I think I know what I am talking about

 

[SCI]

You are confusing issues here.
The tax was not an exercise to generate revenue but to coincide with FACTA and the rest. Read the law because majority of accountants didn't bother. You will find some interesting night time reading.

I have always audited both my FZ and Mainland purely for my European banking facilities, it was not a requirement. Again I do the extra research when I have time.

I would suggest you do the same.

 

[lacomaco]

You are confusing issues here.
The tax was not an exercise to generate revenue but to coincide with FACTA and the rest. Read the law because majority of accountants didn't bother. You will find some interesting night time reading.

I have always audited both my FZ and Mainland purely for my European banking facilities, it was not a requirement. Again I do the extra research when I have time.

I would suggest you do the same.

You are confusing issues here.
The tax was not an exercise to generate revenue but to coincide with FACTA and the rest. Read the law because majority of accountants didn't bother. You will find some interesting night time reading.

I have always audited both my FZ and Mainland purely for my European banking facilities, it was not a requirement. Again I do the extra research when I have time.

I would suggest you do the same.

Just contrary to be considered as confused about corporate tax matters and the enforcement rules, I do remember how I did accounting for many years and provided international tax advice for more than 20 years. This tax advice you gave to the readers to me looks clearly dangerous. What you suggest is against accounting principles (probably you checked Section 183 of the Ministry FAQ in your spare time), and based on this definition “Tax evasion is the illegal non-payment or under-payment of taxes, usually by deliberately making a false declaration or no declaration to tax authorities – such as by declaring less income, profits or gains than the amounts actually earned, or by overstating deductions”, is clearly overstating deductions. Paying out 65% of the company’s total income as a salary to a director is an artificial or sham transaction - at least part of amount definitely is. Of course I fully understand that tax rules and their enforcement are two different things, but with an untested attitude of the tax people and the risk of the UAE courts ruling against a foreigner is not zero. Prove me wrong by showing us a legal opinion stating that your 65% suggestion conforms to the corporate tax law of the UAE, then I will admit that you are right and I am wrong. Otherwise I stand by my opinion.

 

[SCI]

Your opinion is something you are entitled to.

 

[lacomaco]

Your opinion is something you are entitled to.

Thank you

 

[Au999]

I don't think the percentage is an issue rather the amount. You can pay yourself 100% of a company pre tax profits if the number is small.

Look instead to market averages for people in similar situations, roles and positions in the market you're working.

That 65% number given earlier as a salary is not a big wage compared to what thousands of people earn in the UAE.

One man companies making a million a year are quite plentiful in Dubai and I'd imagine the vast majority pay themselves a handsome salary.

Given that as the local market average who's going to insist they only pay themselves a Macdonald's wage? Who in a country of visible consumption can say that you in particular can't earn a similarly high salary?