UAE Mainland or FreeZone?

[Don]

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?

Yes.
The law states that payments made to related parties shall meet the arms-length principle so the difference from market level salaries could be taxed with the income tax.

 

[lacomaco]

Yes.
The law states that payments made to related parties shall meet the arms-length principle so the difference from market level salaries could be taxed with the income tax.

I agree, and that is why the authorities probably would look at similar sized companies where the shareholder and director is not the same person

 

[myhand]

Can't you appoint nominee director and shareholder to avoid any "close related issues" ?

 

[lacomaco]

Can't you appoint nominee director and shareholder to avoid any "close related issues" ?

You can, although it is a question whether the UAE tax auditors would check matters further (not really probable in the near future), and the director has to lie about the BO when declaring it during the KYC renewal with the banks. What could be the problem is finding a suitable director who will not steal the money, as we do not speak a yearly salary of US$10,000 a year but much more

 

[smartcard]

What if open a UAE offshore company (less than $2000 fee per year) with a Wio Bank account, is this a good option?

 

[Clank]

What if open a UAE offshore company (less than $2000 fee per year) with a Wio Bank account, is this a good option?

What do you mean by offshore, you can only get a bank account in the UAE with an FZ and a visa.

 

[gatrader]

Has anyone ever heard about a mainland dormant (non actived company)?

 

[GerhardStrasser]

If you need support with the company formation (freezone or mainland), visa and bank account, feel free to drop us a message.

 

[clemens]

What would be the best setup to avoid public be exposed, avoid taxes and benefit from privacy ?

 

[GerhardStrasser]

In this case the freezone would be the better choice of course. Most of the freezones do not maintain publicly visible company registers.

 

[bigleo]

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

Real question here. Imagine that my company is an IT consulting services, my partner and me are doing IT development/consulting, our salary are almost 80% of the revenue of my company, we don’t have many investments neither costs, it’s all done via working from home. In this case UAE courts can see it has tax evasion? Why?

 

[Mekan Gurbanov]

Real question here. Imagine that my company is an IT consulting services, my partner and me are doing IT development/consulting, our salary are almost 80% of the revenue of my company, we don’t have many investments neither costs, it’s all done via working from home. In this case UAE courts can see it has tax evasion? Why?

The GAAP rule for the salary percentage for directors is about 11% only. While the overall salary ratio can reach until 60% percent. However, it all comes down to the justification of the amount that you are recording. If your IT company is running for quite some time now and the salary rate is constant from the beginning of the operation then it should be ok. Additionally, you also mention that there were no major expenses since this is a consulting company and almost every transaction can be done remotely, so this is justifiable as well. It will also be safe if the salary that you are receiving are still based on the market value. The Directors usually received 40k-60k a month. So if the salary that you are getting are within this range, then this is an additional safe point to consider. But all of this things should have proper supporting documents to begin with. So in case of audit, you can have sufficient proof for your books. The only red flag is that upon the release of the corporate tax law, the company decided to spike up their expenses especially the salaries, then it can be ground for tax evasion.

 

[Yakooza]

So any difference between freezones and the Mainland?
Also what if you as the director giving yourself a big salary like $100k per month? So that is still possible not paying tax on it?

Thanks

 

[Clank]

So any difference between freezones and the Mainland?
Also what if you as the director giving yourself a big salary like $100k per month? So that is still possible not paying tax on it?

Thanks

It's illegal to put yourself a large salary to avoid taxes.

 

[Don]

So any difference between freezones and the Mainland?
Also what if you as the director giving yourself a big salary like $100k per month? So that is still possible not paying tax on it?

Thanks

With turnover of up to 3M AED per year you can qualify for small business relief.
Thats up to 67.5k per month and in such case it doesn't really mather if you allocate it as salary or profit.

100k salary per month is clearly not market level so it looks like evasion of corporate tax if you are a related party.

 

[Yakooza]

With turnover of up to 3M AED per year you can qualify for small business relief.
Thats up to 67.5k per month and in such case it doesn't really mather if you allocate it as salary or profit.

100k salary per month is clearly not market level so it looks like evasion of corporate tax if you are a related party.

Thank you
So from my understanding, $50 to $60k Salary would be okay.
How about when the turnover got higher? Is there any way? Bribing the tax agents or anything like that?
and for the company itself it is up to 350k Durham per year is tax FREE. Right?
How about also put my wife or a relative as another employee and paying her another $50k per month?

 

[Henn and Rich]

The authorities will check what is the market salary for your position in the company, so you cannot claim a huge salary to avoid taxes, they will see right through that.

The small business relief scheme of 0% CT up to revenues of AED 3m can be claimed until 2026. And that is AED 3m revenue only, not profit.

 

[happyjohn]

It's a pity there are no professional advisors for Dubai around the forum anymore; it seems to be in short supply, and those who were here have given up because they can't get their business running. Foolish, when customers are lining up to pay for a service that solves both parties' problems.

 

[Henn and Rich]

It's a pity there are no professional advisors for Dubai around the forum anymore; it seems to be in short supply, and those who were here have given up because they can't get their business running. Foolish, when customers are lining up to pay for a service that solves both parties' problems.

we are one for Dubai, however we do not have legal or accounting services, to which we refer to our partners

 

[Yakooza]

Just an update. Since there was no difference. I have chosen Mainland to register a company