UAE to introduce 9% corporate tax on business profits from June 1, 2023 (FZCO REMAINS 0%)

[Bill D]

Trading or managing your investments under your name is not a commercial activity or business.

You said the opposite on the other page : "Day trading can be considered a professional activity and subject to CT tax. It is still uncertain" Does the new UAE CT applies to day tradings

will there still a very clean way to be at 0% if day trading is your main activity ?
You mention a setup with a freezone, but if that freezone is dealing with local exchanges (most big exchange are licensed in uae), does it mean your fz would be taxed then ?

What are the people regumarly trading within the uae currently doing ?

 

[rowena]

You said the opposite on the other page : "Day trading can be considered a professional activity and subject to CT tax. It is still uncertain" Does the new UAE CT applies to day tradings

Managing your personal investments is different than day trading and can be subject to CT. We're still waiting for the UAE CT law. It should be published later this year.

If you set up an FZ company, then it is always a good idea to not conduct any business with local FZs. You will also need to audit your company yearly.

 

[JackAlabama]

Managing your personal investments is different than day trading and can be subject to CT. We're still waiting for the UAE CT law. It should be published later this year.

If you set up an FZ company, then it is always a good idea to not conduct any business with local FZs. You will also need to audit your company yearly.

Not everywhere are audits required especially for smaller ones.

 

[rowena]

Not everywhere are audits required especially for smaller ones.

I'm talking about requirements of 0% corporate taxation not the free zone requirements. Did you check FTA's latest publishment about the upcoming CT?

https://www.mof.gov.ae/en/resources...E_CT-Public_Consultation_Document_English.pdf

 

[burden]

interesting news.. UAE to introduce 9% corporate tax on business profits from June 1, 2023

it does not need to be bad. Is it possible to deduct company expenses from tax?

 

[JackAlabama]

I'm talking about requirements of 0% corporate taxation not the free zone requirements. Did you check FTA's latest publishment about the upcoming CT?

https://www.mof.gov.ae/en/resources...E_CT-Public_Consultation_Document_English.pdf

Things like that change frequently. Who knows what happens by next year or even in 2024.

 

[Martin Everson]

it does not need to be bad. Is it possible to deduct company expenses from tax?

Yes it is possible to reduce your tax base via expenses. But not in an abusive way that it erodes the tax base. For example paying out all profits as salary could be considered a harmful practice. It depends on whether UAE adopts GAAR or similar anti avoidance legislation. See my post below.

https://www.offshorecorptalk.com/th...-june-1-2023-fzco-remains-0.36312/post-201553

 

[JackAlabama]

Yes it is possible to reduce your tax base via expenses. But not in an abusive way that it erodes the tax base. For example paying out all profits as salary could be considered a harmful practice. It depends on whether UAE adopts GAAR or similar anti avoidance legislation. See my post below.

https://www.offshorecorptalk.com/th...-june-1-2023-fzco-remains-0.36312/post-201553

Yah it is too far out to see with clarity how this will work out.

 

[Bill D]

Managing your personal investments is different than day trading and can be subject to CT. We're still waiting for the UAE CT law. It should be published later this year.

If you are managing your own money, but actively, would it put you under the scope of the CT ?

If you set up an FZ company, then it is always a good idea to not conduct any business with local FZs. You will also need to audit your company yearly.

Even if you setup a company for trading, knowing most big exchange are licensed in the uae, wouldn't they be considered as local transactions and make these transactions liable of CT.

And the fact to operate your FZ from UAE (in case you are a uae resident it would be certainly the case), isn't it de facto putting your center of operation for this fz in uae and making it liable to CT
"Where a Free Zone Person transacts with mainland UAE but does not have a mainland branch, the Free Zone Person can continue to benefit from the 0% CT rate if its income from mainland UAE is limited to ‘passive’ income." if you traded then it's no passiv, then taxed isn't it ?

The question is if you go there and trade your own money under your name calling it trading or managing your personal investments quite actively, do you risk being requalified as a business activity and undergo CT+penalties ?

 

[calnana]

The question is if you go there and trade your own money under your name calling it trading or managing your personal investments quite actively, do you risk being requalified as a business activity and undergo CT+penalties ?

This is precisely my worry. As soon as the new crypto regs came out and indicated that individuals might need to register with the va authority or get a permit, my mind instantly went to -> they want to bend over crypto traders and administer CT.

Obviously this might not happen, or there might be limits etc.. we also don’t know how crypto might be taxed. If it’s crypto-crypto or just fiat cashout.

 

[JackAlabama]

This is precisely my worry. As soon as the new crypto regs came out and indicated that individuals might need to register with the va authority or get a permit, my mind instantly went to -> they want to bend over crypto traders and administer CT.

Obviously this might not happen, or there might be limits etc.. we also don’t know how crypto might be taxed. If it’s crypto-crypto or just fiat cashout.

I really do wonder where all these wild ideas and eventualities come from.
There is nothing much decided as of now

 

[Bill D]

I really do wonder where all these wild ideas and eventualities come from.
There is nothing much decided as of now

In the public consultation documents, saying that even individual, as long as they would be conducting a business or commercial activity, would be undergoing the CT, the question is, is day trading of your assets, as a your main activity, subject to the CT then ?

 

[JackAlabama]

In the public consultation documents, saying that even individual, as long as they would be conducting a business or commercial activity, would be undergoing the CT, the question is, is day trading of your assets, as a your main activity, subject to the CT then ?

See my comments above.

Something which got completely unnoticed here is you have a threshold 375k aed / year anyway, so you would have to be over that.

 

[calnana]

See my comments above.

Something which got completely unnoticed here is you have a threshold 375k aed / year anyway, so you would have to be over that.

Guy, friend, buddy… who’s in dubai for $100k a year? If that’s just from ur company to get visa fair enough, otherwise i hope crypto ppl aren’t moving to the desert on 100k a year.

 

[Bill D]

See my comments above.

Something which got completely unnoticed here is you have a threshold 375k aed / year anyway, so you would have to be over that.

Right, the part of your income below that would be at 0% tho even if you go above that right ?
Just to make sure of how that works

 

[JackAlabama]

Guy, friend, buddy… who’s in dubai for $100k a year? If that’s just from ur company to get visa fair enough, otherwise i hope crypto ppl aren’t moving to the desert on 100k a year.

How about 80% of the guest workers?

 

[calnana]

How about 80% of the guest workers?

Come on, guest workers aren't who we're talking about, although in the current market I'm sure a lot of crypto ppl are about to make the switch Back on topic now for me.

 

[JackAlabama]

Come on, guest workers aren't who we're talking about, although in the current market I'm sure a lot of crypto ppl are about to make the switch Back on topic now for me.

Back to topic is that all these are wild guessings and it is way too far out to have any clarity, since it is 18 months out. Within 18month, the world can change twice these days.
You either take the leap or you don't and wait until 24 and see how things look by then.

 

[Bill D]

I really do wonder where all these wild ideas and eventualities come from.
There is nothing much decided as of now

In fact, it seems better than anticipated according to that article of bloomberg :

https://news.bloombergtax.com/tax-i...corporate-tax-in-the-uae-are-you-ready-part-1
So I guess it means : Day trading your own assets in traditional finance in UAE, regardless of the volume and the frequency, does not require a license. Day trading crypto your own asset should not require VARA, the paper seem to suggest only "providing" exchange service would require it, not trading itself, if someone could confirm that !.


Thus these activities would not require a license, and thus not be subject to CT, as long as you trade only your own balance : "If an individual has, or is required to have. a business license or permit, these individuals would be placed on an equal footing as compared to legal entities performing the same activities. Further, it generally appears that if a business license or permit is not required and not possessed either, then the activity is not considered to be a business."

quote ""The condition for taxability, as discussed above, generally, is with respect to (having a requirement to) obtaining a permit or a license. It appears that this individual trading in securities for their livelihood would not be considered to be undertaking a “business,” even though they may have a profit motive, perform the trades in a methodical manner, operate in substantial volumes, and largely undertake the steps and processes similar to an investment firm or a wealth management firm."

 

[calnana]

Back to topic is that all these are wild guessings and it is way too far out to have any clarity, since it is 18 months out. Within 18month, the world can change twice these days.
You either take the leap or you don't and wait until 24 and see how things look by then.

You are acting like we're suggesting that the earth is flat... We are just pointing out that it may be the case that individuals trading their own funds will be deemed as owing CT. Is this certain? No. Can this be incorrect? Yes, and I personally hope it is. I hope that my suspicions are wrong and you are correct.

I said multiple times and in multiple threads that we don't know, but there is nothing wrong with being aware of this and having an alternative plan if things go south. There might also be nothing wrong even if crypto individuals have to pay 9% tax, especially as we don't know the details.