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

[Bill D]

https://mof.gov.ae/corporate-tax-faq/And the FAQ from FTA seems to say otherwise about tax for individuals : "UAE and foreign individuals will not be subject to UAE CT on [...] capital gains"
(at the line : Will an individual be subject to UAE CT on investment returns?), not sure it include day trading/actively managing own assets in facts, but the quoted text in theory is including it by waiving all capital gains, so it doesn't depend on the frequency , so overall the decree and this faq seems to say two different things. Also in the decree it mentions many times to await for the very awaited "cabinets decision" including on which activity for natural persons will be subject to CT.

 

[Fred]

https://mof.gov.ae/corporate-tax-faq/And the FAQ from FTA seems to say otherwise about tax for individuals : "UAE and foreign individuals will not be subject to UAE CT on [...] capital gains"
(at the line : Will an individual be subject to UAE CT on investment returns?), not sure it include day trading/actively managing own assets in facts, but the quoted text in theory is including it by waiving all capital gains, so it doesn't depend on the frequency , so overall the decree and this faq seems to say two different things. Also in the decree it mentions many times to await for the very awaited "cabinets decision" including on which activity for natural persons will be subject to CT.

We still wait for what "Qualified Income" does mean when it comes to the FZCO.

Just shows you the one dimensional idea behind all this - "look OECD/FATF we have 9% CT".

 

[yngmind]

Examples: ● A business that has a financial year starting on 1 July 2023 and ending on 30 June 2024 will become subject to UAE CT from 1 July 2023 (which is the beginning of the first financial year that starts on or after 1 June 2023). ● A business that has a financial year starting on 1 January 2023 and ending on 31 December 2023 will become subject to UAE CT from 1 January 2024 (which is the beginning of the first financial year that starts on or after 1 June 2023)

That's interesting,

so if your financial year starts on the 1st of January, that means 2023 will be tax-free?

 

[JackAlabama]

Examples: ● A business that has a financial year starting on 1 July 2023 and ending on 30 June 2024 will become subject to UAE CT from 1 July 2023 (which is the beginning of the first financial year that starts on or after 1 June 2023). ● A business that has a financial year starting on 1 January 2023 and ending on 31 December 2023 will become subject to UAE CT from 1 January 2024 (which is the beginning of the first financial year that starts on or after 1 June 2023)

That's interesting,

so if your financial year starts on the 1st of January, that means 2023 will be tax-free?

Yes.

 

[yngmind]

I've talked to my lawyer. There is some good news.

So, if your financial year starts before the 1st of July, 2023 will be tax-free for you, which is amazing.

 

[Bill D]

I've talked to my lawyer. There is some good news.

So, if your financial year starts before the 1st of July, 2023 will be tax-free for you, which is amazing.

right, how do you determine the financial year of a natural person who would never have filled personal income tax return (as this didn't exist), but who would qualify for the new tax on natural persons.
I guess we can consider that for these natural person 2023 is tax free anyways too.

and how do you determine tax year for companies FZ which weren't audited, it is de fact calendar year ?

 

[yngmind]

right, how do you determine the financial year of a natural person who would never have filled personal income tax return (as this didn't exist), but who would qualify for the new tax on natural persons.
I guess we can consider that for these natural person 2023 is tax free anyways too.

and how do you determine tax year for companies FZ which weren't audited, it is de fact calendar year ?

Yeah, just calendar year from 1st of Jan

 

[5K1PP3R]

What is the current status? My FZCO company was created on 23 May 2022, what will I need to do? My income is 100% from outside of Dubai and I am not tax resident there

 

[Fred]

What is the current status? My FZCO company was created on 23 May 2022, what will I need to do? My income is 100% from outside of Dubai and I am not tax resident there

We as your Professional Partner don't advise to do anything as of now.

DLS Dubai 2.0 is launched within the next weeks and we have some employeed inhouse Tax Advisors to make sure every client remains 0% Corporate Tax while beating the industry Standard Price which you face in the Legal/Audit/Accounting Industry in the UAE but only for our in-house clients.

You can of course approach on your own whoever but the chances are very high they charge you 2000AED/month for nothing - your "trusted Accountant" in Deira / Bur Dubai is always available to take your money.

 

[5K1PP3R]

Does it mean that the situation regarding 9% corporate tax on FZCO is still unclear and there is a chance we will need to pay it for 2023?

 

[Clank]

Does it mean that the situation regarding 9% corporate tax on FZCO is still unclear and there is a chance we will need to pay it for 2023?

For 2023 no, for 2024 we don't know yet.

 

[Fred]

Does it mean that the situation regarding 9% corporate tax on FZCO is still unclear and there is a chance we will need to pay it for 2023?

You don't have to pay any Corporate Tax - your Corporate Tax Rate remains 0% for what you have mentioned how your business is conducted.

For 2023 no, for 2024 we don't know yet.

Even 2024 there won't be any CT for FZCO's as long as you have no Mainland sourced income.

We don't know yet the exactly paperwork - if even.

Guys - it remains 0% Corporate Tax - it's just no loger that obvious - I mean we have actually lower paperwork requirements as in the Seychelles and you get transactional retail Banking with local UAE Banks.

Was clear that they can't hold this forever without being just another Caymans/Bahamas - look at the banking industry there - either no industry available like in the Bahamas or Months of account openings with more and more restrictions in the Caymans.

 

[turtle]

We as your Professional Partner don't advise to do anything as of now.

You can of course approach on your own whoever but the chances are very high they charge you 2000AED/month for nothing - your "trusted Accountant" in Deira / Bur Dubai is always available to take your money.

This is the correct approach right now. Even if you pay 2K AED to an accountant, you will still have zero visibility to prepare for 0% CT because no one knows the requirements. I believe UAE will announce conditions in 2 months or postpone CT completely until 2024.

 

[Martin Everson]

Do not mix new UAE tax residency rules with that of corporate tax​

https://gulfnews.com/business/analy...y-rules-with-that-of-corporate-tax-1.94286187

 

[karishi]

@Fred do you give ( paid ) tax advice also to freelancers?my three year freelance permits ends in november and need to understand what to do, I think I will switch to Remote Working visa but not 100% sure. I will be in Dubai in May so might come to visit

 

[Fred]

Do not mix new UAE tax residency rules with that of corporate tax​

https://gulfnews.com/business/analy...y-rules-with-that-of-corporate-tax-1.94286187

"The writer is Managing Director of AskPankaj Tax Advisors."

Paid advertising.

 

[algotrader]

"The writer is Managing Director of AskPankaj Tax Advisors."

Paid advertising.

Well, if it turns out he's wrong with what he's writing he will lose his credibility as a tax advisor and clients. I trust published information thus more than claims from persons in forums or in private conversations.

The big question now is what are the rules that distinguish foreign sourced income of a freezone entity from UAE sourced income and where are these rules published?

Is income from dropshipping considered foreign sourced when organized from a UAE freezone office?
Are capital gains from trading foreign securities, currencies or cryptos or dividends from foreign companies considered foreign sourced income when the trading itself happens in a UAE freezone office?
Is income from consulting services provided to foreign clients considered foreign sourced?
Is advertising revenue from an app provided by UAE entity but used by foreign clients considered foreign sourced?
Is a freelance activity or private trading done from a residential address in UAE considered a "business" and subject to CIT?
Lots of questions but no answers...

 

[manukahoney]

Does anyone know how the CT will be calculated?
What are the allowed expenses to offset the profits?
I mean if it's 9% on corporate profits then it can be legally minimised to 1-3% (think salary to directors, office rent, maybe a corporate car, travel for directors etc). Don't see a huge problem here actually.

 

[Fred]

Well, if it turns out he's wrong with what he's writing he will lose his credibility as a tax advisor and clients. I trust published information thus more than claims from persons in forums or in private conversations.

Good to know - so we have to have a serious conversation with Gulf News as well about a paid News Article - thanks for the hint.

The big question now is what are the rules that distinguish foreign sourced income of a freezone entity from UAE sourced income and where are these rules published?

Is income from dropshipping considered foreign sourced when organized from a UAE freezone office?
Are capital gains from trading foreign securities, currencies or cryptos or dividends from foreign companies considered foreign sourced income when the trading itself happens in a UAE freezone office?
Is income from consulting services provided to foreign clients considered foreign sourced?
Is advertising revenue from an app provided by UAE entity but used by foreign clients considered foreign sourced?
Is a freelance activity or private trading done from a residential address in UAE considered a "business" and subject to CIT?
Lots of questions but no answers...

Better schedule a paid advertising consultation with the Author of the Gulf News Article - I mean with "I trust published information thus more than claims from persons in forums or in private conversations." - it doesn't make sense that you ask your questions in a Forum or Private Conversation.

 

[Au999]

Onshore and offshore earnings of a UAE freezone company are very straightforward no? If you earn money selling goods or services inside UAE to people or businesses inside UAE then that's onshore. If you sell goods or services outside UAE from your UAE FZCO then it's offshore.

It only gets complex if you don't do it through a FZCO, like you do it yourself from your apartment. Or am I missing something really obvious?

Also to answer threads earlier saying Dubai is either expensive or crappy, I've got an amazing brand new massive 2 bed apartment 3 minute walk from metro, sea views, infinity pool, gym and it's less than $20k/yr. I'd call that cheap!