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

[stronco]

Tax residency certificate was available only for certain nationalities in the past. Has this changed with the new rules?

 

[algotrader]

According to this video, Freelancers and Contractors with income above 100K USD will be taxed as well. One way to get around this would be to create a company to benefit from small business relief:

 

[Fred]

According to this video, Freelancers and Contractors with income above 100K USD will be taxed as well. One way to get around this would be to create a company to benefit from small business relief:

"The interesting one which may apply to a lot of our clients is the ability to get something called Small Business Relief"

So the majority of his clients are Freezone Company owners which shows just once again the way how to do it - I know he has insights same like us and know how things are working - unfortunately he has the "YouTube Premium Fee" as well.

The Freelancer License reminds me about the Mainland Company Setup's sold back then to get "easier" Banking Access - while this was not even necessarily true - all the guys listened to this claim are now going to pay 9% CT - same the Freelancers doing now - just because of saving 1000$ compared to forming a Freezone Company.

5 weeks more to go - wait for it.

 

[JackAlabama]

"The interesting one which may apply to a lot of our clients is the ability to get something called Small Business Relief"

So the majority of his clients are Freezone Company owners which shows just once again the way how to do it - I know he has insights same like us and know how things are working - unfortunately he has the "YouTube Premium Fee" as well.

The Freelancer License reminds me about the Mainland Company Setup's sold back then to get "easier" Banking Access - while this was not even necessarily true - all the guys listened to this claim are now going to pay 9% CT - same the Freelancers doing now - just because of saving 1000$ compared to forming a Freezone Company.

5 weeks more to go - wait for it.

Indeed, I met some mainland company owners. From what Ive been told and can assess myself, banking does not seem that much easier and is more inline with what is being asked for FZCOs.

 

[zzzzzz]

Is freelance visa still a good option if you don't plan to work as freelancer and don't need corporate bank account? For example to trade with personal trading account abroad as UAE resident.

 

[sergeylim88]

speaking of freelance visas what's the story with bank accounts you opened under that visa, because those are not actual corporate accounts, they are your private accounts (freelance agreement/permit is used as proof of income)?

the freelance permit just gives you the legal right to conduct business under your name.
in my understanding if you are using that account to receive dividends (income not sourced form actually doing any work), all that is exempt from the 9% tax (other issues such as CFC come in place).

my question is if the accounts are opened under freelance visa, and later you move to a freezone company visa, do you have to close those accounts or it is enough just to inform your bank about your new visa?
@Fred input appreciated and comment on all above (did I get anything wrong?)

 

[Fred]

speaking of freelance visas what's the story with bank accounts you opened under that visa, because those are not actual corporate accounts, they are your private accounts (freelance agreement/permit is used as proof of income)?

the freelance permit just gives you the legal right to conduct business under your name.
in my understanding if you are using that account to receive dividends (income not sourced form actually doing any work), all that is exempt from the 9% tax (other issues such as CFC come in place).

my question is if the accounts are opened under freelance visa, and later you move to a freezone company visa, do you have to close those accounts or it is enough just to inform your bank about your new visa?
@Fred input appreciated and comment on all above (did I get anything wrong?)

New Business Bank Account needs to be opened for the Freezone Company.

 

[JustAnotherNomad]

I think it depends, some freezones actually create a FZE under a freelance license.

 

[sergeylim88]

it goes without saying that in case of opening a freezone entity (a company) you have to open a corporate bank account on company's name.

i was talking about accounts that were opened by a person holding a freelance permit and appropriate visa that goes with it. all those accounts are in person's name, and they are accessed under personal banking, not corporate banking ebanking(banks usually have two login options one is corporate and the other is personal).

so in case of switching to freezone company visa, and cancelling the freelance permit, do you have to close those personal accounts or they are considered personal and you have the right to keep them?

 

[Fred]

it goes without saying that in case of opening a freezone entity (a company) you have to open a corporate bank account on company's name.

i was talking about accounts that were opened by a person holding a freelance permit and appropriate visa that goes with it. all those accounts are in person's name, and they are accessed under personal banking, not corporate banking ebanking(banks usually have two login options one is corporate and the other is personal).

so in case of switching to freezone company visa, and cancelling the freelance permit, do you have to close those personal accounts or they are considered personal and you have the right to keep them?

Yes - the Banks see the Freelance Accounts as a Business Bank Account and not as a Personal Bank Account - you have a Freelance License similar to a Freezone License and latest when you stop renewing the Freelance License - they close you the account.

 

[Fred]

https://gulfnews.com/business/corpo...d-for-managing-tax-compliance-1.1682940902562
"In the case of businesses with a financial year from June 1 to May 31 the corporate tax return must be filed on February 28, 2025. Contrary to this, for businesses with a financial year from January 1 to December 31 the corporate tax return filing due date is September 30, 2025."

Unfortunately they don't mention the Author of the Article but we can confirm that we work hand in hand with the Author of this Article to launch a product for all DLS Dubai Clients to remains 0% Corporate Tax.

 

[sergeylim88]

what's the new information provided in this article?
it is all well known
example if company is registered in March 2022, can it choose to have first financial year from march 2022 to december 31 2022, and second from january 2023 to december 2023....?
is there any declaration that needs to be filed where company decides when is the financial year starting?

 

[Fred]

what's the new information provided in this article?
it is all well known
example if company is registered in March 2022, can it choose to have first financial year from march 2022 to december 31 2022, and second from january 2023 to december 2023....?
is there any declaration that needs to be filed where company decides when is the financial year starting?

This provides written clarification about dates when the first CT fillings are due which is still almost in 2+ years time from now.

We get a lot of messages with a misunderstanding where people looking for something to happen on 01.06.2023 while we expect to not even have Qualifying Income clarified till then.

 

[sergeylim88]

all the information was available on official web site with very clear graphics
https://tax.gov.ae/en/taxes/corporate.tax/corporate.tax.topics/administration.aspx

 

[bandanna]

You guys are the experts and I might be totally wrong. Is there any official information anywhere stating that freezone companies will pay 0% CT, or that's just the assumption based on how advantageous are FZs to Dubai?

The link @sergeylim88 shared is very helpful. And I read some information there about qualifying free-zone companies for 0%, but I'm struggling to find any information on what make a company qualify for 0% or not?

Regarding this -

In order to be considered a Qualifying Free Zone Person, the Free Zone Person must:

●maintain adequate substance in the UAE;
●derive ‘Qualifying Income’;
●not have made an election to be subject to Corporate Tax at the standard rates; and
●comply with the transfer pricing requirements under the Corporate Tax Law.

What's considered as adequate substance and can't fully understand the "derive qualifying income" part? Maybe @Fred you have the full picture here?

 

[Clank]

You guys are the experts and I might be totally wrong. Is there any official information anywhere stating that freezone companies will pay 0% CT, or that's just the assumption based on how advantageous are FZs to Dubai?

The link @sergeylim88 shared is very helpful. And I read some information there about qualifying free-zone companies for 0%, but I'm struggling to find any information on what make a company qualify for 0% or not?

Regarding this -

In order to be considered a Qualifying Free Zone Person, the Free Zone Person must:

●maintain adequate substance in the UAE;
●derive ‘Qualifying Income’;
●not have made an election to be subject to Corporate Tax at the standard rates; and
●comply with the transfer pricing requirements under the Corporate Tax Law.

What's considered as adequate substance and can't fully understand the "derive qualifying income" part? Maybe @Fred you have the full picture here?

No one knows what qualifying income is yet.

 

[sergeylim88]

substance is the fact that the director lives there (has residency visa), that is more than enough

 

[JustAnotherNomad]

I'm struggling to find any information on what make a company qualify for 0% or not?

There's no new info yet. Most companies won't have to pay CIT until September 2025. So it may take time for additional guidance to be released.

 

[bandanna]

There's no new info yet. Most companies won't have to pay CIT until September 2025. So it may take time for additional guidance to be released.

But even if until 2025, will they have to pay retroactively for 2023-2024 I assume?

@sergeylim88 is residency visa enough or they need certain annual days of stay … or just perhaps still falls under the category or “nobody knows” lol?

 

[European]

But even if until 2025, will they have to pay retroactively for 2023-2024 I assume?

Good and important question