What will happen if I "bypass" my UAE company & UAE banks ?

[SasuT]

Hi,
I'm Dubai fiscal resident. I have a company here and local bank accounts (personal + pro).

Multiple questions :

- What will happen if I close my UAE personal bank account (or just stop using it) and use Wise Personal instead? I send my salaries directly from Wio (company bank account) to Wise (personal bank account)

- What will happen if I stop using my UAE company and operate like this instead :
-- UK LLP linked to a Wise Business account
-- Wise Business Account -> Salaries to my Wise Personal Account
-- In this scheme, my UAE company is useless, aswell as both my UAE local bank accounts. I only profit from the UAE fiscal resident status, that gives me 0% income tax and nothing to declare.. (+ inactive bank account here)


It obviously sounds too easy. What's the catch here?

 

[JustAnotherNomad]

It doesn't matter what bank account your UAE company uses. All company income (=any income billed by your UAE company) is subject to UAE tax, you have to submit tax returns, an audit may be required etc.

The UK LLP will also be subject to UAE corporate tax if it is managed and controlled from the UAE or if it has permanent establishment in the UAE. In other words, if you manage the UK LLP from the UAE or if you work from the UAE for that company, it will be subject to corporate tax like a UAE company. You being UAE tax resident may count as managing and controlling the company from the UAE, but we obviously have no idea how this will be applied in practice. You may be able to avoid this by hiring a director for the UK LLP in another country, but then you risk the company becoming subject to tax in that other country instead.

It may be better to use a UK Ltd. with a resident director (so that the company is subject to tax in the UK) and then paying out a salary of up to AED 375k to yourself. In that case, there would be nothing to declare and no tax to pay, unless the UAE should decide that you effectively manage and control the UK Ltd. from the UAE, or that it has permanent establishment in the UAE, which is possible, but not very likely. In general, this seems a bit safer than using a UK LLP.
But then again, you could simply keep using the UAE company and pay a 375k salary from that company and claim deductions. There's also small business relief for the first 3 years of corporate tax, where companies making up to AED 3M in revenue don't have to pay tax. But you may have to apply for that, it's probably not automatic.

With any kind of non-UAE company, there will always be some risk that it could become subject to UAE tax. The risk increases the more time you spend in the UAE. But obviously, they will probably go after simpler cases first.

It also goes without saying that if you actually live in another country, that country may also want to tax both any company and personal income of yours. Having residency in the UAE is not a get-out-jail-free card.
You would also have to cancel your UAE visa in order to be able to close the UAE company. And if you keep the company open, you'll have to submit accounts etc.

 

[SasuT]

It doesn't matter what bank account your UAE company uses. All company income (=any income billed by your UAE company) is subject to UAE tax, you have to submit tax returns, an audit may be required etc.

The UK LLP will also be subject to UAE corporate tax if it is managed and controlled from the UAE or if it has permanent establishment in the UAE. In other words, if you manage the UK LLP from the UAE or if you work from the UAE for that company, it will be subject to corporate tax like a UAE company. You being UAE tax resident may count as managing and controlling the company from the UAE, but we obviously have no idea how this will be applied in practice. You may be able to avoid this by hiring a director for the UK LLP in another country, but then you risk the company becoming subject to tax in that other country instead.

It may be better to use a UK Ltd. with a resident director (so that the company is subject to tax in the UK) and then paying out a salary of up to AED 375k to yourself. In that case, there would be nothing to declare and no tax to pay, unless the UAE should decide that you effectively manage and control the UK Ltd. from the UAE, or that it has permanent establishment in the UAE, which is possible, but not very likely. In general, this seems a bit safer than using a UK LLP.
But then again, you could simply keep using the UAE company and pay a 375k salary from that company and claim deductions. There's also small business relief for the first 3 years of corporate tax, where companies making up to AED 3M in revenue don't have to pay tax. But you may have to apply for that, it's probably not automatic.

With any kind of non-UAE company, there will always be some risk that it could become subject to UAE tax. The risk increases the more time you spend in the UAE. But obviously, they will probably go after simpler cases first.

It also goes without saying that if you actually live in another country, that country may also want to tax both any company and personal income of yours. Having residency in the UAE is not a get-out-jail-free card.
You would also have to cancel your UAE visa in order to be able to close the UAE company. And if you keep the company open, you'll have to submit accounts etc.

Interesting! Can you send me a PM ? I have a question that I can't ask here

 

[sergeylim88]

what if he only stay 15-30 days per year(less than 90) in UAE?
then no risk with the UK company being managed from UAE

 

[JustAnotherNomad]

Nobody knows. Probably not - but we can't know that. And then he wouldn't even be tax resident, unless he has his center of life (apartment etc.) in the UAE.
Also if he spends that little time in the UAE, it may increase the risk of some other country taxing the business.

 

[SasuT]

what if he only stay 15-30 days per year(less than 90) in UAE?
then no risk with the UK company being managed from UAE

Yeah but I'll not be considered as UAE fiscal resident anymore

 

[JustAnotherNomad]

You would be if you have an apartment in the UAE rented for the whole year.