Would being a UAE resident pull my tax-free companies into tax / regulatory framework of the UAE?

[OKboomer]

This is a two-point question.

If I were to live in the UAE and I own and/or manage companies in zero-tax jurisdictions, would my companies, on the grounds of my residency in the UAE be considered as Controlled Foreign Companies and:

1) I would be obliged to pay the 9% tax on income of those companies ?

2) those companies might be subject to UAE rules/regulations ? (For instance if these companies do stuff related to crypto which has more and more restrictions and regulations in the UAE)

And are arrangements on paper (appointing a director / ceo) sufficient, or would any effective / de facto control be deemed as effective management with the same consequences?

Maybe some folks have already experienced this? Curios to hear more. Thanks

 

[Martin Everson]

1) I would be obliged to pay the 9% tax on income of those companies ?

Yes

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Under the Corporate Tax regime, Foreign Companies which have in the UAE

1. Their Permanent Establishment (‘PE’) ; or
2. Their Place of Effective Management ; or
3. Their source of income

will be subject to UAE Corporate Tax at the rate of 9% on annual taxable income exceeding AED 375,000 attributable to UAE business operations and activities.

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2) those companies might be subject to UAE rules/regulations ? (For instance if these companies do stuff related to crypto which has more and more restrictions and regulations in the UAE)

No

And are arrangements on paper (appointing a director / ceo) sufficient, or would any effective / de facto control be deemed as effective management with the same consequences?

Full arms length setup with economic substance PE, management etc etc. We are talking UAE here not EU. They don't slap people on the wrist for violation of their laws rather cut of wrists proverbially speaking.....lol.

 

[GF150]

Under the Corporate Tax regime, Foreign Companies which have in the UAE

1. Their Permanent Establishment (‘PE’) ; or
2. Their Place of Effective Management ; or
3. Their source of income

will be subject to UAE Corporate Tax at the rate of 9% on annual taxable income exceeding AED 375,000 attributable to UAE business operations and activities.

Yes, that's the first step. I believe that has something to do with the deal for removing the UAE from some black/gray list.
But what comes next ? Probably they will tax the off-shore, then they will lower the threshold over time. The other important issue is this one: how can they know your taxable income ? You have to state it. And how can they know you will tell the truth ? Some kind of control, of course. Hence, as things "logically" call for one another in most of the countries, accounting will become mandatory..... So, we start to part with: "The UAE is for makers, not for paper shufflers" - an official punchline less than a decade ago.