Business News UAE – CPA Audit Firm in Dubai

What is an Offshore Company in Dubai UAE?

Naqqash Ahmad — Fri, 25 Nov 2022 05:45:39 +0000

This article will give you every bit of crucial information you need to establish an offshore company in Dubai and the UAE as a whole. It will also inform you about the types of businesses that cannot be set up as offshore businesses. It will provide a list of documents needed to register an offshore company and lastly whether a business owner should hire an agency to assist in the incorporation process.

Let’s start with the most basic question:

What is an offshore company in Dubai?

An offshore company is any company/corporation/firm that is established on one land but operates on another. This is mainly done to avoid taxes on the profits that it is making. The hard-earned profit that businesses can spend on the expansion of the business is excessively taxed which discourages business investment. Not establishing an offshore company in Dubai could be a catastrophic decision for an expanding business.

There are innumerable places to open offshore companies. But incorporating your business in Dubai has its merits. These are 6 irresistible reasons to incorporate your offshore company in Dubai.

No outrageous corporate taxes.
Captivating Political stability.
The financial hub of the world: businesses get close to their trading partners.
One of the most popular business establishments in Dubai.
The best system for wealth management, international investment management, and freedom of operations.
Privacy and anonymity.

Why is DUBAI the most Inspiring place to form an offshore business?

Dubai is named in the same league as Frankfurt, London, Hong Kong, and New York. It provides all the benefits of tax havens without the bitter nuances of other tax havens. It is a place that does not penalize a business that is performing well by taxing its profits.

In Dubai, a business does not generate more sales and profits merely to be doubled-taxed; neither is privacy compromised by publishing corporate reports. In fact, you hardly pay any tax and get known.

It is also the financial hub of the world where business owners get to manage their wealth and investments with ease of setup, anonymity, and privacy. In other words, business owners set up their business in a real tax haven-freeing a deserving investor indulges in profit-making without any guilt.

Before a business is established as an offshore company in Dubai, the owner should be clear about the type of businesses that can be incorporated in Dubai.

Common types of businesses that can be established in Dubai

Below is a list of common business types that are commonly formed in Dubai:

Intellectual property(IP) holding Companies
Shipping firms
General trading firms
Online advertising companies
Distribution firms
Logistics firms
General trading companies
Professional consulting services
Different types of brokers
Real estate holding firms

What offshore companies in dubai cannot do?

Given above are the types of businesses that can be registered as offshore companies. But even though these types are legal offshore firms, there are two activities that they cannot perform, given below:

Trade inside UAE
Employee people

Businesses that cannot be incorporated as an offshore company in dubai

Next, we provide a short list of the main types of businesses that cannot be incorporated as offshore businesses;

Aviation
Media
Insurance

Note: Once an application for the offshore company is submitted, all business types go through the Know Your Customer(KYC) check. It is to ensure that the activities performed under a business are legal.

Unbelievable benefits of offshore company formation is Dubai

100% ownership
Offshore companies don’t pay
- Corporate tax
- Income tax
- Inheritance tax
- Property tax
- Personal tax
Bank account
- Companies can open UAE bank accounts and hold multiple currencies.
- International expansion: offshore companies may expand to other countries.
- Stable political, economic and social base.
UAE offers one of the most stable Socio-political environments where law rules.
- Privacy
1. An offshore company cannot be audited.
- The corporate reports cannot be published
Access to funding
- Being in the financial hub of the world gives business creditworthiness and Good credit ratings to obtain financial funds for its operations abroad.
- Access to solvent foreign banks
Businesses banned other places
- A business that is banned in other countries can run its office in Dubai.
Help in IPO( initial public offerings)
Hold intellectual property and real estate.

These are some of the compelling examples of the benefits an offshore company enjoys.

Documents required to register an offshore company in Dubai

Business plan (ideal is 3 years but not a must have).
6-month Bank statement or original bank reference letter.
CV of shareholders
Passport copies of shareholders
Your address( the one on utility bills will do)
3 options for business name complying with business naming rules
Description of your company operations

A straightforward guide to the registration process

Given below are the main steps a business owner must take to register an offshore company in Dubai.

Choose a name
Fill applicating
Draft of MOA(memorandum of association) and AOA(Article of Association)
Open an onshore bank account
And follow the rules.
And put aside around AED 12,500 to register an offshore company in Dubai

Hiring an agency?

Although the UAE law is clearly stated and the laws rule in the UAE, the legal system can be tricky to understand. What at first seems like a simple process may become a nightmare for a business owner easily turning fantasy into horror. A small mistake may result in the rejection of your application. Therefore, it is advisable that a business owner hire a Dubai offshore company formation agency to guide on every step of the process. Still, an entrepreneur may incorporate an offshore company if he or she is skilled in the company formation process.

Capital Plus Auditing can partner up with you to handle all your offshore company formation tasks. Click the button below to schedule a free meeting to get our Offshore Company Formation Services in Dubai and UAE.

Corporate Tax and its Effects on Entrepreneurs and Emigres?

Naqqash Ahmad — Tue, 20 Sep 2022 17:54:50 +0000

Corporate tax in UAE is a direct tax applied on the profits of business entities.

UAE decided on this Monday that it would impose corporate taxes from next financial year stating from June 2023, so it is necessary to understand what does taxation means, and how it affects entrepreneurs and emigres in the region.

WHAT EXACTLY IS CORPORATE TAX?

A corporate tax, also called company tax, is a direct tax applied on the profit of corporations or business entities. The taxes are paid according to the company’s taxable income, which contains revenue minus general and administrative (G&A) expenses, cost of goods sold (COGS), marketing and selling, research and development, other operating costs and depreciation costs.

How does this tax help entrepreneurs and emigres?

Corporate tax is applied from June 2023 on non-residents which conduct business in the UAE through a permanent establishment. UAE authorities have confirmed that this is not a tax on individuals and their incomes.

This implies that corporate tax will not be implemented on an individual’s salary and other income received from public or private sector.

Corporate tax will also be applied on entrepreneurs or business owners of wide range of industries, mainly oil and banking industries.

Revenue earned under a freelance license/permit will be subject to tax if income is above the minimum threshold of 375,000 Dihram’s in annual profit. If individuals invest in real estate in their personal capacity should not be subject to tax if the individual is not required to carry a commercial license/permit to fulfill such activity.

How did this corporate tax come about?

Gulf economies like UAE have maintained zero or low taxes for many years to attract foreign entrepreneurs and their investment. The UAE remains an attractive place for foreign investment due to suitable tax regimes as compared to other countries in the region.

However, to create a new revenue streams a number of reforms have been underway while lowering dependency on mainstream sources of revenues. Likewise, the UAE, the several other Gulf countries, have already been announced the value-added taxes, and introduced different forms of taxes.

How is Corporate Tax is different from VAT?

Taxes are the main revenue stream for most countries throughout the entire world. Taxes help governments to generate additional revenue and public fund, there is a difference between direct taxes like corporate tax and indirect taxes like VAT and excise tax.

VAT and excise tax are indirect taxes that are collected by businesses on behalf of the government that should be borne by the final consumer. The zero or minimum corporate tax is highly attractive for businesses willing to invest in the country.

Before UAE, which other countries have this tax?

Country’s finance ministry said that “Besides from the UAE, Out of six GCC countries four countries have already corporate tax regimes, ranging from 10% in Qatar, 15% in Kuwait and Oman, to 20% in Saudi Arabia. A tax rate of 9% in the UAE makes it ‘most competitive’ in the world.

When will this start Implemented on businesses in UAE?

In UAE, Corporate tax will be applied on business profits on financial years starting on June 1, 2023.

Chirag Agarwal, founder and managing director at Dubai-based Earning Accounting & Tax Consultancy, told that:

For UAE businesses whose financial year starts from 1^st January, 2023 and ends on 31 December, 2023 will be prompted to UAE corporate tax from 1^st January, 2024”.

Why corporate tax is important for UAE?

The revenue collected from corporate taxes is utilized as the source of revenue for a country.

Paying corporate taxes can be more fruitful for business owners than paying additional individual income tax.

Vikas Arora, chief executive at Dubai-based service provider CXO Factor said that:

“With the assistance of double tax treaty networks (DTT), UAE will be at much better position in corporate tax rate,”

“It also strengthens the UA position in terms of transparency and tax structure”.

How do tax treaties help reduce corporate tax for Expats?

GCC countries have double taxation treaty (DTT) network to abolish double taxation, the UAE has treaties with 112 countries, Kuwait with 82 countries, Qatar with 60 countries, Saudi Arabia with 51 countries, Oman with 31 countries, and Bahrain with 44 countries.

Tax treaties play a vital role in reducing corporate tax for emigres having permanent establishments in other countries, or lowering their withholding tax in the four GCC countries.

Conclusion:

Taxation system is rapidly transforming in GCC countries for non-oil sectors for emigres. Entrepreneurs and business owners need to prepare tax-related documentations in advance. The authorities do not allow to revise tax returns; therefore, taxpayers should be careful in tax related compliances.