NEW Corporate Taxes In Dubai | CFC Rules | Small Business Relief & Permanent Establishment Rules

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Mentioned in this video: We go over our opinion regarding the implementation of Dubai's new corporate tax. Is it still worth it? Let' go over all the details you need to know about Dubais 9% tax. In this video, we're going over Dubai , corporate taxes, and all of the important things you need to know about setting up a business in Dubai and the implications that being a resident or even a nonresident in Dubai has on your international companies. I will be diving deeply into information like corporate taxes on foreign companies that are not registered in Dubai also known as CFC which is the controlled foreign corporation rule and I will be going over important things like per minute establishment rules on companies, registered outside of the UAE, but have permanent establishment inside of the UAE. I will be going over other important information like what happens when a company has more than 3 million AED in revenue and discussing things like the small business relief in Dubai
Important Disclaimer: This video is for informational purposes only and should not be considered as tax or financial advice. It's essential to consult with a certified professional for personalized guidance and to ensure your specific circumstances are taken into account.

[@GenZone_]

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[@abdoubusiness]

Keep up the great content man !

[@GenZone_]

thank you!

[@HilloFX]

Thank you for keeping us up to date, Kevin! 💪 I have one question tho.. You mentioned in some comments the salary must be reasonable, and you can’t just take all the profits as salary. What percentage of company profits would be considered a reasonable salary? Thank you in advance!

[@GenZone_]

We go over specific things like this within our paid service with clients :)

[@zachrome91]

A reasonable salary would be in line with the market. If the CEO of a similar sized hotel takes $50,000 per annum salary, you as the owner of a similar sized hotel should be taking around this much. But if you decide to payroll yourself $150,000 salary to escape tax then you are in trouble.

[@HilloFX]

@@zachrome91 I know people who pay themselves much more than $150K a year. I would argue it's calculated percentage-wise since that's just more smart. From what I've heard some pay 30% of their business profits to themselves as a salary + 6/12 month profit takes as a shareholder. I'm just keen to understand what's the very maximum you can take percentage-wise without problems as my business doesn't require reinvesting profits that much.

[@Jack__Reaper]

@@HilloFX There is no set amount. you have to be reasonable. and what is reasonable one year, might not be reasonable next year. So if you make $1million and pay yourself 900k, is that reasonable? No probably not. But would 250k be reasonable. Probably. So it's all about where the line is and as someone else said, it's in line with the wages of a CEO for a company of your type. If you can see salaries of a CEO for a 10 person company are roughly 200k to 400k then you could likely justify it. As far as i can tell , the authorities in the UAEare lenient with this stuff. but the key is dont be greedy and dont be stupid. Don;t take the piss. Make it easy for someone to look the other way, dont throw it in their face like a moron. Also you can have all sorts of expenses through your business to minimize the tax. But you're paying 9% on the revenue, not 49% like you do in most western countries, or even 59% ot 69% in some hellholes. Be gratious and pay the small nominal tax and enjoy everything the UAE has to offer. DONT BE GREEDY and make it easy for them to ignore you.

[@HilloFX]

@@Jack__Reaper Thank you for this info! What about profit takes / bonuses? I've heard some CEO's take 4 months of salary as a bonus every 6 or 12 months. What's your thoughts on this?

[@user-rj2hs5fm7s]

To be clear UAE 🇦🇪 has no CFC rules but they do have ESR. The US LLC tax liability arises due to the ESR regime. Some other KZbinrs claiming that recently a AED 1M threshold has been defined as the max you can draw from your foreign entity (and bring into UAE annually) and not have to pay any tax on it (as long as rest of the funds stay within the foreign company) = no idea if true but if anyone reading this knows please confirm!

[@GenZone_]

@@user-rj2hs5fm7s the 1M personal income is correct but watch the video to see that ESR is important it’s basically CFC

[@GenZone_]

@@user-rj2hs5fm7s also you can watch the video I covered in this video on KZbin by the FTA

[@user-rj2hs5fm7s]

@@GenZone_ so you can def pay yourself 1M per year and not pay CT on your offshore entity?

[@GenZone_]

@@user-rj2hs5fm7s the 1M rule is based on a resident of the UAE who is a sole proprietor who has business that aren’t registered. The income you can make has a lower threshold at only 1M

[@user-rj2hs5fm7s]

@@GenZone_ Awesome! So zero CT with an offshore entity if you’re willing to live on less than 1M a year.

[@Vintagevibes946]

What makes a US LLC fall under a category of controlled and managed in the UAE? If someone is a tax-resident for domestic purposes by staying only 90 days a year, and all other days of the year is outside the UAE. Does the US LLC liable to corporate tax in the uae or since the owner is only 3 months per year it doesn’t have to be liable for corporate tax ?

[@GenZone_]

If your US LLC is managed or controlled from the UAE, meaning key decisions are made there, it could be liable for UAE corporate tax. Even if you're only in the UAE for 90 days a year, even if you are a non resident of the UAE and spent only 10 days! There are a lot of other factors to consider so it's crucial to consider the bigger picture and consult a tax professional and pay them for guidance.

[@GenZone_]

As you can tell this is very vague right, thats why unless your US LLC literally has nothing to do with the UAE then don't mess around to only save 9%.

[@raoahsan4926]

So informative. Thanks mate I am planning to move to Dubai.

[@GenZone_]

Always welcome!!

[@aqibnoor]

You are doing great work but in my opinion you need to clarify that if person owns both UAE and US companies than there is no relationship between the two entities and is out of the scope of UAE tax laws.

[@GenZone_]

Hey! Thanks a lot This video is more for people who are trying to trick the UAE tax system and not people who have legitimate separate businesses with permanent establishment in another country. Please let me know if I missed anything thanks again

[@GenZone_]

It all comes down to permanent establishment as per UAE tax laws.

[@vrsen]

I thought wealthy expat said Dubai does not have controlled foreign company laws, so you can pay up to 200k USD from your llc in personal income without that LLC being subject to corporate tax. Is that true?

[@InternetMadeCoder]

Yeah Wealthy expat is clueless

[@GenZone_]

You can verify the facts in the video yourself: tax.gov.ae/Datafolder/Files/Guides/CT/Taxation%20of%20Foreign%20Source%20Income%20-%20EN%20-%2016%2011%202023.pdf

[@tomw3102]

what if i personally own a US LLC? not my company owning it

[@aqibnoor]

Its not taxable.

[@GenZone_]

@@aqibnoor Why do you say it is not taxable? If he owns the company fully and it living and operating from Dubai you still think it's not taxable?

[@whocareswhoiam2day]

IP licensing missing in the list or qualified activities for cit free

[@aminaliuk]

What if you pay yourself and others massive salaries shrinking your profits? Is there any corporate tax?

[@GenZone_]

Salaries must be reasonable

[@djmaniax403]

What if your only opening a freezone just for the visa

[@GenZone_]

Can you please elaborate?

[@TechWithAdil]

If you have Freezone company in Dubai but all of your income in from KZbin USA or Affiliate as foreign personal income do you still have to pay 9% tax? or it will be considered personal income with 0% tax?

[@GenZone_]

KZbin withholds 30% on your adsense revenue

[@flyinpatrick]

The point at the end I do own 100% two completely separate companies and separately do not go over the 3 million limit would I still need to register?

[@GenZone_]

If it’s separate you can contact a tax professional to review your case 🙌 [e-mail]

[@rakibench6673]

does it apply to freezone ?

[@GenZone_]

@@rakibench6673 yes

[@alexandrudodon1]

This is interesting, but a question rises for sure: what if I own a US LLC, but someone else manages the company for me who's not a tax resident in the UAE? In this case, the company is not managed from the UAE, no? Also, if the US LLC is sending money to the UAE company and I own both, will they total up the revenue from the US LLC and the revenue from the UAE company to calculate the 3 million AED threshold or will they only look at the US LLC revenue since that's the company that made actual revenue and the UAE company is for moving the money here?

[@sophiew8239]

It depends on whether the person managing your company has actually control. If they simply do what you ask so the de facto control or real decision making power lies with you, then the company is centrally managed and controlled by you from Dubai which triggers the UAE tax nexus and the 9% corporate tax liability. One solution could be to have multiple directors/ managers of your LLC and ensure that the majority of them are based in and exercise their decision-making authority from the jurisdiction in which you want your company to be tax resident.

[@alexandrudodon1]

@@sophiew8239 thank you! And what are your thoughts on the other question? If I have a US LLC and a UAE company. The US LLC has revenue from clients, but then it sends money to the UAE company. Does this mean both revenues would be added up for the 3 million AED umbrella or only the revenue from the US LLC since the only money coming into companies owned by me from the outside while the UAE company gets money from another company that I own?

[@GenZone_]

Correct, that being said even a dubai non resident who has a US LLC, if it has PE in dubai it is taxed in Dubai. "Where a Non-Resident Person, which is a juridical person, has a Permanent Establishment in the UAE, it will be subject to Corporate Tax on Taxable Income attributable to that Permanent Establishment. 30 Taxable Income, irrespective of its source (i.e. whether derived from the UAE or a foreign jurisdiction) will be subject to Corporate Tax if it is attributable to its Permanent Establishment in the UAE. In other words, a Non-Resident Person can be subject to Corporate Tax on foreign source "

[@GenZone_]

@@alexandrudodon1 The revenue is under an umbrella, I mentioned this at the end of the video 6:00. This is in a simple case, of course. It can be a separate entity in some cases depending on the nature of the business and operations.

[@sophiew8239]

@alexandrudodon1 and on the comment below about permanent establishments (or PEs), you as an individual could constitute a PE for your LLC in the UAE. A PE is a tax concept which essentially means 'tax link'. If you are considered a PE of your LLC and you are based in the UAE, then anything done by you in the UAE which generates profits for the LLC, would then be taxable at the 9% UAE corporate tax in the hands of the LLC. A common way to avoid this is that you do not sign key commercial contracts on behalf of your LLC while in the UAE. You travel elsewhere (the US) to do this or get someone else who is not UAE-based to sign on behalf of your company. I don't know the answer to your other question so defer to GenZone's reply below. I'm a tax lawyer but not UAE-qualified. I replied because a lot of UAE tax concepts borrow from common law jurisdictions' tax laws which I'm familiar with.

[@akashsxo]

do i have to live 90 days in UAE for tax residency,even if If i get a Golden VISA through buying real estate ?

[@GenZone_]

kzbin.info/www/bejne/gYiwhn-virKdmsk So if you don’t own a business in UAE, or carry employment in UAE, or don’t have a permanent place of residence in the UAE, then your only option is to stay in the UAE for more than 183 days for tax residency

[@akashsxo]

@@GenZone_ Yeah,i saw your video, sorry, I forgot,thanks

[@FoundationMerch]

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