Breaking News: UAE (Dubai) is Introducing Corporate Tax!

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What we all feared is coming to life - UAE is introducing taxes! corporate taxes to be precise.
Dubai is no longer going to be a tax haven where many wealthy entrepreneurs from all over the globe come to live.
A ministry statement said the new regime implies a standard statutory tax rate of 9%, as well as a 0% rate for taxable profits up to 375,000 dirhams ($102,107.50) in order to support small businesses and startups. ... In 2018, the UAE introduced a value-added tax on most goods and services at a standard rate of 5%.
This new tax regime is going to be introduced in June 2023.
Luckily much of the tax-free regime, including no personal income tax, remains. But the Finance Ministry said it was launching corporate tax to align with international efforts to combat tax avoidance, as well as to address challenges arising from the digitalization of the global economy.
The ministry added that the move would pave the way for the introduction of a global minimum tax rate that would apply a different corporate tax rate to large multinationals that meet specific criteria.
How is this going to affect you and your business? Is UAE still going to be a good option even after they introduce these changes?
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Author: Michael Rosmer
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[@libertarianspirit]

That's bad. And it's result of pressure from socialist western countries. Remember that more than 100 years ago, US introduced 7% top tax rate. It always starts with small and grows indefinitely.

[@silverhawk3043]

The gravy train is over 😃

[@dariusrana8487]

💯. They always start small and then it grows. VAT is an indirect tax and the beginning. I can see personal income tax in 2030. It will start at 5-10% but increase over time.

[@jdbos5530]

At the very least, there will be additional compliance costs (auditors, tax consultants, etc.). Prices of goods and services will also go up across the board to account for Corporate Tax. First, we had VAT in 2018 and now Corporate Tax from 2023. Who knows what else is coming down the road?! Re-evaluating my future in the UAE for sure.

[@ThomasTomiczek]

Given that this hits businesses that either have to have audited books anyway (yes, that is still a thing in Dubai) and you have compliance with VAT anyway, this "additional compliance" is exactly zero additional effort. Thanks for pointing out a lack of understanding of basics on your side.

[@OffshoreCitizen]

Understandable. What is your plan B?

[@azizsiddique1937]

Hahaha Middle eastern countries are always like tht, full of surprises, I'm pretty sure they will start the personal income tax really soooon

[@jdbos5530]

@@OffshoreCitizen Within the GCC, Bahrain springs to mind as a Plan B.

[@EnderViBrittania]

@@ThomasTomiczek Maybe you missed his second and huge point, that prices of goods and services will have to go up as a result… and third point that it is now a pattern of tax increases since VAT tax in 2018.

[@daniels4654]

I'm a new subscriber, really enjoy your content! Saw this news this morning and my first thought was that "I think Michael will make a video about this real soon" 😁

[@tw9419]

Wow, it has begun! Here’s my thought process: it’s already very expensive to live in UAE, company formation costs are astronomical, so are all the other costs to be honest. Many people could justify it with the lack of tax, so even if you pay overinflated prices for literally everything at least you’re not paying taxes. I’m not sure how will they keep their competitiveness on the global market, when there are so many cheap low tax places to choose from! Okay for now there’s no income tax, but what if they introduce that as well and tax you at 9%? Why stay in Dubai in that case? It’s already crazy expensive, and if I have to pay taxes on top of that it’s simply not a good deal anymore. Montenegro, Bulgaria, Malaysia, Portugal, Cyprus, etc. These are all great options and beautiful countries with lower costs of living. I’m afraid that UAE may be shooting them selves in the foot. I understand it’s global compliance, we’ll have to see how they structure it. It could go either way.

[@OffshoreCitizen]

I think they'll be able to maintain zero tax for people who live there for quite some time. We'll see.

[@adelbenaida5597]

I just started following you since two days only.. and then you come with this !!!!

[@OffshoreCitizen]

Were you warming up to Dubai?😬

[@adelbenaida5597]

@@OffshoreCitizen not for now, i want to ask you please if possible. What type of visa i need to day trade from dubai as freelancer (not incorporated) ? does the freelancervisa allow me that ?. or if i purchase a residence of more 1 million AED, does this allow me to work as day trader as solo person ? Thanks so much from Montreal :D

[@tinglestingles]

There always seems to be shifting sands in this industry. Surprised at the UAE. I guess they are used to shifting sands??

[@Shabaazs]

a few things to explore further here Michael, first what about Freelance income via the Freelance visa's where you're a sole professional and not a company. And then what about business income below the threshold, how does that go? Do you just give a simple notification or a report to the government that you're below the threshold? Or get your accounts prepared, audited and filed and claim the exemption? These would be really important aspects.

[@ThomasTomiczek]

Nope. that is only for companies, personal income is not taxed -> freelance is tax free.

[@AIRfree]

Freelancer licence , i think , is also considered a company

[@HunkyMan777]

Freelance is considered a business

[@OffshoreCitizen]

The truth at this stage is it's mostly speculation, we'll find out the details over the next year and I suspect they'll adjust the details based on the feedback they receive. I suspect all businesses will need to prepare annual reports to show the income levels. Freelancing is questionable, traditionally it hasn't really been a thing in UAE.

[@hankclarckson224]

some years ago brits were heading and investing and working in dxb coz of tax free.if westerns leave uae end of party.uae wil be like oman and bahrin and locals wil work as a taxi drivers.

[@briantse8887]

So now what? What’s the alternative?

[@OffshoreCitizen]

Stay tuned 😄 Do you have any ideas?

[@newbiekhyber]

You forgot to mention an important point. Without this corporate tax, UAE runs the risk of being greylisted by the FATF, plus the Houthi threat looms large.

[@RomilCPatel]

I don’t like this. It seems like the UAE is slowly heading in the wrong direction. This makes me want to find other countries to go to instead. Out of curiosity, are there any countries that have zero tax on everything and no need to even file any taxes?

[@azizsiddique1937]

Probably the Bahamas or Anguilla but not so sure

[@OffshoreCitizen]

I've done a video on all the 0% tax countries. To be fair I don't think you can generally say UAE is headed in the wrong direction. Overall their direction is one of the best in the planet. Who else competes?

[@UnitedChristians.Academy]

Interesting! So if I have a car company in Dubai selling cars for Dubai and also international; will need to pay this 9% tax?? Thank you for the video

[@OffshoreCitizen]

That's the way it is sounding yes, though I suspect we'll be able to plan around most of it

[@markbatcho60]

Not a big deal ....you just reduce corporate taxable income by paying salary to owners....also income outside UAE is not subject to tax....

[@beeb7477]

Dubai is a luxury desert, its livable only 2 months per year, your are a prisoner in your own house. Add to that low culture, restricted life. Not to mention, authoritarian non-democratic country. Human rights is something of a joke there.

[@ThomasTomiczek]

Absolutely not true. While I agree it is hard to live here during high summer, iti s more like "good to live here for 8 of 12 months", not 2 months per year. Even if you go extreme - 6 of 12 months. And not really any restriction. Try living here. I do - not feeling any restrictions.

[@PureAlbania]

I belive you don't need to be there all year.

[@chocmilkisgood]

I honestly just can't stand the heat in Dubai. I spent 4 months (I think it was the coldest months lol) and I felt like I was suffocating from the heat all the time and constantly sweating (I'm skinny). But then again, I prefer like 10-20 Celsius climates for living. I think a topic that doesn't get discussed enough in offshore/digital nomad is weather or maybe I'm just autistic lol

[@OffshoreCitizen]

Dubai weather is pretty exceptional by most people's standards from at least November to March. October & April are warm but do you dislike the summer in Europe because it's about like that. I'd say June through September are pretty bad but that works well because during that time it's nice in North America and Europe. Flip it around, much of Europe, the US & Canada are pretty unbearable for 4 months a year sometimes much more, you're basically a prisoner in your house. It's not that different, just different parts of the year, which is a plus because you can rotate. As for low culture and restricted life? I don't think you've actually lived there, Dubai feels more vibrant and free than much of the world but it's easy to have other biases before you live there. It's not for everyone but what place is?

[@GrahamWinship]

Could you do a video on 2nd residences? How long can we spend in countries that aren’t our main residence? Can you own a car/house there? Can you get trapped in their tax net? Etc

[@OffshoreCitizen]

Some of it is already covered in these 👇 kzbin.info/www/bejne/g3m8h2qHdtCBe7M kzbin.info/www/bejne/r6PJYYl3qLOmm68 Usually the 183 residency rule applies. What do you think about the news from today's video?

[@GrahamWinship]

@@OffshoreCitizen thank you I’ll check them out, it makes my decision of Thailand > Dubai seem that much better lol

[@MrGreen087]

It was expectable. Oil is not forever. Income tax is next.

[@ThomasTomiczek]

Yeah, but you are aware Dubai NEVER really had enough oil? And what they had started the city growth and ran out a LONG time ago. So, non argument.

[@OffshoreCitizen]

This has nothing to do with oil, oil has been about 2.5% of GDP for ages. I think it will be a long time before they introduce personal income tax but we'll see.

[@fritzmetzger22]

The OECD strikes again!

[@victorpod4068]

9% is still better than 40% in Canada for example (for large businesses). Taxation is only a part of a problem of doing business in each particular country, but there are also other factors to consider such as an overall business environment and regulations. UAE is still more attractive (at least for me) than West and it is definitely difficult for the country to resist West pressure. And even if UAE won’t be competitive anymore one day, there will always be a place to go.

[@OffshoreCitizen]

What makes the UAE more attractive?

[@victorpod4068]

@@OffshoreCitizen 1. Good conditions for doing business. 2. Growing economy versus stagnating and debt fuelled one like in Canada. 3. Progressive mindset versus regressive in North America where people want to build failed socialism and this it will be a win. 4. Great strategic geolocation 5. Great to build personal wealth versus buying a home in Ontario and betting that it will appreciate and the bubble never pops Those are just my thoughts, very personal. I totally respect other opinions as well

[@pak74x]

Something to do with a threats to blacklist UAE in february?

[@OffshoreCitizen]

Probably along those lines, bully behaviour over sovereignty

[@EnderViBrittania]

@@OffshoreCitizen Also the US could further offer military aid (missile defense against Houthis), as a carrot to entice the UAE to play ball, since UAE does have its own leverage (oil) otherwise to refuse.

[@Carey1135]

Do u think in future they will tax freezone companies ...

[@ThomasTomiczek]

50 years tax free in the charter of the freezones, iirc, after tax is introduced. Read up - hidden somewhere.

[@OffshoreCitizen]

Yes I think they will or make the exemption limited to just a few years.

[@Carey1135]

@@ThomasTomiczek 50 years. Wow that is good .

[@kearneybird]

I’ve just set up a “FZE LLC” with plans to move in March. Will this come under those new laws

[@OffshoreCitizen]

They are saying free zone companies not operating in the mainland will continue to enjoy tax incentives, it remains to be seen what the details of that will be

[@EnderViBrittania]

@@OffshoreCitizen Didn’t it say freezone companies without UAE customers will be exempt from the tax?

[@Funfitexplore]

Hi michael my friend is thinking the same thing . Would you recommend a agent that could help on set up FZE and bank account please ? Thanks

[@donkeysaurusrex7881]

Finally, let people immigrate. Reduce the freedom that made immigrating attractive in the first place.

[@bobo-uv9ls]

The 9% is for Mainland companies. Not the freezone ones. At least for now.

[@OffshoreCitizen]

Well they haven't really clarified how it will work for Freezone companies only that "they can continue to enjoy tax benefits"

[@julioalmeida4645]

Portugal have NHR for nationals out of the country for 5 years. Using the 0% tax salary still is a huge hack for people to come back and not be taxed.

[@OffshoreCitizen]

Have you seen some of our vides on Portugal?

[@julioalmeida4645]

​@@OffshoreCitizen Yes I did. And I have sent them to a lot of people. You guys explain very well the difference between golden visa and NHR. Unfortunately in Portugal, people think the expats come here for the good weather and pay 48% on IRS.

[@gubli96]

US LLC owner living in the UAE would be 0% tax as it is considered personal income as I understand. Thanks for your videos Michael

[@OffshoreCitizen]

Are you a US citizen?

[@nicolas4771]

Yeah, but then not sure how you would get a residency permit in the UAE

[@NomadicJulien]

Any idea if this will impact the freelance license?

[@OffshoreCitizen]

Not sure yet

[@unknowninfinium4353]

First. One thing you mentioned caught my attention. When you mentioned Crypto, do you think that companies will shift to Crypto?

[@OffshoreCitizen]

Big companies no, think from the perspective of a public company CEO it's not your money your incentive is to follow the law. Smaller businesses will be different

[@richhitch3242]

Big mistake UAE. I'll be moving on for sure.

[@OffshoreCitizen]

Where to next?😄

[@newbiekhyber]

@@OffshoreCitizen Wherever Houthi's cannot bomb...:-).

[@wearewe4640]

They are moving in the good direction. Next : becoming a desert city in the desert

[@jonathanbartsch2938]

Bait N' Switch - what a betrayal!

[@HB91LDN]

Everyone gets greedy eventually!!

[@OffshoreCitizen]

I don't think greed has anything to do with it honestly

[@BrendanMetcalfe]

🔥🔥🔥

[@OffshoreCitizen]

What do you think of today's news?

[@MrAmhara]

I'm not a fan of UAE. Hopefully some others countries will create better alternatives of wealthy nomads.

[@OffshoreCitizen]

What countries would you like to do so?

[@rogersan4352]

WHAT!!!!?

[@OffshoreCitizen]

This was our reaction too! 😂

[@wilmarego6424]

It's very expensive to live in dubai...not worth it.

[@OffshoreCitizen]

How long have you lived in Dubai? How was your experience?

[@jesselivermore9285]

So long as the UAE does not implement a capital gains tax they will remain competative

[@OffshoreCitizen]

So long as they don't implement personal tax they'll be competitive

[@EnderViBrittania]

@@OffshoreCitizen Yeah, capital gains tax is only one piece of the puzzle. Personal income tax is also a huge attraction of UAE for skilled labor to even think about coming to a Muslim desert, and that skilled labor is responsible for Dubai’s economy.

[@newbiekhyber]

@@OffshoreCitizen And do you think corporates will not eventually pass on this tax to individuals/customers/consumers?

[@BDevil815]

@@OffshoreCitizen Don’t worry. Corporates will start offloading the tax burden on their employees or job seekers and that would indirectly render the place unattractive to expat workers.

[@dariusrana8487]

Personal tax will definitely come in 2030. That's my prediction. If you look at the UAE it's clearly following a socialist path. For example the working week is now 4.5 days. Back in the day it was 5.5 to 6 days a week.

[@HunkyMan777]

What a stupid decision is this?

[@OffshoreCitizen]

Well it might seem that way and obviously for some of us it sucks. But from the other perspective do you want to end up like Malta where it's impossible to bank? Right now the environment is one of extreme global pressure, it will get worse before it gets better.

[@EnderViBrittania]

@@OffshoreCitizen UAE has strategic oil as leverage, though.

[@HunkyMan777]

@@OffshoreCitizen The UAE is so rich and powerful they don't need the money. All they have to do is say to the OECD back off " If you sanction us, we will cut off the oil supply and cripple the world". Combined with other arab countries they could do it". The OECD would back down real fast

[@jessyjiana7672]

Malta is the second option 😂😂😂

[@OffshoreCitizen]

Nice! What drives you to Malta?😄

[@patienceisalpha]

Aaaannnd here it starts. Disappointed but I guess they are long term thinking. Ie they introduce a tax before being bullied to do it

[@OffshoreCitizen]

I think they are trying to walk a fine line of trying not to appear as a tax haven while maintaining their incentives and attractiveness

[@ThomasTomiczek]

Not sure what you assume has changed. This is a very limited tax that mostly has the end effect of a VAT - basically, all non trivial companies people interact with have to pay 9% tax (restaurants, shops). Get a wage as owner and that is tax free (this is only on corporate profits). Investments (investment companies) are tax free. Personal income is tax free. Basically run an investment company and it is tax free (even as company, rent, investments) are not taxed. This is really limited. And remember freezone guarantees of 0% (for 50 years). Really as you say - this is basically like a VAT, (as in: you consume something, the company has to get more money from you as some is lost to their tax) taking in some profits out of companies serving the population and country leaving all the rest untouched, including literally pretty much all operations done by rich people.

[@OffshoreCitizen]

I'm skeptical the tax free for 50 years on free zone stuff will hold. I think the bigger issue is for foreign companies wanting to set up companies in UAE because they can't benefit by taking the money out for themselves tax free.

[@lindakristinjohansen2092]

😊

[@OffshoreCitizen]

What do you think about the news?

[@lindakristinjohansen2092]

@@OffshoreCitizen it's okay. I don't have a business in this countries. 😊 If taxes are raised it's usually for the common wealth. To get better hospitals, roads etc. So if I country feel that is needs to it just might be that it's needed in some cases of the public arena. So then it's ok in my opinion.

[@jeremyleonbarlow]

If you wonder why one half of the greatest investor duo on history, Charlie Munger says pay your taxes and grow your pie bigger. This is why. It's whack-a-mole for pennies. A game of marginal value when you should be focused on exponential value creation.

[@tw9419]

It’s hard to grow the pie when they tax you 40+% along the way. Michael has a video on this actually, how much difference does the compound interest make with vs without taxes. It’s insane difference. Hard to make things meaningfully bigger when you’re being ripped off at every step of the way.

[@samuliceo]

I live in Dubai but I used to live in Finland and paid over 50% taxes in total. In Dubai I’m earning twice as fast and investing twice as much. It’s a crazy difference and you would be surprised how good and easy life can get when your income basically doubles over night. Business is hard enough as is it is. The vast majority of business owners will be suffering with insane 50% taxes for no reason and very few will make serious money. Now living in Dubai I’m shocked how people ever let the governments go to a point where they can tax 40-70% of your generated revenue (business + personal). It’s legal slavery.

[@vimalcurio]

@@samuliceo ikr