Every business wants a good start in life. So if you have the\nchance to base yourself in a place known for its tax benefits, why wouldn\u2019t\nyou?<\/p>\n\n\n\n
The UAE is the ideal location to relocate your business or set\nup a new business if you are in a high tax jurisdiction. There are a few small\ntax components that exist, but this is absolutely nothing compared to the\nfreedom and opportunities that will give any new business a financial boost\nfrom the start.<\/p>\n\n\n\n
So, here\u2019s what you need to know about taxes in the UAE, and\nwhat each one means for your business.<\/p>\n\n\n\n
1. VAT Is Set At 5%, But Not Every Business Will Be Liable\nTo Pay It<\/strong><\/p>\n\n\n\n Value Added Tax (VAT) is a tax on the use or consumption of\ngoods and services, paid at the point of sale by the consumer and collected by\nbusinesses\u2014who then have to pay it back to the Government.<\/p>\n\n\n\n Introduced in the UAE at the beginning of 2018, the 5% tax was\ndesigned to provide a new source of funding to help the Government continue to\nsupply superior public services. Yet, while it works for the benefit of\neveryone, VAT does not have to be paid by every business. Some companies are\nexempt.<\/p>\n\n\n\n VAT does\nnot have to be paid by every business. Some companies are exempt.<\/p>\n\n\n\n With that in mind, it pays to do your research ahead of time to\nsee if you will be one of them. For example, you won\u2019t be liable for VAT if you\nare under the threshold of income per year (more on that below).<\/p>\n\n\n\n What This Means For Your Business<\/strong><\/em><\/p>\n\n\n\n If your\ntaxable supplies and imports are over AED 375,000 per annum then you must\nregister and pay the 5% tax. While if your supplies and imports are over AED\n187,500 per annum it is only optional <\/em>to\nregister for VAT. Below this figure, you are not liable to pay anything.<\/p>\n\n\n\n If you are liable for VAT you can either decide to raise your\nprices by 5% to cover the tax or take it out of your company\u2019s profit, but make\nsure you file your accounts properly. You will be responsible for recording\nyour income, costs, and related VAT charges. A chartered accountant or tax\nprofessional can help you make sure your company is filing its VAT returns\ncorrectly.<\/p>\n\n\n\n 2. There Is No Capital Gains Tax<\/strong><\/p>\n\n\n\n Capital gains tax is where you pay tax on the profit gained from\nselling (or \u2018disposing\u2019 of) an item that\u2019s increased in value over time.\nOverseas investors may already be familiar with this tax because it is widely\nused (in some form) around the world, including in Europe, the US, and\nAustralia.<\/p>\n\n\n\n The good news is that there is no capital gains tax for\nbusinesses to deal with in the UAE. This frees up a lot of new startups from\nfinancial burdens that are often imposed by this tax.<\/p>\n\n\n\n What This Means For Your Business<\/strong><\/em><\/p>\n\n\n\n This might not\naffect every business, but there will be many breathing a huge sigh of relief\nwhen they realise that they won\u2019t have to worry about capital gains tax. It is\nespecially important to those businesses in the property industry or with other\nsignificant assets, allowing them to operate more freely and without any major\ntax implications from selling or disposing of those assets or shares.<\/p>\n\n\n\n 3. No Personal Income Tax And No Corporate Income Tax On\nMost Of The Businesses In UAE (Except Certain Industries)<\/strong><\/p>\n\n\n\n Another great\ntax incentive for setting up in the UAE is the lack of corporate tax at all\nlevels.<\/p>\n\n\n\n Selective\ncorporate taxes are currently enforced only on petrochemical companies involved\nin the exploration and production of oil and gas, and foreign banking\ninstitutions.<\/p>\n\n\n\n The maximum\ncorporate tax rate that applies to oil and gas companies is 55%, a figure that\nhas held steady from 2003 to 2018. Meanwhile, branches of international banks\nare liable for 20% corporate tax on their profits.<\/p>\n\n\n\n In the free\nzones it\u2019s a different matter, with businesses registered here being exempt\nfrom corporate tax for a specific period of time (which can be extended).<\/p>\n\n\n\n What This Means For Your Business<\/strong><\/em><\/p>\n\n\n\n Unless you\u2019re\nin the business of oil exploration activities or banking, you don\u2019t currently\nneed to worry about factoring in corporate tax to your outgoings. This is\nanother big positive for new business owners in the UAE who might well have\nexperienced high levels of corporate tax elsewhere in the world.<\/p>\n\n\n\n This is another big positive for new\nbusiness owners in the UAE who might well have experienced high levels of\ncorporate tax elsewhere in the world.<\/p>\n\n\n\n 4. Indirect Benefits From Tourism Tax (And A Boost From\nIts Reduction)<\/strong><\/p>\n\n\n\n There are two\ntypes of tax that apply to visitors to the UAE: hotel tax and departure tax.\nThe hotel tax includes municipality fees and other charges on hospitality\nservices and room rates at hotels or guest apartments. It is charged every\nnight of a visitor\u2019s stay and can vary depending on the type and rating of the\nplace in question. Dubai, for example, has a \u2018Tourism Dirham\u2019 fee charged per\nnight, per room.<\/p>\n\n\n\n What This Means For Your Business<\/strong><\/em><\/p>\n\n\n\n The sums of\nmoney received by these indirect taxes are actively used to improve the current\nservice delivery and infrastructure in the tourist and hospitality industries.\nThis benefits everyone and bolsters our already superior standing on the global\nstage as an in-demand destination.<\/p>\n\n\n\n However, reductions in these taxes were reported last year in various emirates. For example, Abu Dhabi will see the tourism tax drop from 6% to 3.5%; the municipality fee from 4% to 2%; and hotel fees from AED 15 to AED 10. This will ensure an even bigger draw for tourists and investors to the region ahead of 2020, helping to further boost the economy, and creating fantastic opportunities for all businesses in the region to prosper.<\/p>\n\n\n\n Source: worldwideformations.com<\/p>\n","protected":false},"excerpt":{"rendered":" Every business wants a good start in life. So if you have the chance to base yourself in a place known for its tax benefits, why wouldn\u2019t you? The UAE is the ideal location to relocate your business or set up a new business if you are in a high tax jurisdiction. There are a few small tax components that exist, but this is absolutely nothing compared to the freedom and opportunities that will give any new business a financial boost from the start. So, here\u2019s what you need to know about taxes in the UAE, and what each one […]<\/p>\n