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UAE Tax Free Status: What to Know About Living and Working in Dubai

UAE Tax Free Status: What to Know About Living and Working in Dubai What is the UAE Tax Free Status, and what does it entail? The UAE Tax Free Status exempts expatriates from paying taxes on income from salary, dividends and pensions. In addition, the status provides for 100% ownership of foreign-owned companies with no capital gains tax payable. It also allows for free trade in goods and services. However, there are some limitations to the benefits of this status which include: 1) The company must be wholly owned by the individual who qualifies for tax free status 2) The company must be registered in Dubai 3) There must be a physical presence in Dubai 4) Any other sources of income are liable to taxation such as capital gains or rental income 5) Company profits that are remitted outside of UAE will incur a 20% withholding tax   What is the UAE Tax Free Status? The UAE Tax Free Status exempts expatriates from paying taxes on income from salary, dividends and pensions. In addition, the status provides for 100% ownership of foreign-owned companies with no capital gains tax payable. It also allows for free trade in goods and services. However, there are some limitations to the benefits of this status which include: 1) The company must be wholly owned by the individual who qualifies for tax free status 2) The company must be registered in Dubai 3) There must be a physical presence in Dubai 4) Any other sources of income are liable to taxation such as capital gains or rental income 5) Company profits that are remitted outside of UAE will incur a 20% withholding tax   How to apply for UAE Tax Free Status There are two routes to qualifying for UAE Tax Free Status. 1) If you are a citizen of a country that has a Double Tax Agreement with the UAE, then you can apply for UAE Tax Free Status 2) If your country does not have a Double Tax Agreement with the UAE, then you will need to be sponsored by an individual who is either:
  1. A) Citizen of the UAE
  2. B) Holds a 20% shareholding in the company
    What are the benefits of UAE Tax Free Status? The UAE Tax Free Status exempts expatriates from paying taxes on income from salary, dividends and pensions. In addition, the status provides for 100% ownership of foreign-owned companies with no capital gains tax payable. It also allows for free trade in goods and services. The benefits of this status include not having to worry about any potential tax liabilities in the future, which is especially helpful if you are planning to stay in Dubai for a prolonged period of time.   Tax-free salary, dividends and pensions The UAE Tax Free Status exempts expatriates from paying taxes on income from salary, dividends and pensions. In addition, the status provides for 100% ownership of foreign-owned companies with no capital gains tax payable. It also allows for free trade in goods and services.   100% ownership with no capital gains tax One of the main benefits of the UAE tax free status is the 100% ownership of foreign-owned companies with no capital gains tax payable. This means that if you are a non-UAE citizen living and working in Dubai, all your profits from your Dubai-based company are tax-free. And if you own more than one company, there is no limit to how many you can have under the UAE tax free status.   Full freedom for trade in goods and services The UAE Tax Free Status is advantageous for those who want full freedom to trade goods and services. This status exempts expatriates from paying taxes on income from salary, dividends and pensions. In addition, the status provides for 100% ownership of foreign-owned companies with no capital gains tax payable. The primary benefit of this status is the ability to start a business in Dubai with no taxes or restrictions on export.   Limitations of UAE Tax Free Status The UAE Tax Free Status has certain limitations that must be taken into account. 1) The UAE Tax Free Status only applies to individuals and not companies or partnerships, so those who are employed by a company will not qualify for the tax free status. 2) There is a 100% ownership requirement. This means that if the company is owned by two individuals and one of them doesn’t qualify for the tax free status, then the company will still be liable to taxation. 3) The physical presence in Dubai requirement also means that people who live outside of Dubai but work in Dubai must pay taxes on their income earned there. 4) Any other sources of income are liable to taxation such as capital gains or rental income. If your total income exceeds the cap set by the UAE Government, you may have to declare your entire global income and pay taxes on it.  

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