From June 1st, 2024, self-employed persons, freelancers and companies based in the United Arab Emirates will have to pay 9% profit tax on all profits over around EUR 100,000. Small businesses with a turnover of less than around 750,000 euros are exempt from the tax.

99% of all Freezone companies are also affected by the tax
The fact that practically 99% of all free zone companies (FZEs) are also affected by the tax was only announced today and hits many people like a slap in the face.

The first draft laws said that those FZEs that only generate sales abroad would be exempt from tax (we have already reported on this in this article). But that is definitely not the case.

For an FZE to be tax exempt in Dubai, three conditions must be met:

Firstly, the FZE must generate 95% of its sales from the following activities:

• Manufacture of goods or materials;
• processing of goods or material;
• reinsurance;
• Holding stocks and other securities;
• vessel ownership, management and operation;
• fund activities;
• Wealth and investment management;
• Head office activities
• Intra-group treasury and financing services;
• Financing and leasing of aircraft including engines and retables;
• Transportation of goods or materials into or out of a designated Free Zone;
• logistic services;
• and all ancillary activities to the activities listed above.

Second, for tax-exempt FZEs, the following are prohibited:

• transactions with natural persons,
• income from certain regulated financial services,
• Income from intangible assets,
• and real estate income, excluding transactions with other FZEs relating to commercial real estate in a free zone

Thirdly, it was confirmed that in the United Arab Emirates only those FZEs will be able to claim the tax relief in the future, where the value creation takes place completely in the free zone, i.e. by local employees in the free zone or service providers in the same.

For most clients, the UAE will have been done with as a location.

Of course, Dubai is still attractive as a place to live. There is still no income tax. But anyone who moved to the UAE to do business there and not pay taxes is now faced with a heap of rubble and can start all over again.

However, there are a number of alternatives to living in the UAE and a Freezone company in Dubai, where entrepreneurs can set up and operate companies at low taxes – and at lower costs and with far less effort than has been the case in Dubai up to now.

Malta is ideally positioned here. A company resident in Malta as a non dom on the island guarantee a 5% total tax burden.

Other solutions we can support you with include:

• Live in Spain, Italy or Portugal with company in Malta – 5% tax
• Living in the Bahamas (1 hour from Miami) with US LLC – 0% taxes
• Living in South Africa with company in Singapore – approx. 4% tax
• Living in Montenegro with the lowest tax rate in Europe of 15%

 

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We’ve helped hundreds of people move their businesses overseas, legally reduce their taxes, and become dual citizens. We are focused on high-net-worth individuals and their families as well as corporations wishing to invest their offshore companies or even secure their wealth in offshore financial centers around the world. We will help you to find the best solution for setting up an offshore or onshore company. Another special area of our full-service consulting is the investment opportunity and solution in Europe, especially in the Balkans, Africa, Asia, UAE, the Caribbean and the Pacific.

If you are looking for it, please feel free to contact us. We create a holistic plan that serves your purpose.
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GCI UNIT Worldwide, designs and implements customized, holistic strategies for successful investors and entrepreneurs to legally reduce their tax bills, diversify and protect their wealth, invest abroad, gain a second citizenship and live a freer life worldwide to lead.

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If you would like to discuss your internationalization and diversification plans, book a consulting session* or email us under: [email protected]

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