Taxes are the basis for existence of any economy of any country. They provide an opportunity for development of infrastructure of the state, its security and social protection of citizens, etc. Furthermore, taxes can also be deemed a factor that may hinder the development of business and the economy by imposing excessive charges on business.
For this reason, the challenges faced by any state is to find a balance between the level of taxes and fees required for covering government spending and to maintain them at the level that will foster the development of business.
So, what constitutes an ideal tax system in the world? It is a system that attains perfect balance!
As a matter of fact, it is unlikely that you will attempt to open real business in the country with low tax regime or tax free status, but which fails to provide sufficient legal protection, and standard level of security for work and life.
Besides, it is unlikely that the country, which meets practically all criteria, but has the level of taxes that prevents from doing business, will constitute an attractive destination for doing business.
We have prepared an analysis of the tax systems of different countries in the world. Subject to the results of such analysis, we have concluded that one of the best balances related to the ratio of government fees and business taxes and available infrastructure, legal framework and all other components required for successful business is available in the United Arab Emirates.
This country offers one of the best tax systems in the world. The reasons for such conclusion are follows:
- No tax charged against most types of business activities. Of course, there are some indirect business taxes in the form of license and registration fees charged to companies, lease of premises, in most cases signed with administration of free trade zones, etc. But such fees do not constitute substantial amounts.
- No additional costs related to payment of wages. To such an extent, of course, some fees are charged for work visas and compulsory insurance of the employees, but in total they do not constitute substantial amounts.
- Conclusion of agreements for the avoidance of double taxation with various countries, which allows to use the advantages of companies in the UAE in terms of structuring of companies doing business in different countries.
- Clear and comprehensive legal framework for registration and operation of companies with 100% foreign ownership.
- All required constituencies for business – any type of premises, logistics, infrastructure, banks, etc.
In addition to the aforesaid, apart from tax preferences for business, the UAE also offers significant advantages for individuals residing in the country. Such preferences include tax free status with regard to most types of income of individuals being tax residents of the UAE.
Taking into account the aforesaid, the economy of this country is one of the most stable and fast developing, and offers, in addition to tax incentives, also a number of other benefits for business and residence.
In summary, it may be stated that the UAE offers one of the best tax systems in the world for successful development and conduct of business in different areas.
Furthermore, this country offers the possibility of establishing different types of companies with different costs and challenges that can be addressed through such companies.
If you have any questions relating to registration of companies in the UAE and maintenance of business in this country - please write to us - our specialists will be happy to answer your questions. Besides, we would always be happy to see you at our office in Dubai.