The tax system is the main source of income for all major governments in the world and the disputes in respect of taxation have always been a key point for the presidential campaign in any country. However, there is one country, where it is not necessary to pay taxes on the gained income and the dividends. Also, there is no taxation for non-residents and residents residing in such a country.
UAE is the country, which is being referred to in this article. It is the country with a high level of GDP per capita, and the taxation is practically absent. You won’t have to pay taxes; Dubai has got all the advantages for doing international business. Here, you have got all the resources and facilities to let even the most daring business projects come to fruition. Modern logistics, a large number of office premises, accreditation of many major international companies make Dubai quite attractive for a multitude of foreign investors.
The main advantage for business in Dubai is the specifics of the local taxation. It can be firmly declared, that Dubai is the taxation at a zero rate virtually for all types of business with a very few exceptions.
Currently, UAE has double taxation treaties agreements with many countries. Those agreements allow avoiding double taxation, which makes business on the territory of UAE quite profitable.
The answer as to why Dubai is attractive for business is simple – taxation under special terms. Those terms represent the complete absence of taxes as opposite to other developed countries. For example, there is no income tax for natural persons. Whereas, in other countries, an employee pay taxes depending on his/her salary, in UAE employees pay no income taxes either.
Regarding the corporate tax, which is paid from the profits by legal entities, in UAE, only those companies trading in oil and gas as well as have banking as their nature of business, pay taxes. Banking and oil companies who do business inside UAE pay corporate tax. However this relates only to companies acting on local market. If the company, for example, is the international oil trading company dealing worldwide – no taxes would be applicable either.
When talking about Dubai and economic gains, it is worth mentioning the concept of free trade zones in Dubai’s economy. Companies working in these zones are completely exempt from any kind of taxes and customs and also have the guaranteed opportunity for repatriating investments.
These companies can perform their business activity not only on the UAE territory, but also outside of UAE. Currently, many major and mid-size international companies are interested in opening a branch or a separate legal entity in UAE.
Based on the latest financial reports, the tax law in Dubai and UAE is largely deemed as one of the most effective for doing business in the whole world. The estimate for the country’s economic appeal is based on three main quantitative criteria:
- The maximum rate of tax on income for natural persons
- The maximum rate of tax on companies and corporations.
- The total amount of tax payments in relation to GDP.
Dubai has got the leading position in all three indicators. The favorable taxation in this country, the strategic location and the developed infrastructure have made it one of the biggest business centres in the Middle East.
The existing taxation in UAE:
- Income taxes – a total exemption
- VAT – 5%
- Taxes for the capital gain – non-existent in UAE
- Taxes on dividends – non-existent in UAE.
- Taxes on royalties – no taxes in UAE
- Taxes on interest – no taxes in UAE
- Taxes at source – no such taxes in UAE.
- There is no income/salary tax
- Import/export is not taxed if done over Free Trade Zones
- A total absence on tax on net worth
There are no quotes, trading restrictions and financial control on most of the activities and that is exactly what attracts ever-more foreign investors into this country.
The local currency is linked to the US dollar and is freely convertible.
The main advantage of the free trade zones in Dubai and other Emirates is that they are free of tax. Companies working in the Free Trade Zones in UAE, are fully exempt from the corporate tax. Employees and other natural persons do not pay tax on the gained income and salaries.
Also, the UAE is well known for its modern and developed banking system providing a solid base for the business. Dubai is duly recognized as an international business center and a center for business relations. The company formation or the formation of its branch in UAE will give your business a boost in development and expansion.