The UAE is one of the most attractive countries for foreign investors. Everyone has reasons for opening a company in the Emirates: it may be a desire to reduce the tax burden on business, to obtain a resident visa that provides many privileges, or the opportunity to legally live in a prosperous state with a developed economy and a high quality of life. Many foreign entrepreneurs are attracted to the Emirates by the possibility of obtaining tax resident status. We will tell you about what UAE tax residency gives and how to get it.
Benefits of UAE Tax Residency
Obtaining UAE tax residence status allows foreign businessmen the following:
- Enjoy a preferential taxation system that provides for minimum tax deductions:
- 0% — for companies not engaged in the UAE’s oil and gas or banking sector, which have an annual taxable income from activities within the country of no more than AED 375,000 ($102,000).
- 5% VAT over the above income. If the sold goods and services are included in the list subject to VAT, you must register as a payer of this tax.
- 9% — federal corporate tax on income over AED 375,000. It has been imposed since June 1, 2023.
- Do not pay tax in the country of permanent residence if it has concluded an agreement with the UAE on avoiding double taxation. Emirates signed such agreements with 128 countries of the world.
- Receive tax-free income from international activities.
- Confirm the economic presence in the Emirates by possessing a certificate of UAE tax residency, ensuring compliance with ESR requirements.
- Respect the confidentiality of data on the ownership of assets and real estate in the UAE.
- Keep information about your activities secret, thanks to protecting residents of the United Arab Emirates from the automatic exchange of tax information with other countries.
Having received the tax residency of Dubai or any other of the country’s seven emirates, you will keep your profit as much as possible and be able to withdraw it from your account freely.
Services for Opening a Company for Tax Residency
Dynasty Business Adviser is a licensed UAE registrar of onshore and offshore companies. We have developed a convenient algorithm of actions to assist entrepreneurs from different countries who wish to open a business in the Emirates, and we offer the following services aimed at obtaining UAE tax residency:
- Advice on issues related to the registration of a company in the Emirates, consulting support at every stage of the registration process.
- Registration of a company in any emirate of the country on a turnkey basis with the opening of a bank account.
- Obtaining a UAE resident visa — it should be noted that possessing a golden resident visa obtained for investment does not give the right to apply for tax residency.
- Legalizing documents with translation into English or Arabic and certification in all necessary instances.
- Obtaining a UAE tax residence certificate.
We will help you obtain the status of a tax resident by registering your company in the UAE in the shortest possible time, thanks to the high professional level of our company’s specialists and their impeccable knowledge of the United Arab Emirates laws.
Company Opening Process
To obtain UAE tax residence, first of all, it is necessary to register a company in any emirate of the country. This will require the following:
- Choose the company type — an offshore company is unsuitable for obtaining a tax resident (domicile) certificate since its registration does not allow the owner to get a resident visa and rent a physical office. One cannot get a domicile without these conditions.
- Determine the type of business activity. Tax residence in Dubai and other emirates of the country is granted only to companies with commercial licenses.
- Choose a business location — if you want to open a company in the free zone, you should pay attention to the allowed types of activities you want to engage in.
- Rent a physical office on the territory of the selected emirate or free zone.
- Collect the necessary documents and perform their consular legalization. The list of documents may vary depending on the type of company, the emirate, and the free zone. Still, it generally includes the following:
- Constituent documents of a new legal entity.
- A copy of each founder’s passport and the UAE entry stamp page.
- A photo of the founders and a document confirming their residence.
- Statutory documents of the parent company, if the shareholder is a legal entity, as well as the decision of the meeting of shareholders on the registration of a new company.
- A copy of the certificate of the new company name reservation.
- A letter of recommendation for each shareholder from the bank where they are served.
- Pay the registration fee and submit a package of documents for registration (together with a payment receipt).
- Obtain the necessary licenses after receiving a company registration certificate and registered statutory documents for a new legal entity.
- Issue an immigration company card (Establishment Card), register a legal entity with the FTA (Federal Tax Service), and receive a TRN (tax registration number).
- Obtain resident visas and Emirates ID (identity cards) for shareholders and directors.
- Open a corporate account in one of the UAE banks. Without it, conducting business and confirming the movement of funds is impossible when applying for tax residency in the UAE.
Company Types and Locations
UAE tax residence is available to legal entities of two types — a local company and a company in the free zone. To determine the most suitable option for your business, you must know these companies’ features, pros, and cons.
A local company in the UAE is registered on the main (mainland) land, outside the free economic zones, and, in addition to international activities, can operate in the domestic market without restrictions. Its main advantage is the possibility of doing business throughout the state. Other advantages of such a company include the following:
- Opportunity for foreigners to own 100% of the shares. The requirement to have a local partner from UAE citizens who would own 51% of the shares remained only for the banking, insurance, hotel business, and the oil and gas sector of the economy.
- A wide range of activities — more than 2000.
- Access to tenders held by the state.
- Costs for renting or buying real estate and paying for utilities are cheaper on the mainland than in free zones.
A local company is the best choice to obtain tax residence in Dubai and other Emirates. However, its registration will be more expensive, and to open such a company, getting permission from the Office of Foreigners and Residents is necessary.
Onshore Company in the Free Zone
A company of this type can conduct international business without restrictions but carry out domestic activities within its Free Zone. Its main advantages are the following:
- 100% ownership by foreign shareholders.
- The availability of renting a physical office in your free zone.
- The possibility of cooperation with companies from other FEZs and local firms.
A company in the free zone cannot qualify for participation in government tenders. It will need a distributor to sell products within its emirate, which can only be a local company.
The Procedure for Obtaining Tax Residency
A company can obtain a UAE Tax Domicile Certificate after one year of activity in the country if it has a physical office, an immigration card, and a TRN tax number under which it is registered with the Federal Tax Service.
To obtain domicile, the following documents must be collected and submitted to the Federal Tax Authority:
- Company statement.
- Certified constituent document on forming a legal entity.
- The organizational structure of the legal entity.
- Commercial license.
- Office lease agreement.
- Bank statement on the movement of funds in the corporate account for the last six months.
- Audit report (its certified copy).
- A copy of the passport and Emirates ID of the company’s first head.
- Document confirming the payment of the fee of AED 10100.
The certificate is issued electronically. It takes a month to receive it on paper. This document is valid for one year.
Dynasty Business Adviser specialists will help you open a company quickly, without problems, and get UAE tax residency status!
This article is for informational purposes only and should not be considered an advice. To consult with the specialists of our company, contact us in any convenient way from the contacts on the site!