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MEDIA / Blog / Taxation in the UAE - 27 JUNE 2017

Globalization, as a concept, refers both to the "shrinking" of the world and the increased consciousness of the world as a whole. Considering this era of globalization, not only businesses are spread across the globe but also individuals are travelling abroad to do business since they are no longer restricted to a single geographical region.


Tax Residency in UAE:

Obtaining a residence permit is the primary condition for being considered as resident in the UAE. By establishing a tax residency certificate a free zone company in UAE and a foreign individual can have residence permits and it is possible to obtain tax residency certificates.

A UAE tax residency certificate permit and a tax residence certificate can be useful to many foreign owners and executives of FTZs who wish to register tax register tax residency in the UAE. It is worth noting that authorities and banking institutions in the UAE and many outside consider UAE tax residence certificates as sufficient proof of tax residency in the UAE.

The requirements to obtain a personal tax residence in the UAE are as follows:

1)     passport copy and visa copy
2)     request letter from the individual
3)     bank statement for the last 6 months
4)     source of income
5)     certificate from the company stating the individual activity and source of income
6)     fee of AED 1.000 (approximately US$300)

The above requirements are straightforward and the process application takes approximately 1 week to complete. The documents required are produced internally by the company, with no outside confirmations necessary. There is also no need for any external verification and the movement in the AED bank account does not need to be substantial.

The requirements to obtain a company tax residence in the UAE are as follows:

1)      trade license
2)      lease contract
3)      copy of passport and residence of the company director
4)      request letter from the company
5)      bank statement for the last 6 months
6)      fee of AED 5.000 (approximately US$1.400)
7)      audited accounts

Double Tax Avoidance Agreement (DTAA):

As the total income is contributed and distributed by different countries, each of these countries wishes to tax that global income of its residents and the profits earned on its territory. In order to curb double taxation and ensure that the business owners are not paying tax for the same income twice, countries like UAE have entered into double tax avoidance agreements (DTAA). Once DTAA is signed between two countries, it mandates tax authority to produce a tax residence certificate, which assists investors, individual residents to claim their tax treaty benefits.

DTAA or double tax treaty (DTT) is a bi-lateral agreement between UAE and other countries that preserves and upholds the interests of foreign investors and companies from other jurisdictions in an effort to invest in UAE. As a result of this treaty, any foreign company already paying taxes abroad for the profits earned from his/her business can mitigate any potential tax burden in the UAE. The main advantages of investing in UAE and/or setting up in a FZ in the UAE include:

·         100 percent foreign ownership
·         residence permits for the owners of the entity
·         guarantee for 15-50 years against the future imposition of corporation tax
·         import of goods is duty free, provided the goods are not supplied to the local market
·         streamlined procedures: all formalities are typically dealt with through the FZ authorities instead of the various government departments
·         the government does not impose any taxes through DTT on the business owners planning to setup their business in UAE.

Not just the Companies, but individuals who are fiscal residents in UAE for more than 180 days and can provide the documents requested by the country’s Ministry of Finance are eligible to use the advantages of the treaty.

To find out more about taxation in the UAE and for a complimentary consultation, please contact our regional director Mehul Goradia at mgoradia@oneworldmideast.net

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