Company Formation United Arab Emirates: Forms of Offshore Operation
Company Formation United Arab Emirates: Forms of Offshore Operation
- Index Company formation Dubai,UAE
- Free Zone Company UAE/RAK
- Fees Free Zone Company UAE/RAK
- RAK International Company (Offshore Company RAK/UAE)
- Tax planning via a network of international tax advisers and attorneys
- Offshore Company Formation: Tax haven rankings
- Examples for the legal reduction of corporate taxes
- DTA permanent establishment concept
- Our services and fees
- Parent companies and their subsidiaries in the European Union
- OECD: Articles of the Model Convention with Respect to taxes on income and on capital
- Beware of cheap founders!
- Information about the company formations in English
- Worldwide Registries
- Table of Fees: International Business Formations
- Basic considerations within the framework of international taxation
- Index UAE
Introduction/summary
Dubai has a unique set of selling propositions, namely:
- No corporate tax
- No income tax
- No capital gains tax
- No property tax
- No wealth tax
- Low property transaction cost
- Ease of access to home finance
Dubai/UAE has double taxation agreements = DTA with most other countries. EU freedom of establishment is not applicable. For approval of the permanent establishment according to tax laws, a commercially equipped business operation must be installed in Dubai/UAE, and active business must be transacted in UAE/Dubai.
Since only oil companies and banks are subject to taxation in the UAE/Dubai, and any other companies do not pay any taxes, this results in interesting opportunities for investment in Dubai/UAE. In order to be able to use the tax advantages, a permanent establishment according to DTA must be installed in Dubai. On the one hand, a Dubai company is no offshore company in this sense, since the UAE/Dubai also maintain double taxation agreements with many countries – including Sweden and Denmark – but on the other hand, the EU freedom of establishment is not applicable. Therefore, the following prerequisites for approval of a permanent establishment according to tax laws in Dubai must be met:
- Place of management: A manager resident in the UAE/Dubai according to tax laws must – at least on the outside – control the company’s businesses.
- There must be a commercially equipped business operation, i.e. at least one office and one employee.
- It must be demonstrated that the Dubai company does actively transact business in the UAE.
Under the stated conditions, for example the Swedish could be a majority shareholder of the Dubai company, but nevertheless Dubai/UAE has the sole right of taxation, provided that the Articles of Association state that all relevant decisions are made at the shareholders’ meetings, which exclusively take place in Dubai, at which the Swedish shareholder must be present. However, the UAE company law stipulates that 51% of the company shares must be held by persons resident in Dubai. As a rule, the founder will use a “sponsor”. This requirement may be omitted in case of company formations in the free zones. In the free zones, 100 % of the shareholders may be foreigners.