Uae New Tax Rates 2022

UAE Corporate Taxes are to be imposed from June 2023. How will this affect RAK International & Free Zone companies?

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Starting from June 2023, the anticipated introduction of corporate taxes in the UAE will finally come into effect. Read below how this will affect businesses operating in the country, including those in Free Zones like Ras al Khaimah (RAK).   The new corporate tax regime in the UAE will subject businesses to a 9% tax rate on their profits. Large multinational companies with profits exceeding EUR 750 million will be subject to a 15% tax rate. However, businesses with taxable income not exceeding a threshold (expected to be AED 375,000) will continue to enjoy a 0% rate. To diversify its economy and also to avoid being sanctioned or penalised by organisations such as the EU, OECD and even the USA,  the United Arab Emirates (UAE) has announced the introduction of corporate taxes starting with effect from June 2023. The new tax regime is set to have far-reaching implications for businesses operating in the UAE, including those based in free zones such as the Ras al Khaimah (RAK) free zone. This comprehensive guide will discuss the UAE’s new corporate tax regime, its key features, exemptions, and the potential implications for businesses operating in the country. Looking to incorporate a RAK International company? Learn how to form a RAK IC here UAE’s Corporate Tax History Historically, the UAE has been a zero-tax jurisdiction, with no income tax levied on citizens and minimal corporate taxes imposed on businesses. Most of the state’s revenues came from the petroleum industry, with nationalised and private companies paying up to 50% tax on their revenues. Foreign banks, hotels, and restaurants in Dubai also paid certain taxes. However, with a growing focus on diversifying its economy away from petroleum, the UAE has gradually introduced new taxes to generate additional revenue. The first significant change came in 2018 when the UAE introduced a 5% VAT tax on consumer purchases. In January 2022, the government announced the new corporate tax regime, effective from the financial year starting on or after 1st June 2023. Overview of the New UAE Corporate Tax Regime Applicable Tax Rates The new corporate tax regime in the UAE will subject businesses to a 9% tax rate on their profits. Large multinational companies with profits exceeding EUR 750 million will be subject to a 15% tax rate, in line with the Global Minimum Corporate Tax Rate agreement. However, businesses with taxable income not exceeding a threshold (expected to be AED 375,000) will continue to enjoy a 0% tax rate. Taxable Persons The new tax regime will apply to residents and non-residents in the UAE. Residents include juridical persons incorporated or otherwise established in the UAE (including free zones), those effectively managed and controlled in the UAE, and natural persons conducting business activities there. Non-resident persons may be subject to corporate tax if they have a permanent establishment (PE) in the UAE, derive UAE-sourced income, or have a nexus in the UAE. Exemptions   Under the new tax regime, certain persons will be exempt from corporate tax, provided they meet specific conditions. These exemptions include the following: Persons engaged in the exploitation of UAE natural resources Government and government-controlled entities Qualifying public benefit entities Charities and public benefit organisations Pension or social security funds Qualifying investment funds Tax Base and Permanent Establishment The new tax regime introduces the concept of a “Qualifying Free Zone Person” (QFZP), which is broadly defined as a company or branch registered in a free zone, maintaining adequate substance in the UAE, deriving qualifying income, satisfying transfer pricing requirements, and meeting any other conditions prescribed through a Ministerial Decision. QFZPs will still be subject to corporate tax but may benefit from a 0% rate on their qualifying income. Free Zones and Qualifying Free Zone Persons UAE businesses will be subject to corporate tax on their worldwide income, with exemptions for dividend income and capital gains subject to the participation exemption. Non-residents will be considered to have a PE in the UAE if they have a fixed place of business or a dependent agent in the country. A Ministerial Decision will determine other forms of nexus that could create a PE. Key Features of the UAE Corporate Tax Regime Taxable Income Calculation As reported in standalone financial statements, the accounting income will be the basis for determining taxable income, subject to adjustments. Businesses will be able to carry forward tax losses indefinitely, subject to certain conditions, and offset up to 75% of taxable income in future tax periods. Taxable Income Calculation As reported in standalone financial statements, the accounting income will be the basis for determining taxable income, subject to adjustments. Businesses will be able to carry forward tax losses indefinitely, subject to certain conditions, and offset up to 75% of taxable income in future tax periods. Tax Groups A parent entity of a group can apply to the Federal Tax Authority (FTA) to form a tax group with its UAE subsidiaries, subject to certain conditions. Losses can also be transferred between entities outside of a group, provided a 75% ownership relationship exists, and other conditions are met. Withholding Tax Payments made by UAE businesses to non-residents earning UAE-sourced income will be subject to withholding tax at a 0% rate unless the income is attributable to a branch or PE located in the UAE. The Cabinet may specify other rates.   Transfer Pricing Transactions with related parties and connected persons must comply with the arm’s-length principle. UAE businesses must maintain transfer pricing documentation and submit it to the FTA within 30 days of a request.   General Anti-Avoidance and Transitional Rules The new tax regime includes general anti-abuse rules (GAAR) intended to disregard transactions or arrangements undertaken to obtain a corporate tax advantage. Transitional rules also apply from the date the law is published in the Official Gazette. Implications for RAK International Companies and Other Free Zone Companies The introduction of corporate taxes in the UAE will have implications for businesses operating in free zones, including those in Ras al Khaimah (RAK) and other

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Why incorporate in the USA and which State is Best for Non-Residents?

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Why incorporate in the USA and which State is Best for Non-Residents? The USA has many advantages for non-residents seeking to incorporate there but not trade in the USA. First, and most important, non-residents are not taxed, which provides a significant advantage for those incorporating LLCs. An LLC (Limited Liability Company) in international terms is more akin to a Limited Partnership. Members are liable to taxation (if any) on profit share from the LLC. The other principal type of US business entity is the C Corporation  (a standard limited company in most countries). C Corporations are taxed on their profits wherever sales are made and whatever the ownership structure. The standard rate of Federal corporate tax in the USA is 21% for 2021. It is important to understand that each state determines its own taxation rates (in addition to Federal Taxes), and the States are certainly not equal in their taxation policies.  Throughout this article, we refer to ‘incorporate’, but in fact, we mean forming an LLC (Limited Liability Company). There is a shortlist of States which are generally considered to be business-friendly. Top of the list is Delaware, which not only created LLCs but also has a well regarded Chancery (business) court. Other contenders include Florida – downsides include corporate tax, more applicable to C Corps. Nevada – licensing requirements for certain businesses can make this unattractive. Texas – this is a business-friendly state with low taxes. Wyoming – our choice due to minimal requirements and low costs. You might ask why California and New York are not on the list above. Simply, bureaucracy and state-level obligations. An introduction to Wyoming LLCs. Compared to other states in the US, Wyoming offers numerous advantages to non-residents that want to set up an LLC there. To recapitulate, these include: Zero Wyoming State taxes. Low maintenance costs. Minimal information on the public record.  You will, however, need an EIN (US tax number), and we can arrange this for you when you form an LLC with us. An EIN (formally Employer Identification Number) is a tax registration certificate and will be required by banks/e-Wallets before they will open an account for an LLC. A little more detail on setting up an LLC in Wyoming. The Wyoming registry does not ask for information to be filed, and therefore there is no public disclosure concerning your business or its structure. Once instructions have been received, it should take just a couple of days to set up your company. The Benefits of LLC Incorporation in Wyoming For a limited liability company or LLC, there are no state taxes to be paid in Wyoming. The LLC is seen as a separate entity to its owners which means you are not liable for debts and can protect your assets. The reporting and disclosure rules for a Wyoming LLC are minimal, and you do not have to be a US resident to set one up. Single Member LLCs are permitted and even a Sole Member can act as the Manager who fulfils the same function as a director. An LLC will continue indefinitely, even if passed onto other owners, and will only cease to trade once it is officially dissolved. It’s also, therefore, easy to ensure the transfer of ownership of a business. The filing fees for setting up a Wyoming LLC amongst the lowest in the US. You can set up banking facilities anywhere in the world, giving your business the flexibility it needs to operate on a global stage. What is the next step to form your Wyoming LLC. First, is to decide on a company name, better to give us three choices which we can check for you. Second, is to decide who will be the Manager and, of course, your co-investors as Members. If you have multiple Members it’s probably a good idea to have a Members agreement in place – we can provide a draft. Thirdly, please contact us to get things moving. Finally, after formation you will need to apply for an EIN and subsequently open a bank account, both of which we can assist with. Contact TaiPan about incorporating a Wyoming LLC

Avoid These Common Mistakes When Forming An Offshore Company

Avoid these common mistakes when forming an offshore company

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Avoid these common mistakes when forming an offshore company. While forming a company is relatively simple and can be accomplished online, a few set-up mistakes could cost you time and money. Fortunately, these are easy to avoid if you choose the right professional to work with and take a little time to get everything right.     The most common mistakes we see when a business is forming an offshore company include: Choosing an unsuitable jurisdiction It’s important to consider all of your options, including ongoing costs, what you might need in terms of accounting and audit obligations (if any). Tips for choosing the jurisdiction for your company: What are the ongoing annual costs – Apart from formation cost (by definition a onetime cost) there will also be annual costs. These costs include registered office, registered agent/company secretary which are always obligatory, plus accounting & audit obligations where applicable and finally optional costs such as a virtual office etc. Where are you planning to sell? There are different obligations depending on where you are planning to sell. For example, a company selling in the EU 27 area will almost certainly need to register for VAT (a form of Turnover Tax). Likewise a company trading in the USA needs to be aware of State Sales Taxes (which vary). Need more information or advice? Please contact us. Unsuitable banking arrangements A common mistake is that clients are trying to replicate what they are used to. e.g. bricks and mortar bank offering traditional services. It may well be that an e-wallet makes sense in many cases and gives greater flexibility. First, it is important to understand the difference between a bank and an e-Wallet (Digital Wallet or Neobank): Banks have traditionally served local customers and are set up for face-to-face interaction and telephone service. They tend not to work well across borders except in specialist areas, e.g. private banking. Their existence is being undermined by increasing regulation and the move towards digital banking. E-Wallets (also known as Neobanks or Digital Wallets) have rapidly increased their market share in the last twenty years or so, starting with PayPal in 1998. They specialise in fast transfers of funds, especially across borders, together with good exchange rates. Customer service is often limited unless you enjoy communicating with bots. Not being familiar with tax rules Tax law is constantly changing, and it’s essential to make sure you understand what applies in your chosen jurisdiction and how it will impact your personal tax position. e.g. is it better to take a salary or dividends? In several countries, including Singapore, salaries are generally taxed at the local rate, even for non-residents. This subject often requires professional advice to get it right. However, there is a danger of ‘letting the tax tail wag the dog’ at the expense of, say, ease of doing business in a particular jurisdiction and the total cost (both start-up and annual) of maintaining the company.   Insufficient research before starting Although it may sound obvious, not thoroughly researching your project can be a major reason for difficulties down the line.     Tip You should carry out extensive background reading on key topics related to both marketing strategies/uses (such as pricing) AND your customer demographics. For further detailed advice, please contact: TaiPan-International.com today to find out more.

Singapore Company Registration

4 Reasons to register company in Singapore

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4 Reasons to register a company in Singapore Rate this article  5/5 Singapore is one of the best places to register your business especially if you want to trade internationally. Below you will find the reasons why you should incorporate your business in Singapore: 1. Fast company incorporation process Singapore has concentrated on being as business-friendly as possible with the added benefit of low tax rates. Singapore company registration process is fast – it takes just a couple of days, and there is no need to visit. Singapore places no restrictions on the nationality of directors or shareholders, although one local director is required, which in itself gives a level of privacy. Additional services such as establishing a virtual office are also easy to arrange.    We have been successfully forming companies for our clients in Singapore since 2008. We will guide you through the process to ensure you have a fully functioning Singapore company very quickly and at reasonable cost. Contact us to form your Singapore company 2. Efficient banking system Compared to many jurisdictions, it is easy to open a corporate bank account for a Singaporean company in Singapore. There are many well-established banks (including OCBC, DBS etc) with an excellent international reputation. It is, of course, also possible to establish banking facilities outside the jurisdiction, including e-Wallets. 3. Low taxes & many Double Tax Treaties (DTA) Base your start-up in Singapore, and you can benefit from 75% tax exemption on the first S $100,000 that your business earns. The top rate of tax is 17%. If you are interested to learn more about Singapore taxes, please visit our guide on How to Start a Company in Singapore. Singapore also benefits from around 70 DTAs, which mostly cover interest and royalties, but dividend payments are generally free of withholding tax. See a complete list here (opens in a new tab). 4. English speaking & Common Law The local dialect in Singapore is referred to as ‘Singlish’, but you will be pleased to know that standard English is universally understood and used in business (no need to learn Singlish). The legal system is English Common Law which is generally more business-friendly than Napoleonic/Civil Law. Conclusion As you can see from the above, Singapore is an attractive jurisdiction to do business from. It has had a pro-business since the country became independent in 1965. We can form Singapore companies to your requirements and assist you with opening a bank account both inside and outside Singapore. Please contact us (contact form below) for more information. Twitter

Do You Know It All

Why it is often cheaper to pay consultancy fees

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Why it is often cheaper to pay consultancy fees So you have decided to set up your offshore company. You think you know where to incorporate. You know how to form the company. Correct?  Well, maybe.  You did your research, you gathered all the information, and you think you possess the “know-how”.  But do you know what you don’t know? In other words, are you aware of the things you did not even think about? The best way to illustrate what I am talking about is to give a working example.   A couple of years ago, one of our clients set up a company in the Emirates – an IBC (International Business Company) incorporated in Ras Al Khaimah (RAK).   His two main reasons for setting up the RAK company were:   (1) RAK companies do not have a public register, so the names of the shareholders and directors are not available to public searches and (2) he did not have to file accounts.     The client did not feel he needed our consultancy services. He decided a RAK company would be a good choice, and the company was formed.  Then came the problem he had not thought about. His business was going to be fully ‘on line’, and he wanted to receive payments via PayPal… Fine, until he discovered that PayPal insists that the company and the bank account must be in the same country.  Banks in the UAE are not opening accounts for RAK IBC’s (even now).  The UAE bank turned him down.  Therefore, the company was rendered largely useless for his purposes.       The above example illustrates why we recommend clients to consider our consultancy services. We offer structuring advice based on your circumstances and your business plans. By ‘structuring advice’ we mean consulting you on choice of jurisdiction and whether it is suitable for your business, our advice on the most suitable bank/e-wallet, payment processor, general advice on setting up your business.  Where do we start? First, we offer a 20 minute free – no obligation – consultation either by email or a scheduled call by Zoom or Skype. If you decide to go ahead with our structuring advice, we will go through your requirements step by step taking into consideration all the important aspects of your proposed business. We will then prepare and send you a detailed report for action or further discussion. In summary, you can save yourself time and effort as we will do the research for you,  and we will recommend a practical and workable solution and structure.