Interesting facts:
Full versionResidency in the United Arab Emirates isn't merely a formality but an extensive strategic decision on how your assets will be protected globally and how to scale your business. That system has become more transparent, the rules clearer, but also at the expense of former “tax simplicity.” The Emirates, which was previously viewed as a safe haven without any commitment, nowadays is a well-respected jurisdiction with modern legislation that demands thoughtfulness.
There are two main ways to legalize your residence in the country: through investment in residential property or by starting your own business. The choice depends entirely on your goals.
This option is ideal for those who need status without having to delve into the operational management of a company. To obtain a residency visa this way, several critical conditions must be met:
The main caveat here is the lack of work permits. You gain the right to live in the country, open personal accounts, and bring your family with you, but you cannot officially work or conduct commercial activities without additional permits. Furthermore, this route requires a significant one-time capital investment.
This is the most popular and flexible method. Instead of simply tying up your money, you invest it in a working instrument. Entrepreneurs most often choose to register in free economic zones (Free Zones).
The era of "zero taxes for everyone" is officially over. The UAE's modern tax system now includes VAT and corporate tax, making the country part of the global financial community.
Since January 1, 2018, the country has had a 5% VAT rate. It applies to all types of businesses, including companies on the mainland and in many free zones. However, legislation provides for a zero rate (0%) for exports and international shipping, as well as a complete exemption for certain financial services and residential property.
This is the most recent change. Effective June 1, 2023, the UAE will introduce a 9% corporate tax on profits exceeding AED 375,000. It is important to understand that companies in free zones can still benefit from the preferential 0% rate if they meet the "qualifying income" requirements. However, there is still no personal income tax (salary) in the Emirates.
Even with taxes paying free zones are highly enticing. Many are treated as special areas for VAT purposes, which means that above certain thresholds transactions within those zones can be tax-free.
Clarify the cost of opening company, corporate or personal bank account, obtaining a residence visa, or another question regarding business in Dubai, UAE:
Similarly, free zone businesses enjoy the duty-free imports of goods as long as the products are not moved out of the free zone or get re-exported. This creates the perfect logistics hub in the UAE. There is also no withholding tax on dividends, interest and royalties in the country, allowing for seamless profit relocation.
The UAE residency status facilitates access to a vast network of double tax treaties (DTAs). A company or individual can leverage tax residency certificates in order to legally minimize their global tax obligations.
Simply put, investing in real estate or incorporating a company is to live passively, or develop actively. Registering a company in a free zone is cheaper than purchasing luxury real estate and offers many more tools for integrating into the UAE economy. Given the current tax system, structuring your business correctly from the outset ensures that the Emirates remains the most advantageous jurisdiction for you.
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