The country of the United Arab Emirates has been known for being highly business-friendly, what with the famed ‘zero-tax’ regime in place for decades now. This has encouraged the creation of hundreds of thousands of businesses and millions of jobs in the country and has made Dubai the land of dreams for entrepreneurs with unlimited opportunities.
On the face of it, the ‘zero-tax’ term may seem simple, but when you dig deeper you would realize that it’s really not that straightforward. Read on to find out more.
There are fundamentally three types of direct and indirect taxes in UAE, and in Dubai in particular:
- Direct Taxes
- VAT/Sales Tax
- Service Tax
Majority of the business in Dubai is done by expats from all over the world, sometimes with families residing in their home countries. A vacant property in the home country at times is sufficient to show a ‘tie’ to the individual and can cause tax liability in both, the home and the host country. Being a tax defaulter in either of the countries can be a legal hassle and is likely to be expensive and time-consuming to get out of.
Value Added Tax has been announced to be introduced in the UAE to aid the revenue of the government and reduce dependence on income from oil. The additional cost would be passed on to consumers either partially or completely. As a new type of tax which would come into play in the UAE, understanding among the masses is limited.
If the entity for taxation in question is a corporate entity, then the company may exist physically in UAE, or also in a virtual office. In either case, the entity has to prove that the place of factual management is UAE in order to avail tax benefits in UAE.
The UAE also has various tax agreements with different countries for avoiding Double Taxation based on criteria applicable based on the business being conducted. This helps in the taxpayers save unnecessary deductions
As you can see, being in different types of businesses, it could be easy to get caught up in the details and lose track of which taxes you need to pay and which tax benefits you can avail. It’s best to engage the services of tax consultants in Dubai to help you streamline your tax processes, avoid paying excess tax and to be adherent to the tax laws of the UAE. At Commitbiz, we have years of experience in helping our clients be compliant with the tax code of UAE and to steer clear of any pitfalls they may likely face. Contact us today for more details.
1. Which are the sectors where the corporate tax is applicable in Dubai?
Oil companies Foreign banks
2. When was the VAT tax introduced?
January 1, 2018.
3. Where is the VAT zero-rated?
Healthcare
Education
Medicine and Equipment,
Exports and International Transports,
First Sale of Residential
Investment in Gold, Silver, and Platinum
Crude Oil and Natural Gases.
4. What are the benefits of tax consulting services in Dubai?
Tax experts assist in the preparation of tax returns by saving time.
Tax experts help you prepare and give important information for your company.
When dealing with tax returns, they check into every element of the firm.
They can provide you with the most up-to-date information on any changes in tax policy.
5. Why was VAT implemented?
VAT was imposed to assist the government in lessening its reliance on crude oil and contributing to the continued provision of high-quality public services such as education, healthcare, and infrastructure.
