Auditing, VAT, Accounting & Business Consultancy Services in UAE

How To Save Big On Tax?

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  • Taxation
  • 2022-12-18
  • Mr. Waseem

How To Save Big On Tax?

The United Arab Emirates has become the location of choice for many multinational corporations and investors. The United Arab Emirates (UAE) has become increasingly attractive to foreign investors as a place to establish a business and raise a family for the following reasons:-

- Environment Favourable to Business

- Governmental incentives

- Guaranteed Security and Safety

 -Business-friendly legislation and diplomatic practises

 - Connections Around the World

Save On Tax By Opening A Company In UAE

Establishing a new company and opening a company bank account in the United Arab Emirates is a shrewd way to manage your wealth when combined with conducting business there. Investors can cut their tax bills by setting up shop in the United Arab Emirates.

Due to the absence of both a corporate and personal income tax, the United Arab Emirates is a popular destination for international investors.

All sales made within the United Arab Emirates are subject to a 5% value-added tax. Under specific conditions, the VAT may be waived in a select cases. To help foreign investors minimise their tax liability, the UAE offers attractive business formation options.

Starting a Business in the United Arab Emirates: Tips for Minimizing Tax Obligations

By establishing a business in one of the world's low-tax-paying countries, overseas investors can legally reduce their tax liability in their own country. When compared to other countries, the United Arab Emirates has among the lowest tax rates. If an investor wants to minimise their tax liability, setting up shop in the United Arab Emirates is an excellent option.

How Different Taxes Affect UAE Based Businesses? (Like VAT & Corporate)

The United Arab Emirates imposes relatively minimal taxes; these include a 5% sales tax, an excise tax on a small number of goods (tobacco, energy drinks, etc.), and a tourism and municipality tax on hotels. The United Arab Emirates also levies a corporate tax, but exclusively on foreign banks and oil companies.


A person resident in the United Arab Emirates does not have to pay taxes on their salary, profits, inheritance, real estate sales, etc. Investors are being enticed to the United Arab Emirates (UAE) by the country's comparatively low corporate taxes.


United Arab Emirates (Mainland and Free Zone) Taxes Companies in the UAE are liable for different taxes depending on their legal status.


Types of taxes in UAE?

There are two main types of taxation levied against mainland UAE businesses: customs and municipal.

Some goods sold in the UAE are subject to an excise tax, and businesses operating in the UAE, such as oil firms and international banks, must pay a corporate tax.

- Clearing Customs Tax:-Companies based on the mainland must pay an import tax of 5%. Some industries, like those dealing with food, construction, medicine, the free zone, etc., are excluded.


- Municipality Taxes:- In addition to the Service Tax, Tax on room rate, City Tax, and Tourism Fee, which are all levied on visitors to the United Arab Emirates, the UAE's restaurants, hotels, hotel apartments, resorts, etc., will also impose a 10% Municipality Fee.


- Corporate Tax:-Only oil firms and foreign banks are subject to the UAE's Corporate Tax. In the United Arab Emirates, neither service providers nor merchants are subject to corporate taxation.


- Excise Tax:-Tobacco, alcoholic beverages, candy, soft drinks, and fast food are all subject to the Excise Tax in the United Arab Emirates. The excise tax on sodas is 50 percent, on cigarettes and cigars it's 100 percent, and on energy drinks it's also 100 percent.


What are usages of free zone?

The Advantages of Doing Business in Free Zones is as follows:-

- There is no tax on any earnings, whether they are earned by an individual or a business.

- Investors of any country or legal residence can acquire a hundred percent of the company.

- Profits and investments can be brought home in full.

- Complete exemption from customs fees both entering and leaving the country

- There is no need to make a down payment.

- Start-up costs are low; obtaining a licence and office space is simple; and

- Top Facilities for Doing Business Including Offices, Equipment, and Networks, Other Important Motivating Factors for Investors to

- Establish a Company in the UAE. Establishing a company is simple, and the infrastructure is excellent:-

The United Arab Emirates is one of the most well established economic and business hubs in the Middle East, and it offers a wide variety of opportunities to interested investors.

Numerous elements, including government encouragement, business and technology infrastructure, banking services, financial structure, innovation, access to the global market, etc., are drawing capital to the area.


- International Tax Avoidance & Trade Agreements:-

The United Arab Emirates (UAE) has a very low taxation rate, and investors can reap the benefits of tax savings while conducting commercial activities locally and globally thanks to tax-saving agreements of UAE with other nations.

Foreign investors will find the United Arab Emirates (UAE) to be an ideal trading partner due to the country's many FTAs and the fact that Customs Duty is not charged to businesses located in its Free Zones.

As a strategic crossroads between East and West, the United Arab Emirates is ideally situated to serve as a logistics hub for global commerce.


- Treaty on the Avoidance of Double Taxation:-

The United Arab Emirates (UAE) has signed the Double Taxation Avoidance Agreement (DTAA) with 117 countries, and businesses and citizens in those countries are now able to take advantage of the DTAA's favourable provisions.


The purpose of the Double Taxation Avoidance Agreement is to encourage the free movement of goods and capital across national boundaries. As a result, it discourages double taxation and encourages more investors to set up shop in the United Arab Emirates (UAE).


The Tax Residency Certificate can be requested from the UAE Ministry of Finance by companies that have been in operation for a year and by individuals who have been permanent residents in the UAE for more than 180 days.


The Tax Residency Certificate allows companies and high-net-worth people based in the UAE to take advantage of the Double Taxation Avoidance Agreement (DTAA).

Check out Tax Resident Certificate in UAE for more info.


- Niche Market Developments:-

More investors will be drawn to the UAE as a result of the government's permissive policies in most sectors. The expansion of the UAE's economy is mostly due to the strength of its import and export sectors.


The UAE offers a wide variety of incentives for businesses to set up shop there, including full foreign ownership, the ability to repatriate earnings, a streamlined start-up process, and favourable tax rates, among other things.


Investors in the UAE, a tax haven, are shopping around for business creation packages that meet the country's unique regulations. Dubai's business setup process is simple, albeit it does require a few official documents and approvals.


If you hire a professional business consultant, they will be able to advise you through the steps needed to obtain a company licence quickly and easily.  Well, Risians Accounting is one of the best accounting firm in UAE. That will help you to save big on tax without any problem.


What are the options for foreign investment?

There are a variety of ways in which foreign investors can establish a presence in the UAE. Methods for Establishing a Company in the United Arab Emirates Free Trade Zones. 

Establishing a Business in the Central Region of the United Arab Emirates:-

- UAE Offshore Company Registration:-Getting a business licence from one of the 40+ Free Trade Zones in the UAE is the quickest and least complicated way to set up shop in the region.


- UAE Free Zones Your Best Option:-In the United Arab Emirates, several regions have been classified as "free zones," each of which is subject to its own administrative procedures and company registration rules.


A variety of subsidies and tax breaks are available to businesses that set up shop in Free Zones. In the Free Zones, anyone can form a corporation, or a firm can form a branch, or a foreign company can form a subsidiary.


Conclusion:- After reading this blog you will understand how to save tax by Opening a Company in UAE and grow your business easily.

Mr. Waseem AUTHOR

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