Taxes: Setting up a company in the United Arab Emirates?

[Soder]

A friend has told me about the option he has chosen to reduce the taxes he pays. He has created a company Shams, in the United Arab Emirates.

I prefer that the company be in my country, but everything has a price.

Creation seems easy and fast, and the country seems safe. The reviews on Google are excellent.

• 0% corporate or personal income tax
• Company setup options starting from AED 5,750 (1,565 USD)

Does anyone know this option or similar?

About Us | Vision & Mission | Sharjah Media City (Shams) Free Zone

Empowering startups and SMEs. Contact our setup advisors for Shams Free Zone company formation assistance | Entrepreneurs' Choice - Shams Free Zone

www.shams.ae

 

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[monnffffiiiiiii]

Your company must be located in the country you do business in.

Otherwise everyone would put their company there and not pay taxes.

 

[Soder]

Your company must be located in the country you do business in.

Otherwise everyone would put their company there and not pay taxes.

Thanks for the point. Maybe I should have indicated that my company is online and sells worldwide.

 

[MTF]

Thanks for the point. Maybe I should have indicated that my company is online and sells worldwide.

It doesn't matter. Most countries have CFC rules that will tax your foreign company as if it was a local one. You're taxed wherever all the decisions are made and if you're the sole owner, you'll be taxed in your home country unless you cease being a tax resident there.

You'd have to physically move to the UAE, or to another tax haven, or to a country that doesn't tax foreign income.

 

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[Soder]

It doesn't matter. Most countries have CFC rules that will tax your foreign company as if it was a local one. You're taxed wherever all the decisions are made and if you're the sole owner, you'll be taxed in your home country unless you cease being a tax resident there.

You'd have to physically move to the UAE, or to another tax haven, or to a country that doesn't tax foreign income.

Thank you very much. I did not know that. I thought you could create a company abroad, being a resident there through the virtual visa they have there. And do not pay taxes in your country until you repatriate the benefits.

My friend who did it is from India and he says he hasn't had any problems. That he only visits the Emirates once a year.

Thank you so much for opening my eyes.

 

[MTF]

Thank you very much. I did not know that. I thought you could create a company abroad, being a resident there through the virtual visa they have there. And do not pay taxes in your country until you repatriate the benefits.

My friend who did it is from India and he says he hasn't had any problems. That he only visits the Emirates once a year.

Thank you so much for opening my eyes.

Looks like it works in India because it's one of the few countries that doesn't have CFC laws:

Unlike most OECD member countries, India does not have CFC provisions in its domestic tax legislation. CFC provisions were included in the Direct Taxes Code Bill, 2010, new legislation proposed to replace the current Income Tax Act, 1961, that was presented to parliament in August 2010 but lapsed without being passed.

But if you're from a country that does have CFC laws, you can't do it legally. Some people do it and hope the government doesn't catch them. And maybe it won't. Or maybe it will and your tax savings will not be worth it as you'll lose your freedom.

 

[Soder]

Looks like it works in India because it's one of the few countries that doesn't have CFC laws:



But if you're from a country that does have CFC laws, you can't do it legally. Some people do it and hope the government doesn't catch them. And maybe it won't. Or maybe it will and your tax savings will not be worth it as you'll lose your freedom.

From what I see, the USA and the EU have CFC standards.

Thank you very much for your comment, you have clarified for me in a minute what would have taken me hours and hours of efforts that would have been useless.

 

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[GlobalWealth]

Your company must be located in the country you do business in.

Otherwise everyone would put their company there and not pay taxes.

This is not correct information. This is a complex topic, but this advice is just plain wrong.

 

[GlobalWealth]

Looks like it works in India because it's one of the few countries that doesn't have CFC laws:



But if you're from a country that does have CFC laws, you can't do it legally. Some people do it and hope the government doesn't catch them. And maybe it won't. Or maybe it will and your tax savings will not be worth it as you'll lose your freedom.

CFC rules are very complex and very from country to country.

There are often loopholes avoiding CFC reporting but it gets very tricky.

 

[GlobalWealth]

A friend has told me about the option he has chosen to reduce the taxes he pays. He has created a company Shams, in the United Arab Emirates.

I prefer that the company be in my country, but everything has a price.

Creation seems easy and fast, and the country seems safe. The reviews on Google are excellent.

• 0% corporate or personal income tax
• Company setup options starting from AED 5,750 (1,565 USD)

Does anyone know this option or similar?

About Us | Vision & Mission | Sharjah Media City (Shams) Free Zone

Empowering startups and SMEs. Contact our setup advisors for Shams Free Zone company formation assistance | Entrepreneurs' Choice - Shams Free Zone

www.shams.ae

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This is an extremely complex topic.

I'd need to know a lot more detail to give any advice.

Some of that detail you should be post online.

Your citizenship, tax residency, physical residency, nature of business, location of clients, currency, banking, etc are all factors.

Just because your buddy did it and hasn't had any issues didn't mean it's correct.

 

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