As of 1st June 2023, the United Arab Emirates (UAE) is to introduce corporation tax rate of 9%. While this rate is still considered low within a global context – the UK’s corporation rate is rising to 25% – many may consider there is a strong argument that UAE is no longer as attractive a destination when considering where to have an offshore company. But the reality is, it remains one of the most attractive destinations globally.
The Ministry of Finance reasoning behind the move is to help the country diversify away from fossil fuels as well as meeting international standards for tax transparency. Just like in the UK, the 9% tax will be levied on the net income or profit of corporations whose net profit is more than 375,000 AED (which is just over £80,000).
Even companies that have been set up within free zones will also be subjected to the new tax and will also be required to submit corporate tax returns. However, the law will honour the tax incentives currently offered to free zone establishments but only on condition that the companies comply with applicable regulatory requirements and do not conduct business onshore in the UAE.
So, what is the answer?
For those individuals who have an offshore company and potentially bank accounts set up in the UAE, it may be time to consider other options if your preference has always been to have an offshore company in countries with no corporation tax.
Working with ourselves, we’d explore various other options to decide which would be most suitable. There remain several counties that have no corporation tax such as Belize, BVI, Hong Kong, Seychelles, even Malta. Each of these countries offer a unique set of benefits, which is why we take the time to explore which would be the best option for you.
Once a new country has been chosen, it is then a case of setting up a new offshore company and associated offshore bank accounts. We’d then take you through the necessary sets to ensure that any company based in the UAE is closed down in the correct way and that any tax liabilities under the new laws are dealt with properly.
If you do currently have an offshore company in the UAE and would like to better understand your position, please contact a member of our trusted team today.