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Can Entrepreneurs Pay 0 Percent Taxes with a Company in Dubai In Dubai, entrepreneurs can potentially pay 0 percent taxes under specific conditions. Tax regulations vary depending on the type of company and tax residency status. New Corporate Tax Rules Since June 2023 Dubai introduced new corporate tax regulations for both Mainland and Freezone companies. Mainland Companies Mainland companies in Dubai are subject to a 9 percent corporate tax on profits exceeding 375,000 AED. Small Business Relief SBR The Small and Medium Enterprise Business Relief SBR applies to both Mainland and Freezone companies. Businesses with an annual revenue under 3,000,000 AED can benefit from this relief. To qualify, companies must register for corporate tax and prove their eligible revenue. This relief is valid until the end of 2026. Freezone Companies Freezone companies are also subject to the 9 percent corporate tax on profits over 375,000 AED. This applies to all income, regardless of whether it is generated within their Freezone or internationally. Freezone companies can also use the SBR scheme, meeting the same requirements as Mainland companies. Personal Income Tax Dubai does not impose income tax on individuals. However, to legally benefit from full tax exemption in Dubai, you must establish tax residency in the United Arab Emirates UAE. Tax Residency Requirements You can achieve tax residency if you meet at least one of the following criteria: - Spend at least 183 days per year in the UAE. - Have your primary residence in the UAE. - Hold your center of economic interests main income sources in the UAE. When one or more of these conditions are met, you can apply for a Tax Residence Certificate from the UAE.

Income Tax for Individuals in Dubai In Dubai and the United Arab Emirates UAE, there is no income tax for individuals. This means that the income earned by individuals in Dubai is generally tax free. This is one of the main reasons why Dubai is considered an attractive destination for international professionals and entrepreneurs. While individuals in Dubai do not pay income tax, it is still important to be aware of tax obligations in their home or residency country. Some countries apply the worldwide income principle, meaning that a person’s entire income, regardless of where it was earned, may be subject to taxation. Therefore, it is advisable to familiarize yourself with your home country’s tax laws and, if necessary, seek professional advice.

Freezone Overview A Freezone is an economic area in the United Arab Emirates that offers the following benefits to foreign investors when setting up a business: 1. Simple and fast setup process 2. 100 percent foreign ownership without the need for a local partner 3. Tax incentives, as long as business is conducted within the Freezone or internationally 4. Ability to sponsor foreign employees and apply for residence visas 5. Tailored infrastructure for specific industries and business sectors However, it is important to note that Freezone companies are generally not allowed to conduct business directly with the Mainland without involving a local distributor or an authorized importer.

Differences Between Freezone, Mainland, and Offshore Companies in Dubai The main difference between Freezone, Mainland, and Offshore companies in Dubai lies in their legal structures, ownership arrangements, and business opportunities. Freezone Companies Freezone companies allow 100 percent foreign ownership and offer tax incentives as long as business is conducted within the Freezone or internationally. However, they are typically restricted when it comes to conducting business directly with the Mainland. Mainland Companies Mainland companies can conduct business directly with the local market in the UAE. For trading companies, the local shareholder UAE national holds 51 percent of the shares, while the foreign shareholder holds 49 percent. For service-based companies, foreign nationals and founders can own 100 percent of the shares. Offshore Companies Offshore companies are legally based outside the UAE but are registered in the country. They were previously an option for international business activities and tax optimization, but due to challenges with opening company accounts and changes in regulatory frameworks, they are no longer recommended.

Company Formation Process Duration in Dubai The duration of the company formation process in Dubai can vary and depends on various factors, such as holidays or the current workload of the authorities. During periods of increased demand, such as during Ramadan, the company setup process may take longer. However, under normal circumstances, the process usually takes around 5 to 7 working days.

Residence Visa Duration in Dubai The Residence Visa in Dubai is typically valid for 2 or 3 years, depending on the type of visa and the specific circumstances. The validity period can vary for different categories of residence visas, such as for employees, business owners, or investors. Investor or Partner Visa Usually valid for 3 years. Employment Visa Typically valid for 2 or 3 years, depending on the employment contract and employer. Freelancer Visa Often issued for 2 years. Family Visa Generally valid for 2 or 3 years, depending on the sponsor's visa. After the visa expires, it can be renewed as long as the individual continues to meet the eligibility requirements.

Business License Validity in Dubai The validity of a business license in Dubai is typically 1 year. However, it is possible to acquire licenses with longer durations of 2, 3, or even 5 years. Opting for a longer license period comes with discounts on the original total price, which are as follows: - 2-year license: 15 percent discount - 3-year license: 20 percent discount - 5-year license: 30 percent discount Choosing a longer-term license can help businesses save time and effort in managing license renewals while benefiting from the offered discounts.

Residence Requirement for Company Formation in Dubai A residence in Dubai is not mandatory for company formation. When establishing a Freezone company, it is possible to operate the business without being a resident of Dubai. However, having a residence in Dubai can be advantageous in order to be considered a tax resident and fully benefit from the tax advantages.