What is TAX
UAE has a company formation setup process that caters to the requirements of investors who are looking to save taxes, as the UAE has rules in place that enable it to charge fewer taxes from both the residents and foreign investors. As a result, foreign investors choose UAE as a location for their business setup to save on taxes.
UAE offers two main locations for an investor to set up their business, which is the mainland and the free zone. Both jurisdictions are governed by a different set of rules and accordingly, the taxes are charged by the investors. UAE charges very few taxes and some of the taxes charged include a value-added tax of 5%, and excise taxes for some of the selected commodities like energy drinks, and tobacco products.
Open a company in UAE to save on taxes
UAE also charges minimal tourism and municipality tax on hotels. Further, UAE has a tax regime that only charges corporate tax from foreign banks and oil companies. UAE as a country is free from various kinds of taxes that are charged in other countries, which mainly include income tax, no tax on capital gains, no tax on property sales, and no inheritance tax.
Thus UAE as a business location is ever attractive to investors to save on taxes while deciding to start a business setup in UAE. Many factors make the UAE heaven for investors and drive them to choose the country as a location to set up their business.
The various factors that play an important role in all this are outlined below
- The process of business setup is easy as the government provides continuous support to investors not only to minimize the burden of taxes on them but also to provide them with other facilities as well.
- The UAE has put in place a world-class infrastructure to lure investors along with putting in place one of the friendliest tax regimes of the world.
- UAE is a tax haven for investors as they have a very minimal amount in taxes while operating both at the local and global levels. This is mainly because the UAE has signed several agreements with other countries that result in huge tax savings for the investor in the UAE.
- Waivers in customs duties and free trade agreements has made the UAE one of the most sought destinations among investors.
- Further, the UAE has put in place a double taxation treaty with 94 countries to avoid taxes on overseas investment. A double taxation agreement is put in place to promote cross-border trade and ensure investment flows into the country. Thereby it helps protect taxpayers from double taxation; as a result, attracts more investment into the country.
- UAE as a country has on offer various niche market trends, as it offers several liberal policies in different industrial sectors, which in turn helps to attract a huge number of investors into the country. UAE has put in many friendly measures like 100% foreign ownership and 100% profit repatriation without charging any taxes.
- The factors outlined above play a major role in attracting investors as they are at the benefit of saving lots of taxes that are otherwise charged in other countries. UAE has put in place various policies that ensure investors feel comfortable in investing within the country and also help them save on taxes in UAE while deciding to start any business setup.
Start a Company to save on taxes
Although the UAE charges several taxes like excise tax, customs tax, municipality tax, and corporate tax, the amount charged for these taxes is minimal such that investors don’t feel it is an extra burden to pay these taxes. Among the taxes various kinds of taxes are charged on a few of the business setups that fulfill certain conditions, thus making UAE a more attractive proposition among the investors to start a company to save on taxes.
Set up a company in mainland Dubai
Further, UAE has kept the option of choosing from different jurisdictions for an investor. If an investor decides to set up a company in mainland Dubai, it will save him the burden of taxes even though minimal taxes are to be paid while as on the other hand, the option of Freezones for an investor to set up a company will save almost 100% of different taxes that may otherwise be levied in other countries.