In 2024, the UAE, known for its political and economic stability, high living standards, and top-notch infrastructure, keeps drawing migrants from around the globe. Dubai, in particular, has gained popularity as a tax haven, offering tax-free income and opportunities for global business growth, along with permanent residency options and UAE visas.
Until 2023, Dubai was known as an ideal tax haven for both individuals and corporations. However, changes to the Emirates’ tax laws were introduced on June 1, 2023. Now, the corporate tax rate is set at either 9% or 0%, depending on specific criteria.
Dubai’s tax benefits for global investors
Considering Dubai as an offshore tax haven involves understanding its tax structure:
- Personal Income Tax: Dubai imposes no personal income tax.
- Inheritance Tax: You will encounter no inheritance tax in the emirate.
- Capital Gains Tax: The tax rate is set at 0%.
- Value-Added Tax (VAT): Individuals are subject to a VAT rate of 5%.
- Corporate Tax: Companies earning up to AED 375,000 annually are taxed at a 0% rate. Other companies pay the tax at 9% generally, or up to 55% for specific activities.
- Income from Employment or Investments: Personal income from employment, real estate, or stock investments is not subject to corporate tax.
- Free Zone Companies: Companies in Dubai free zones enjoy a corporate tax exemption for 15 to 50 years, regardless of profit, which is attractive for foreign businesses.
- OECD Standing: Dubai’s offshore zone is on the OECD’s white list, indicating compliance with international financial standards.
Dubai now rivals the top tax havens globally. It offers individuals the benefit of paying no taxes and has established more than 50 double tax avoidance agreements. These DTAs allow residents from those countries to work in the UAE without being subject to taxation.
Dubai’s tax-free status is drawing more interest for offshore company registration, offering significant tax benefits. However, the cost of setting up an offshore entity in Dubai starts at a minimum of USD 5,000, with yearly maintenance fees adding a few thousand dollars more.
The upside to this investment includes the advantage of no taxes and freedom from international regulatory claims.
Several easy steps to setting up your company in Dubai
The process of setting up an offshore company in Dubai can be outlined in these key steps:
- Select a Free Zone: With about 50 options available in 2024, choose a free zone that caters to your business activities and offers zero tax privileges in Dubai or another emirate, provided the profits are not sourced within the UAE or stay below the annual threshold of AED 375,000.
- Trade Name Registration: Register your company’s trade name and prepare the foundational documents.
- Obtain a Business License: This is essential for all companies in the UAE, both local and offshore. Such licenses are valid for one year and may be renewed later on.
- Bank Account Setup: Prepare the necessary documents and meet the financial institution’s requirements. Offshore companies formed in the UAE have the right to open local bank accounts, while foreign entities may access UAE banking through branches, subsidiaries, or by establishing an offshore company in the jurisdiction.
- Rent Office Space: This is as complex as a bank account setup. Choosing the right location is of major importance, yet remember that International Wealth agents and seasoned professionals are always here to help.
Dubai’s flourishing high-end property market: trends and investment opportunities
Luxury property prices in Dubai have seen a consistent rise, with a notable sales growth of 14.5% in 2023. When it comes to Dubai’s real estate, both apartments and villas are available for purchase in the primary and secondary markets. Foreign investors, in particular, show a preference for off-plan properties, especially those that are still under construction.
The UAE investment program’s criteria were updated in 2023. Now, foreign nationals can secure a residency visa and aim for permanent residency in the Emirates by meeting one of these requirements:
- Golden Visa: Buy property in the UAE worth at least AED 2 million (USD 545,000) to get a Golden Visa, which is a ten-year residency permit.
- Two-Year Residency: Invest in real estate valued at a minimum of AED 750,000 (USD 204,000) for a two-year resident visa.
- Retiree Residency: If you’re a retiree over 55, purchasing property in Dubai or another emirate valued at AED 2 million or more will qualify you for a residency visa that lasts up to five years.
You are welcome to purchase properties in Dubai using either cash, credit, or a mortgage. If you’re not a resident, you’re allowed to buy in designated areas, which are usually set aside for off-plan projects. As of 2023, there were about 50 such special zones.
Why Dubai is your perfect relocation choice in 2024
The United Arab Emirates may rightly be referred to as an ideal relocation destination, offering safety, speed, and cost-effectiveness, without the burden of future taxation.
Here’s what key benefits in the UAE, particularly Dubai, include:
- Tax Exemptions: Dubai residents enjoy no income, capital gains, or wealth taxes.
- Property Tax: A moderate 5% tax on the annual rental value.
- Business Tax: Rates vary between 0% and 9%, based on the company’s status (local or offshore) and profits. Local businesses with annual profits over AED 375,000 are taxed at 9%, while offshore companies benefit from up to 50 years of tax exemption.
- Value-Added Tax: A uniform 5% VAT is levied in Dubai.
- Import and Export Taxes: The UAE imposes no export tax, and import tax rates range from 5% to 100%, depending on the goods, with items like tobacco and alcohol at the higher end.
Even with the recent updates to the UAE’s tax regulations, Dubai continues to be a favored tax haven for offshore companies and expatriates looking to move to Dubai and secure residency.
For inquiries about UAE free zones or relocating your business to Dubai, the experts at International Wealth are at your service for complimentary consultations. Feel free to reach out using your preferred communication method.
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