Archives August 2024

UAE has long been considered to promote a tax-free system which helped it being a prominent business hub. However, recently, the United Arab Emirates (UAE) has decided to impose tax on profits made by businesses at a range varying between 0% and 9%. Though having a long-term position as a tax-free economy, the proposed rates are much lower as compared to other countries. It resonates the region’s long-standing commitment to upholding its position as a top-notch business avenue.

Whether you are looking to setup a company in Dubai or already have one, this post would help you understand each & every aspect of UAE’s tax regime.

What does corporate tax mean?

Also called business profits tax or corporate income tax, corporate tax refers to a direct tax that is levied on the total income or businesses. The new tax system of UAE would place it among nations that already have a set corporate tax system.

The UAE discharged the Corporate Tax Law in the tear 2022, which gave the legal backdrop for the overview and application of a federal corporate tax applicable for financial years starting on or after 1 June 2023.

At the outset, without relieved, any income more than AED375,000 will carry along a 9% statutory tax rate. There will be no tax on income below this limit.

Who are obliged to register for UAE corporate tax?

Both resident and non-resident individuals with permanent business establishment or connection in the UAE are needed to register themselves to obtain a corporate tax registration number.

Resident Individuals

These individuals include businesses established in UAE in freezones, offshore, or the mainland. Foreign bodies that are looked after by individuals in the UAE and people doing businesses in the UAE are also taken as resident individuals. The taxable income would be their universal income.

Resident taxpaying individuals are supposed to register by specific due dates ascertained by the month of issuing of trade license. The year of license issuance has no role in it.

Below is a table that highlights the month of license issues along with their respective deadlines for tax registration application.

In the case of businesses having multiple licenses or business groups with diverse operations, the deadline would rely on the first license issuance date.

Non-resident Individuals

Non-resident individuals are inclusive of firms that have a permanent establishment in the UAE. This category also includes those getting income from the UAE that is not realted to the permanent establishment or a connection in the UAE.

The taxation for non-resident persons will be applicable only on the income associated related to their UAE permanent establishment or connection. The deadlines are defined below:

Down the line, all taxable individuals are needed to file their corporate tax registration application. If not done, it will incur a penalty of AED10,000.

UAE Corporate Tax Exemption

In UAE tax regime, some individuals are exempted from the tax liability. They include government units and government-run establishments. A list of exempted entities is listed below:

• Ancestor businesses in the UAE
• Non-extractive natural resource firms in the UAE
• Qualifying public benefit entities
• Qualifying investment funds
• Public and private pension or social security funds
• Wholly-owned and regulated UAE subsidiaries of specific exempt entities

Small Businesses

The businesses with revenues lower than AED3 million for the current and previous tax sessions, small business relief can be availed. Small business relief can be availed for tax session ending before or on 31 December 2026.

A business needs to meet the below criteria to avail small business relief:

• It must be a resident in in the UAE
• The revenue for the concerned tax session and all previous tax periods should know go beyond AED3 million
• The business should not be a financial institution or a holding business

A business needs now to pay any kind of corporate tax if all the above points are met. However, it will be based on compliance requirements like simplified transfer pricing rules.

Eligible Free Zone Individuals

For individuals meeting the Qualifying Free Zone Person (QFZP), there is no need to pay any corporate tax on their income. They can avail this benefit if they:

• Have proper substance in the UAE
• Carry non-qualifying income not above the de-minimis limit
• Get qualifying income
• Abide by the transfer pricing rules and paperwork requirement
• Get audited financial statements as per the International Financial Reporting Standards (IFRS)

There are two types of qualifying income:

• Income from activities with free zone individuals: This income comes from activities with other free zone individuals, excluding when income comes from omitted processes
• Income from activities with non-free zone individuals (qualifying processes): Income generated from qualifying activities with businesses other than free zone can be considered qualifying income, as far as these processes are not omitted.

The list of qualifying activities is given below:

• Material manufacturing & processing
• Possessing shares & securities
• Owning, handling, and running shipping business
• Reinsurance services controlled by UAE
• Fund management services under UAE regulatory oversight
• Wealth and investment management services, looked after by UAE regulators
• Headquarter services
• Treasury and financing services
• Aircraft financing and leasing services
• Supplying materials from a specific zone to resellers, meant for resale
• Logistics services
• Any supporting activity that assists the primary qualifying activity without working individually

Contrary, the below-mentioned excluded activities will carry a corporate tax of 9%:

• Dealings with natural individuals not pertaining to specific qualifying activities
• Banking, insurance, and finance and leasing processes not coming under designated exemptions
• Ownership or misuse of non-commercial stationary property other than free zones, or intellectual properties

Corporate Tax Filing

Once the registration is done, businesses should get ready their initial corporate tax filing. The pending tax will be payable within nine months after their concerned relevant tax period is over. Any UAE corporate tax payable need to paid within this period.

With a majority of businesses following a a fiscal year system ending on 31 December, the primary taxable period will be from 1 January 2024 to 31 December 2024. This way, the filing deadline would be 30 September 2025.

It is necessary for businesses to keep all concerned documents and records in order for a period of 7 years after the end of the tax period. This is mandatory in regard to compliance guidelines defined by UAE tax authority.

The Conclusion

Whether you are already running a business in the UAE or planning to setup a new one in the UAE, Licensebox can help you in following the latest UAE tax regulations by providing full-fledged support in regard to document preparation, eligibility check, and tax filing.

Are you looking for a fabulous business avenue for your entrepreneurial dreams? If yes, Dubai could be a place you can’t afford to ignore. From favorable business environments to lower taxes, easy business setup, world-class healthcare, full-fledged government support, and multicultural people, there are hundreds of reasons why entrepreneurs are rushing to invest in Dubai. Whether you are looking to expand your existing business to Dubai or want to start a new venture altogether, Dubai has emerged as a dream commercial destination among new-age entrepreneurs. However, for them, it is necessary to know how can they set up a new business in Dubai.

Dubai recorded its GDP of AED 429 million in 2023, which was an increase of 3.3% from 2022. In addition, Dubai managed to retain the title of being the lowest-risk nation in the Middle East and Africa (MEA) region in 2023. It simply means that Dubai is considered an easy-going business destination for entrepreneurs and investors across the globe.

If you are looking towards a business setup in Dubai, you must understand a few major elements related to the same.

Economic Zones: Mainland, Free Zones, and Offshore

Prior to doing company incorporation in Dubai, you need to be aware of the different economic zones in Dubai. They are mainland, free zone, and offshore.

1. Mainland

The mainland zone is a feasible choice for those who look forward to flexible business setup for direct trade in the local UAE market and also globally. These companies are entitled to work anywhere in the UAE and their operations are not restricted to specific areas. It has become a lot easier for investors coming from other countries to get total control over their business in a majority of regions. However, the businesses set up in this zone come under the purview of UAE laws and regulations and are free to trade within the local and international markets.

Benefits

• Flexible trade opportunities both local and globally
• Total ownership
• Local flexibility
• Full freedom to pick any location for office
• No individual income tax
• 5% VAT and 9% corporate tax on gains above AED 375,000

2. Free Zone

Dubai’s free zones are meant for those entrepreneurs who want to enjoy total ownership of their company. This is the most popular option for company incorporation in Dubai. The government brought the concept of the free zone with an aim of generating foreign interest for business setup in Dubai. The free zone is a special economic region where business owners get full business ownership, 9% corporate taxation (for profits above AED 375,000), and zero personal income tax.

Benefits

• Total foreign ownership
• Restriction-free any currency transaction
• Corporate-friendly taxation system
• 1oo% repatriation of capital and profits
• Dedicated industry-centered support

3. Offshore Firms

Offshore companies can be listed in a free zone and get the same perks. The major difference between a free zone business and an offshore business is the business operations. Offshore companies are entitled to run business activities other than in the UAE and not in the region. There is no restriction on minimum capital paid prior to company incorporation in Dubai.

• Complete foreign ownership
• Superior levels of privacy and protection
• No minimum capital requirement

Types of Business License

There are primarily three types of business license issued by the Department of Economic Development (DED) in Dubai.

1. Commercial Licence

A Commercial Licence enables an entrepreneur to set up a company in Dubai that is essentially involved in trading or the buying and selling of items. This business license is meant for businesses involved in import & export, logistics, sales, general stores, travel & tourism, and real estate.

2. Industrial Licence

The Industrial Licence is given to businesses involved in manufacturing chores that convert natural materials into final products either manually or mechanically. This license includes businesses involved in textile manufacturing, metal making, and paper production.

3. Professional Licence

The Professional Licence is for service-based businesses, artisans, or craftsmen. A few examples of this type of license include medical services, parlors, and repair services.

Steps To Register A Company in Dubai

Below is a step-by-step guide on how to do a business setup in Dubai.

1. Determine your business activity

First and foremost, you need to determine the regular operations of your business as this would help you fix a specific business model. This is also important as you may need to get prior approval from concerned authorities before starting the business operations.

If you want to register your business in a particular economic business zone in Dubai, you must opt for a free zone business setup in Dubai. For a business setup in Mainland, you can register your company as either a sole business or LLC, given the specific business activity.

2. Pick A Company Name

Now, it’s time to choose a business name. According to experts, it is necessary that you choose a name that is related closely to your business operations as this would heighten the significance of your business.

However, you must abide by the trade name reservation guidelines while choosing a business name. Don’t use provocative terms that may hurt one’s religious sentiments.

3. Choose The Business Location

The location of your business is extremely crucial. This is because it gives exposure to various economies, and affects the availability of resources, tax regulations, infrastructure, etc. As already mentioned, you can choose from the three types of economic zones available in Dubai.

You can check the pros and cons associated with choosing a specific economic zone before choosing a particular zone to avoid any surprises at a later stage. It is better to consult a business services organization for valuable help in zone selection.

4. Prepare LSA or MOA.

It is recommended to seek the help of a local service agent (LSA) if you have plans to do a business setup in Dubai mainland. Such an expert would merely provide full-fledged support in procuring relevant licenses and other crucial permissions; they wouldn’t meddle in your business decisions. Furthermore, even on the mainland, you are no longer required to give a UAE national a 51 percent stake in your company.

5. Submit Your Application for a Business License.

Moreover, keep in mind that mainland companies are obliged to follow the DED for a business license. On the other side, kicking off a business in the Dubai free zone needs an application to their concerned authorities. Nevertheless, once you get a business license, go and secure all external approvals from several other governing departments, if applicable.

6. Open a Bank Account.

Once you are done with all the crucial licensing formalities and paperwork, you are suggested to open a business bank account on behalf of your business. Hence, pick a bank that best matches your company’s needs and offers various benefits and relaxations that intend to optimize the setup cost.

The Conclusion

Whether you are starting a new business altogether or looking to expand your existing business in Dubai, we, at LicenseBox, can help you all your business ventures in Dubai. Don’t take stress related to business setup in Dubai as our business formation experts can help you at every step of company incorporation in Dubai of any type. Get in touch with us today to discuss your requirements.

If you’re thinking about company incorporation in Singapore, one of the first things you’ll need to do is register with the Accounting and Corporate Regulatory Authority (ACRA). So, what is ACRA and what does it do exactly? It is a government authority that keeps a record of all the companies registered in Singapore to maintain transparency with the general public. Let’s find out more about ACRA.

About ACRA

Its main functions include:

Accounting and Corporate Regulatory Authority (ACRA) is the national regulator of company registration, financial reporting, public accountants and corporate service providers. It is tasked with developing the accountancy sector and fixing accounting standards which are followed by companies, societies, co-operative societies and societies registered in Singapore. Singapore is often ranked as one of the best countries to start a business. ACRA plays an important role in this achievement. If you want to make your business a legal entity, registration with ACRA is necessary.

ACRA Functions

Its main functions include:

• Overseeing and regulating companies and public accountants.
• Providing companies with a Unique Entity Number so that they can conduct business activities in Singapore.
• Collecting data of those associated with the company such as shareholders, directors, company secretaries, and so forth.

Statutory Requirements of ACRA

There are certain statutory requirements set forth by ACRA. The company directors must ensure their compliance with these requirements. In case of non-compliance, ACRA can take action against them. The following ACRA statutory requirements must be complied with by all the companies in Singapore:

• Every company registered with ACRA must have a local registered office address.
• A private limited company must have between 1 to 50 shareholders which can be individuals and corporate entities.
• Only individuals who are 18+ can be appointed as directors.
• A company is required to hold an annual general meeting. It provides a platform for stakeholders and company officers to communicate with each other. AGMs ensure that company’s stakeholders are updated about the company’s financial situation and direction.
• Private companies are required to file their annual return within 7 months after the end of the financial year.
• All the companies, including ones that are inactive and dormant, are required to file annual returns.
• If even IRAS has exempted a company from filing its income tax return, the company must file its annual return with ACRA as long as the company’s status is “live.”
• Under the Companies Act of Singapore, every company shall appoint a secretary within six months of incorporation.
• A company’s sole director and company secretary cannot be the same individual.

Conclusion

ACRA is the national regulator of companies in Singapore. All the companies operating in Singapore are registered with this government authority. Without this authority’s approval, no company can get registered in Singapore. ACRA has set forth certain statutory requirements for all the companies in the country. In case of non-compliance with any of these requirements, an enforcement action can be taken against them by the authority.

If you want to obtain ACRA’s approval for company incorporation in Singapore, please allow Licensebox consultants to assist you. We will provide you with expert guidance and complete assistance to ensure that your company’s formation process goes as smoothly as possible.

Any individual who wants to establish a company in the United Kingdom must apply for UK company incorporation with the Companies House. Without the approval of the Companies House, a company cannot be established anywhere in the United Kingdom, whether it’s in Northern Ireland, Wales, England or Scotland. Let’s find out more about what is the Companies House in the UK in this post.

Companies House: Definition

Formed in 1844, Companies House is the official registrar of companies in the UK. It is responsible for regulating and administrating the public limited, private limited, private unlimited, chartered and other companies in the UK. This agency, as well as British company law in general, are governed by the provisions of the Companies Act 2006 of the UK. 

Companies House mandates all the companies registered in the UK to file documents such as statutory accounts, annual accounts, confirmation statements and change of address notifications. If a company appoints new directors, secretaries or officers, the same must be notified to the Companies House by filling out a form. The Companies House stores the data of companies and makes them available as part of the public record so that anyone can monitor and access details of any company running in the UK.

Functions of Companies House

The main functions of the Companies House are:

• Forming and dissolving limited partnerships
• Preserving and archiving data in compliance with the Companies Act
• To make corporate information publicly available

Different Ways to Register with the Companies House

Those who seek company registration in England or Wales are required to register with the Companies House located in Cardiff, the capital of Wales. Those who seek company registration in Scotland must register with the office in Edinburgh, the capital of Scotland. For northern Irish companies, the concerned office for company registration is Companies House office located in Belfast. Additionally, there is also a central London office which can be reached out to through post.

To apply for company registration in a hassle-free manner and from the comfort of your home, you can register with the Companies House online. Once company registration process is done, the Companies House will issue you a Certificate of Incorporation, showing that your company is legally registered in the UK.

Details included in Certificate of Incorporation issued by Companies House

The certificate of incorporation granted by the companies house to the companies in UK consists of the following information:

• Registered name
• Registered number
• Date of incorporation
• Whether the company is limited or unlimited, and if limited, whether by shares or guarantee
• Whether the company is private or public
• Whether the company’s registered office is based out of England, Wales, Scotland, or Northern Ireland

Penalties for non-compliance with Companies House

You must keep the Companies House updated about the current information regarding your company. In case of any inaccuracies or late filing, the Companies House will charge penalties. If the annual accounts are submitted after the deadline, an automatic financial penalty charge will be applicable. In certain circumstances, company officers can be subject to prosecution if they withhold information from the agency. 

Conclusion

Companies House is the government body responsible for administering company information in the UK. It issues the certificate of incorporation to all the newly registered companies in the United Kingdom. If you want to obtain company registration in the UK as quickly and easily as possible, you can connect with Licensebox consultants. We will help you in receiving the certificate of incorporation from the Companies House effortlessly, so that you can run your business in the UK without any hassle.

Free zone companies are business entities that are authorized by free zone authorities to conduct business in Dubai. There are several free zones in the UAE, out of which Dubai alone has approximately 30 free zones. In this post, we’ll provide you a list of all the free zones in Dubai for company incorporation. You can start a free zone company Dubai in any free zone of your choice!

List of Free Zones in Dubai for Company Incorporation

Here is a list of some of the free zones in Dubai for free zone company incorporation:

Why Register a Free Zone Company?

Registering a free zone company has several benefits. If you’re wondering why you should register a free zone company UAE, check out the benefits stated below:

• Free zones have a low tax policy. Most types of free zone companies in Dubai are exempted from taxes, including VAT, customs and corporate tax. 
• 100% of the capital and profits are repatriated to the foreign owners of free zone companies in Dubai.
• Business entrepreneurs who set up free zone companies in Dubai get 100% ownership. There is no requirement of a local service agent. 
• Free zones in Dubai are located at strategic locations, and they offer premium infrastructure and world-class facilities for the free zone companies.
• Company formation in Dubai is easy and cost-effective. Many free zone authorities offer remote free zone business setup processes in Dubai.

Conclusion

There are approximately 30 free zones in Dubai. All of them have state-of-the-art infrastructure and latest technology. You can choose free zone company incorporation in Dubai in any of the free zones mentioned in this blog post. If you’re ready to begin your business journey in Dubai, connect with Licensebox consultants for company formation in Dubai in a smooth and hassle-free manner.

Most people who want to start a business in Dubai and have researched a bit on the Dubai company registration topic are familiar with two terms, namely, Dubai Mainland and Dubai Free Zone. Both Dubai mainland companies and Dubai free zone companies are great choices for company formation in Dubai. However, which one is the best in your case can only be decided once you can understand the difference between Dubai mainland and Dubai free zone companies.

What is Dubai Mainland Company?

Dubai Mainland company is a company which is authorized by the Dubai Department of Economic Development (DED) to carry out business activities in Dubai. When a company is registered as a mainland company in Dubai, it does not have any restrictions on its commercial activities.

What is Dubai Free Zone Company?

Dubai Free Zone company is a company which is located in one of the 26 free zones in Dubai. It is authorized by the free zone authority to carry out its business activities in a particular free zone in Dubai.

Dubai Mainland vs Dubai Freezone: Key Differences

The following comparison table will help you to understand Dubai Mainland vs Dubai Free Zone easily. 

Conclusion

Mainland companies in Dubai can conduct commercial activities in the UAE without any restrictions. However, free zone companies in Dubai can only carry out business in their respective free zones. While a physical office isn’t required for a Dubai free zone company registration, it is mandatory for a mainland company. Now that you know the major differences between Dubai mainland company vs Dubai free zone company, you can choose either of them based on your requirements. If you wish to know more about these two types of companies in Dubai, you can speak with our consultants at Licensebox.