Did you know that a $10K investment can get you a tax-free company and residency in Dubai ?
30 July 2018
Due to recent legislative changes and increased compliance with international tax avoidance regulations, Dubai is no longer just a viable option for incorporating a new business. In fact, compared to others and due to these recent developments, it is fast becoming the destination of choice. Did you know you can set up a business in Dubai much more cheaply and easily than comparable places?
What You Can Get for $10k
Although its economy is built on oil, the banking crisis of 2008 led to many changes in UAE. One of the growth areas was construction, although it was not the only area. Other growth areas include energy, aluminium production, and the motor industry. Ten years of diversification and recent changes to legislation means Dubai is an attractive proposition to start a new business. This applies not just to UAE citizens, but for foreign residents too. One of the most important areas for attracting foreign investment is Dubai. But why? The geographical location is obviously advantageous; the Middle East brings together business interests in Asian, European and Middle Eastern economies, as well as attracting investment from the Far East. But there are great business reasons for doing so too. When setting up a business, investors are subject to far fewer stringent measures and the area has a far more liberal approach to foreign residency. In brief:- You are entitled to apply for a standard 3-year residency in the UAE when incorporating a new business within Dubai or another Emirate. Residents can obtain a Tax Residency Certificate.
- There is no corporate or personal income tax in the UAE.
- All the company owner needs to do to maintain ownership, tax-free status, and their residency is to visit the UAE twice a year
How Does this Compare to Other Places Around the World?
Monaco
The most obvious place to begin setting up a tax-free business is Monaco. The principality on the Mediterranean, known as a playground of the rich and famous and centre of one of the world’s most famous motor races, certainly has its advantages. However, to enjoy similar privileges in Monaco compared to Dubai you will need far more money than you would in Dubai – €150,000 in some cases which is around $174,000 US at present – 17 times greater capital compared to incorporating in Dubai. There is no personal or income tax to pay in Monaco which is one of its biggest selling points. However, a 33% corporation tax applies when global sales represent more than 25% of total sales. Simply – if you want to operate internationally, you will be subject to tax over a certain threshold. Foreigners seeking residency must spend a minimum of 180 days in the principality which is strictly checked and enforced. For Dubai, that minimum requirement is just 2 days. Also, if you have French citizenship, you are not entitled to tax exemption even if Monaco is your permanent residence. Finally, Monaco is subject to the EU’s 20% VAT (Value Added Tax) rate.
Cyprus
Useful for businesses based on the Middle East and Eastern Europe, the country divided between Greek West and Turkish East has, in recent years, become a great base of operations for foreign owned businesses. Although not an EU member, it’s application is pending, making it a great place to do business. With low personal and business tax, many people choose Cyprus due to its equal favouring of EU and non-EU citizens. However, these advantages are mitigated by several critical disadvantages. It’s incredibly expensive to obtain residency as a foreigner. Taxes are low but not 0%; corporation tax is presently 12.5%, the lowest in the EU but Dubai is still a better choice.
The Bahamas
People looking to set up businesses in The Bahamas are drawn to the fact that there is no personal or corporation taxes to pay. Also, at present, it does not hold tax treaties with other countries. Foreigners seeking residency have the flexibility of choosing annual residency (for one year, renewable every year) or permanent (apply one time and receive lifetime residency). The Bahamas are ideal for dealing with North America but not so much for elsewhere. It has a high crime rate and import duties are high, meaning a high cost of living which effectively cancels out any personal tax savings you make, and with a 5-15% tax on multinationals, to save, you need to operate only within The Bahamas. Healthcare is expensive compared to the others and of lower quality for most people. Residency applications are slow; there is a fast track system which costs $1.5m (Bahamian Dollars are the same value as US dollars). The costs keep stacking up too.
