Activities that receive preferential state treatment in the UAE

Given that businesses operating in the local UAE market are highly profitable, the introduction of VAT has had a negligible impact on the business community. At the same time, many types of business in the Emirates are not affected at all and VAT is not applicable to a large number of foreign and local companies. Find out which areas of activity have received state support and an exemption from 5% VAT, and what unique opportunities are open to investors as well as the many advantages they can enjoy.

Business areas not affected by the introduction of VAT

Economic activity abroad

International trade and service business activities with foreign counterparties through a company that is incorporated and operating in the UAE

Investment activity

Investing own funds in securities on global markets, contributing to the authorized funds of foreign companies, purchasing and selling assets

Tax groups

Holdings created in the UAE to hide the ultimate beneficiary, and interconnected structures under a single management in the form of ‘tax groups’

Precious metals

Investment supplies of precious metals within the UAE and their import. This applies to gold, silver, platinum in the form of ingots with a purity of 99%

Export and re-export

Direct and indirect deliveries from the UAE to countries other than the Persian Gulf countries, including through the UAE’s Free Trade Zones

Real estate transactions

Purchase, sale and lease of apartments and houses in the UAE within 3 years from the date of their commissioning, and land plots without buildings

Many investors mistakenly assume that taxation depends on where the company was incorporated and choose Free Trade Zones, believing that activities outside the FTZ will be taxed. This is a misconception, since the tax system applies both to the FTZ and to the rest of the country. Having said that, Mainland (local) companies are a more flexible and creditable tool for doing business without restrictions

VAT reporting in the UAE

In the UAE, the requirements for tax registration, tax payment deadlines and preparation of tax reports are regulated by the state. A number of government agencies, counterparties, and international financial institutions require a tax number (TRN) from the first day of operation.

Voluntary VAT registration

Turnover exceeding

185 000dirham

Mandatory VAT registration

Turnover exceeding

375 000dirham

Reporting frequency

Quarterly submission of reports to the FTA (Federal Tax
Authority)
Monthly submission - for a large number of bank account
transactions

Responsibilities of taxpayers

Submission of tax reports and timely payment of VAT due
Submission of tax invoices to clients upon the provision of the
service

The basis for calculating value added tax in the United Arab Emirates is the difference between outgoing and incoming VAT. That is, the amount of value added tax can be calculated using the formula: "VAT on sales" (charged by the company to consumers) minus "VAT on purchases" (paid by the company when purchasing goods or services for subsequent use) is equal to "VAT payable to the FTA".

What benefits do taxpayers get in the UAE?

Onshore status

It is automatically assigned during tax registration and guarantees protection against deoffshorization trends

Tax Residency

All TRN number holders can apply for tax resident status and receive Information Exchange Protection (CRS)

Participation in tenders

Candidates from a jurisdiction that generates a high degree of trust in commercial and state competitions, entry to international bids

Prestige

High credibility in the eyes of foreign counterparties and financial institutions, support of UAE banks and credit institutions

Creating a cash and settlement center

Optimization of the operational activities of the entire international business with central calculation of taxes

International agreements

Covering mutual protection of investments and avoidance of double taxation, including the common customs space of GCC countries

The UAE government is doing everything to protect international business from global pressure. The introduction of VAT is one such measure. By introducing VAT, the UAE eliminated the risk of becoming the object of another international wrangle against tax-free jurisdictions, thereby guaranteeing geopolitical stability for its markets.

Get a free specialist consultation

Things to take into account when registering

TAX Group

To form a Tax Group, members must be residents of the Emirates and operate related businesses. Such a group can submit consolidated financial statements to the Federal Tax Authority and receive a single taxpayer number

TRN number

They are awarded to onshore (mainland) companies that operate in Dubai and are registered with the FTA. In addition to the advantages of jurisdiction, a TRN having protects against the payment of an “offshore fee” by counterparties and from “withholding tax"

Grounds for registration

Even if your business activity is amongst those that enjoy preferential rates or are exempt from VAT, you still need to register as a taxpayer, get a TRN number and a certificate confirming the exemption from tax obligations

Bookkeeping

Despite the fact that there is no requirement for mandatory accounting in the UAE, all companies are legally required to submit financial reports and keep primary documentation for 5 years

SORP specialists will help you resolve all issues with organizing your business in the UAE

Preparing a business model

We will choose the most appropriate license and type of legal entity

Setting up a business

Fast incorporation through our long-standing close cooperation with licensing authorities

Tax registration with the FTA

Registering for VAT with the FTA and obtaining a TRN number to provide credibility for your business

Dubai business address

Cost-effective office rental in SORP business center for employees and licensing procedures

Opening bank accounts

Close cooperation with UAE banks, assistance in passing KYC procedures

Local partner or agent

Nominee service from SORP Investment LLC with waiver of rights in the Dubai Court

The UAE is an ideal base for your business

International recognition

The country's high standing in the eyes of the international community allows companies incorporated here to enjoy the support of banks and financial institutions, international partners or counterparties. Foreign businesses receive state support in priority sectors on a par with local entrepreneurs.

Financial freedom

The UAE government has declared support for free movement of capital and the complete absence of currency controls and restrictions on the size of bank transactions or payments in the national currency. The UAE is the most attractive settlement center for international transactions

Tax advantages

Apart from the 5% VAT rate on a number of domestic goods and services, there are no major corporate or personal income taxes in the UAE. Any business owner can obtain the status of a tax resident and protect themselves from the automatic exchange of tax information

The UAE tops the ratings

The United Arab Emirates ranks second in the world in terms of financial freedom, first in terms of ease of taxation, 16th among the easiest countries to do business, and 5th in terms of international trade. In the ranking of global competitiveness, the Emirates ranked 9th and 10th in the logistics and infrastructure development index among all countries of the world.

Superb location

The UAE is an international trade hub and a recognized logistics center due to its ideal geographical location at the intersection of Europe, Africa and Asia. The highly developed transport network allows you to quickly receive and conveniently store, ship and transport goods within the country and abroad.

The CORP Group of Companies provides the widest possible range of consulting services in the United Arab Emirates. As experts in the analysis and selection of business strategies in the UAE, we will tell you how to implement your idea most effectively and quickly. We provide our clients with recommendations on choosing the best jurisdiction in which to incorporate and ensure you avoid the typical mistakes people make when setting up a business here.