New 9% Tax in Dubai Explained?! | GenZone Podcast (Who Has To Pay)

Dubai introduced corporate tax… but most people still don’t actually understand how it works.

In this episode, Kevin breaks down the UAE’s new corporate tax system in simple terms especially for free zone companies, which is what most entrepreneurs and online business owners are setting up in Dubai.

You’ll learn:
• Who actually has to pay the 9% corporate tax
• What “qualifying income” really means
• Why all companies still need to register
• The difference between holding investments vs active trading
• How crypto, stocks, and investing are treated in the UAE
• Why Dubai is still one of the most attractive jurisdictions globally for entrepreneurs

If you’re considering setting up a Dubai company, moving to the UAE, or want to understand how the new tax rules affect you, this episode will save you a lot of confusion.

Transcript

SPEAKER_00 0:00

This year in 2023, Dubai introduced a new corporate tax that will be applied to businesses, and in 2024 it's gonna take effect. Now, all businesses have to register for corporate tax. No matter if you have to pay it or not, you have to register for corporate tax. However, some people are talking about well, this company might not have to pay it, and this one might have to pay it. Or if you're in a free zone, you don't have to pay it. So I'm gonna clear it up for once so that everyone can know exactly what is going on in Dubai starting in 2024. And I'll be going over specifically free zone companies because that's what most people are setting up. If you're watching this video, you probably want to set up a free zone company, and that's exactly what we support with as well. Of course, we support with mainland companies, but 99% of our clients set up free zone companies in the UAE. And if you're confused or don't know how to properly set up a company here in Dubai because you've never done it before, then let us take care of that for you. Book a call down below, and we would be more than happy to get on a consultation call and set up your business with you. And when I say with you, I mean for you because our service is a totally done-for-you VIP service where you don't have to do anything, we take care of everything for you and make sure it's done properly the first time. So the first thing you need to know is qualifying income. Now, qualifying income is income that qualifies to not be subject to the corporate tax. So if someone says that X is a qualifying income activity, it means that there will be no corporate tax applied to X. So let's go over these qualifying activities. And if your activity is not on the list, then you will have to pay this 9% corporate tax, which is on net income above roughly 102,000 US dollars or 375,000 Durham. So again, to make it clear, let's say your company makes $300,000 and then you have $200,000 worth of expenses and your net income is $100,000. Well, there is no corporate tax you know attributable to your company. And this also resets for the next year as well. So that $100k doesn't move forward to the next year, it resets to zero. So that's what you need to keep in mind. So starting off a manufacturing of goods or materials, B processing of goods or materials, C trading of qualifying commodities, D holding shares and other securities for investment purposes, E ownership, management and operation of ships, F reinsurance services, G Fund Management Services, H wealth and Investment Management Services, I Headquarters Services to Related Parties, J Treasury and Financing Services to Related Parties, K Financing and Leasing of Aircrafts, L. Distribution of Goods or Mirs in or from a designated zone, M. Logistics Services. I had a client that had a big portfolio of stocks, cryptos, and other assets and asked me, Kevin, if I had these in my company, would I have to pay a corporate tax? Now it's very important to note that according to this document, the answer is no. However, this says holding of shares. If you are not holding, but you are trading actively, buying and selling, then in that case, that is a different situation. You are not only holding, but you are trading. So if you are trading, then in that case, you will have to pay that corporate tax. But it's also really important to note that here in Dubai, if you set up a company and get residency here, you can 100% invest trade in your personal name. It does not have to be in a company. So if you're trading in your personal name, whether it's crypto, stocks, mutual funds, whatever it is, this will be taxed at 0% at the moment. And for the next four or five years, we all expect it to remain the same. So hopefully this cleared it up for you. And if you want to set up your business in Dubai, book a call with us down below, and we would be more than happy to assist you. Get set up here.