TAX RESIDENCE IN UAE’s FREE TRADE ZONES

The UAE has almost 40 Free Trade Zones of which more than 20 are located in Dubai. Establishing a business entity in one of the UAE’s Free Trade Zones (FTZs) can be an attractive option for foreign investors.

 

For a start, an FTZ company enjoys full exemption from income and corporate taxation, can have 100 percent foreign ownership, no exchange restrictions.

 

A further possibility is to apply and obtain tax residence status and certificates from the UAE authorities for its shareholders.

 The benefits of registering a company in one of the UAE’s Free Trade Zones:

  • Economic substance
  • Access to the UAE double tax treaties network
  • 100 % foreign ownership
  • Zero corporate and personal income taxes
  • 100 % capital repatriation
  • Up to 50 shareholders
  • Full range of business activities permitted
  • 100 % import and export tax exemption within the FTZ
  • Swift registration process
  • No restrictions on hiring foreign employees
  • Modern and investors friendly rules and regulations

 

There are several options when it comes to establishing a business within a FTZ:

 

  • Free Zone Establishment (FZE), which is suitable for a single shareholder
  • Free Zone Company (FZC), for up to 50 shareholders
  • Branch or representative office of an existing company based within the UAE or abroad

 

Obtaining a residence permit is the primary condition for being considered as resident in the UAE. A UAE residence permit and a tax residence certificate can be useful to many foreign owners and executives of FTZ company’s who wish to register tax residency in the UAE. It is worth noting that banking institutions in UAE consider UAE tax residence certificates as sufficient proof of tax residency.

As global markets become increasingly intertwined, taxpayers need to be ever more aware of cross-border considerations. In the current environment, where focus on disclosure, reporting, and  taxation of foreign assets has sharpened, this is now of paramount importance.