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United Arab Emirates: Hamriyah Free Zone

Basic taxes (briefly)

Personal tax No
Corporate tax (in detail) There is currently no federal corporate income tax in the UAE. However, the emirates introduce income tax at their own level. In the emirates, where income tax has been introduced, it is levied only on companies engaged in the extraction and processing of oil and gas and branches of foreign banks.
Capital gains tax. Details There is no capital gains tax in the UAE
VAT. Details The standard VAT rate is 5%.
Other taxes real property tax, municipal duties
Government fee
Stamp duty No

International tax agreement

   


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TAXATION

Individual Taxation

Personal income tax is not levied in the UAE.

Corporate Income Tax

Companies registered in UAE free zones are exempt from corporate tax, capital gains tax, property tax and other taxes, except VAT.

Capital Gains Tax

No tax is imposed on capital gains in the UAE.

Dividends

Dividends are not subject to taxation.

VAT

From 1 January 2018, the UAE introduced a Value Added Tax.
VAT as a general consumption tax applies to all transactions with goods and services, unless such transaction is exempted or taxed at 0% rate.
The standard VAT rate in the UAE is 5%.
There is no obligation to register for VAT unless sales turnover in the country exceeds the registration threshold, which is AED 375,000 (~ USD 100,000) in the UAE.
Registration as a VAT taxpayer is required in the following cases:
  • there is reason to believe that the taxable turnover in the next 30 days will exceed the registration threshold (for example, a contract has been made);
  • at the end of the month, the taxable turnover for the previous 12 months actually exceeded the registration threshold;
  • the company receives services to be included in the return using the reverse charge method, in excess of the registration threshold.

It is possible to initiate a voluntary registration after exceeding the threshold of taxable transactions in the amount of AED 187,500 (~ USD 50,000).

Withholding Tax

There is no such tax in the UAE.

Stamp Duty

Stamp duty is not levied in the UAE.

Other Taxes and Duties

Real Property Tax each transaction with real property is object to 4% tax of the contract value.
Municipal Duties levied on the hotel services as well as lease of living and commercial property.

Anti-Avoidance Rules

Transfer pricing: no.
Thin capitalization: no.
Controlled foreign companies: no.

Double Tax Agreements

The UAE have exchange of information relationships with 106 jurisdictions through:

  • 99 DTCs: Albania, Algeria, Andorra, Armenia, Austria, Azerbaijan, Bangladesh, Barbados, Belarus, Belgium, Belize, Benin, Bosnia and Herzegovina, Brunei Darussalam, Burundi, Canada, China, Comoros, Cyprus, Czech Republic, Ecuador, Egypt, Equatorial Guinea, Estonia, Ethiopia, Fiji, Finland, Former Yugoslav Republic of Macedonia, France, Georgia, Germany, Greece, Guinea, Hong Kong (China), Hungary, India, Indonesia, Ireland, Italy, Japan, Jersey, Jordan, Kazakhstan, Kenya, Korea (Republic of), Kosovo, Kyrgyzstan, Latvia, Lebanon, Libya, Liechtenstein, Lithuania, Luxembourg, Malaysia, Malta, Mauritania, Mauritius, Mexico, Mongolia, Montenegro, Morocco, Mozambique, Netherlands, New Zealand, Nigeria, Pakistan, Panama, Paraguay, Philippines, Poland, Portugal, Romania, Russian Federation, Saint Kitts and Nevis, Senegal, Serbia, Seychelles, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sudan, Switzerland, Syrian Arab Republic, Tajikistan, Thailand, Tunisia, Turkey, Turkmenistan, Uganda, Ukraine, United Kingdom, Uruguay, Uzbekistan, Venezuela, Viet nam, Yemen/
  • 8 TIEAs: Argentina, Colombia, Denmark, Faroe Islands, Finland, Iceland, Norway, Sweden.

It should be noted that the above treaties do not apply to offshore companies.

Foreign exchange control

There is no foreign exchange control in the UAE.

ACCOUNTS

Financial Statements

Every company registered in Hamriyah Free Zone must keep accounting records sufficient to confirm its financial position and reflecting up-to-date information about the assets and liabilities of the company. It is also necessary to prepare annual financial statements of the company.
The free zone administration offers the option of temporary exemption from submitting financial statements to the authorities. Please contact your consultant for details.
The company’s first accounting period lasts 6 to 18 months and depends on the legal form of the company and the date of registration. Subsequent periods last 12 months from the end-date of the first accounting period. The company is given 3 months from the end of the period, to prepare and submit audited financial statements to government authorities.
Companies that have subsidiaries (more than 50%-owned) are required to prepare consolidated financial statements for the group.

Audit

Audit is mandatory.

Annual Return

Offshore companies are not required to file annual return.

Tax Returns

It is not required to file tax returns.

    Taxes of UAE

    Min. rate for corporate tax No
    Capital gains tax No
    VAT 5%
    Withholding tax No
    Exchange control No
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