UAE accounting & tax considerations

Since 2003, Healy Consultants Group PLC assists our Clients with timely compliance of their annual legal, accounting and tax obligations in the UAE.
tax and legal obligations in UAE

  • UAE taxation

    • In the UAE, taxes are only levied on companies which deals in oil and gas exploration and production and petrochemical. Companies in the UAE pay no corporate or capital gains tax on worldwide-sourced income.
    • There are no withholding taxes in the UAE.
    • Value Added Tax (VAT) is levied at a standard rate of 5%. Food items, health, education, petroleum products, social services and bicycles are VAT exempt. The financial services and (residential) real estate sectors are also exempt from VAT (with certain exceptions).
    • A mandatory 5% tax on imports to mainland UAE is applicable to all trading companies, irrespective of their business activities; However, companies in free zones are exempted from import duty on goods coming into the free zone.
    • Excise tax is payable on the importation, manufacture and stockpiling of excisable goods, which include carbonated beverages, energy drinks and tobacco.
    • There is no personal tax levied on residents and non-residents.
    • Municipal fees of 10% are charged on commercial properties and 5% on residential properties. There is also 10% municipal tax on certain hotel revenues and entertainment.
    • In 2020, the UAE implemented the eDirham system to facilitate the collection of state fees and revenues and provide further options for paying government fees using the latest technology.
  • Tax reporting, accounting, and auditing considerations

    • VAT returns generally are filed on monthly or quarterly basis depending on the business turnover. However, they must be filed online by the 28th day of the month following end of the reporting quarter.
    • As part of an annual obligation, all business entities are mandated to file audited accounts with Ministry of Commerce located outside the free trade zones.
  • UAE company tax exemption package

    • All supplies of goods and services made in the UAE are taxable supplies. However, the UAE’s Cabinet lists 20 free zones across the country as designated free zones under special treatment under VAT law. In order for an area located within one of the Designated Zones to qualify as being outside the UAE (for VAT purposes), it must also meet the criteria of Article 51 of the Executive Regulations.
      • It is a specific fenced geographic area; and
      • It has security measures and Customs controls in place to monitor the entry and exit of individuals and movement of goods to and from the area; and
      • It has internal procedures regarding the method of keeping, storing and processing of goods within the area; and
      • The operator of the Designated Zone must comply with the procedures set out by the FTA.
      • It is only when the area within the Designated Zone meets all the requirements of Article 51 of the Executive Regulations should it be treated as outside the UAE territory for VAT purposes (applicable to specific supplies of goods only).

      Otherwise businesses established within a designated zone have the same VAT compliance obligations and rights as non-Designated Zone businesses.

    • UAE has Double Taxation Avoidance Agreements (DTAA) with more than 90 countries including Canada, China, France, Germany, India and Singapore.
  • Healy Consultants Group PLC fees for accounting and tax support

    • Healy Consultants will assist our Clients with company registration and maintenance i) preparing forecasts, budgets, and sensitivity analysis for UAE business set up; ii) documenting and implementing accounting procedures; iii) implementing financial accounting software; iv) preparation of financial accounting records.
    • The UAE incorporation process mandates that all companies must apply for appropriate government licenses before commencing operations. Examples includes trade license, industrial license or professional license for skills-based businesses.
    • It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fullfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.

Legal and compliance

Healy Consultants Compliance Department will assist our Client in effectively discharging all legal obligations following company setup in UAE:

  • Company regulations

    1. There are various categories of business organization defined by the Commercial Companies Law, such as;
      • Limited Liability Company (LLC);
      • Free Zone Company;
      • Offshore Company;
      • Branch / Representative Offices of foreign companies;
      • Partnership and joint venture company;
      • Public and private shareholding company;

      Amongst above, the most appropriate method of establishing a business in the UAE by foreign investors is to form a Limited Liability Company (LLC) or the branch/representative offices;

    2. A company is deemed to be UAE-resident under the following conditions:
      • It was formed in the UAE;
      • The company’s central management and administration is in the UAE, even if it was formed in another jurisdiction;
      • The company conducts business in the UAE and its voting control is in the hands of resident UAE shareholders, even though it was incorporated in another jurisdiction or its central management is in another jurisdiction;
    3. Under UAE corporate law, directors control the daily operations of the UAE business. Directors are appointed by the company’s shareholders who have the power to remove them as and when required;
    4. The UAE incorporation process mandates that all companies must apply for appropriate government licenses before commencing operations. Examples includes trade license, industrial license or professional license for skills-based businesses;
    5. A UAE LLC is mandated to reserve 10% of annual profits until the reserve reaches 50% of the initial share capital;
    6. All resident firms must file returns with the relevant authorities, providing information about the directors and shareholders. Only the director’s information will be publicly accessible;
  • Other considerations

    1. UAE participates in many organisations and conventions such as WIPO, WTO, PCT and WIPO Copyright Treaty which deals with intellectual property rights of foreign companies;;
    2. UAE business laws provide for de-registration of a resident company. This process takes approximately 6 months on average. Healy Consultants can assist our Clients with de-registering their UAE business for a fee of US$1,450;

Contact us

For additional information on our accounting and legal services in UAE, please contact our in-house country expert, Ms. Chrissi Zamora, directly:
client relationship officer - Chrissi