Tax and accounting regulations

There is no federal tax legislation in the UAE, each emirate has its own tax law. Only oil, gas and petrochemical companies are required to pay taxes.

Below is an overview of the tax and accounting regulations in RAK:

RAK Tax System:

  • Income Tax – 100% Income Tax exemption
  • Value Added Tax (VAT) – There is no VAT in the UAE
  • Capital Gains Tax (CGT) – There is no Capital Gains Tax in the UAE
  • Corporation Tax – 100% Corporation Tax exemption
  • Taxation of Dividends –Profits derived from dividends are taxed only in the state from which the income was earned. Dividend income paid by a UAE company to another company which has a double taxation treaty with the UAE may not be taxable in the foreign company even though no tax was paid in the UAE
  • Taxation of Royalties – Profits derived from royalties are taxed only in the state from which the income was earned.
  • Taxation of Interest – Profits derived from interest are taxed only in the state from which the income was earned.
  • Withholding Tax – No Withholding Tax applicable
  • Capital Duties – 100% Capital and Profit repatriation
  • Import / Export Taxes – No import or export taxes
  • Net Worth Tax – No Net Worth tax

International Aspects of Taxation:

Anti-avoidance regulations:

  • RAK has rapidly gained a reputation for being a tax free, transparent jurisdiction and it is of paramount concern that the reputation of RAK is not tainted by money laundering or any other illegal practices therefore anti-avoidance regulations are enforced.

System of Double Tax Treaties:

  • The UAE has over 40 Double Taxation Treaties in place.
  • As the UAE has no taxes, double taxation treaties are aimed at making the UAE a more attractive territory in which to operate by reducing taxation levied in foreign jurisdictions on profits remitted abroad by foreign entities operating in the UAE.
  • RAK currently has a DTTA with the following countries: Austria, Belarus, Canada, Czech Republic, Egypt, Finland, France, Germany, India, Indonesia, Italy, Lebanon, Malaysia, Malta, Morocco, New Zealand, Pakistan, Poland, Romania, Singapore, Sudan, Thailand, Tunisia, Turkey and Ukraine.

Annual Reporting Requirements:

  • Accounting records must be kept for 7 years from the date on which they were prepared.
  • Accounts are required to be approved and signed by the directors but there is no requirement for accounts to be filed with the RAK authorities.
  • No audit is required.

A coherent offshore tax planning strategy is essential to maximize the effectiveness of offshore companies. Eltoma can assist by structuring the most tax efficient strategy to satisfy your requirements. Eltoma will guide you as to which jurisdictions offer the best tax structure by identifying the types of tax payable as well as applicable exemptions and incentives. Eltoma will provide tax planning advice that will identify which is the most favourable tax efficient jurisdiction in which to incorporate.