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Tax incentives in UAE free zones

Tax incentives in UAE free zones

The United Arab Emirates has long attracted foreign businesses with a plethora of free economic zones with a variety of specializations, simplified registration and a loyal tax policy. However, the UAE tax landscape has undergone changes since the introduction of corporate tax. For successful operation, and requires a deep understanding of local legislation to optimize the tax burden. In this article, we will break down the main aspects of taxation for businesses registered in the UAE free zones.

1. VAT.

Value Added Tax introduced in 2018 (5%) applies to companies in free zones as well. It is important to understand that registration in a FEZ does not automatically exempt a company from paying taxes. Moreover, there are so-called Designated Zones — special territories within a freezone, activities in which can be exempted from VAT if certain conditions are met. These conditions vary depending on the specific free zone and the type of activity of the company.

For example, a company registered in a free zone and engaged in export activities may be exempt from VAT on exported goods and services.

However, if the company makes domestic supplies, VAT will apply. It is important to familiarize yourself with the regulations of the freezone to determine the possibility of optimizing the tax burden in the case of the planned type of activity and peculiarities of the business.

Companies registered in FEZs that do not have Designated Zones status are subject to the general VAT rules in force in the country. This means that they must register as VAT payers and pay tax on their transactions in accordance with the law.

The application of VAT depends on a number of factors: the origin and destination of the goods, and the location of the seller and buyer. Even within a single Freeson company, there may be VATable and VAT-exempt transactions.

2. Corporate Tax.

Corporate tax with a rate of 9% has been introduced from 2023. Although Freeson companies are not generally exempt from it, there are exceptions. The key factor is qualifying activities.

Qualifying Free Zone Person (QFZP) — companies that qualify for preferential tax treatment by meeting certain criteria set out in the legislation. For example, the revenue of such companies must not exceed AED 5 million or 5% of the total revenue of the company for the tax period, and the type of activity must be on the list of qualified. Also, important is the company’s compliance with the economic presence in Freezones. Corporate income tax exemptions are generally available for such companies as they are heavily export and international trade oriented.

Thus, the tax legislation of the region classifies the business activities of organizations operating in FEZ into three categories:

1. Qualifying activities are those explicitly permitted and supported by a particular free zone and aimed at exporting goods and services outside the region. Income from qualifying activities for QFZPs is exempt from tax, subject to a number of conditions.

2. Exempted activities are activities that are generally taxable under other UAE regulations, regardless of the status of the company (FZP). These include, for example, real estate transactions within the Emirates, certain financial services, etc.

3. Other activities are activities that do not fall under the definitions of qualifying or excluded activities.

Choosing a free zone to do business in the Emirates requires careful analysis. The nuances of taxation under VAT, corporation tax, customs duties and other local levies must be considered. Designated Zones or qualified activity status plays an important role in minimizing the tax burden.

Before deciding whether to register a company in a particular free zone, it is important to consult with experienced UAE legal professionals. Make an appointment for a free consultation with a Makebiz lawyer and learn more about the benefits your business can expect.

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Personal Data Processing Policy.

1. General provisions This personal data processing policy is compiled in accordance with the requirements of Federal Law No. 152-FZ of 27.07.2006 "On Personal Data" (hereinafter referred to as the Personal Data Law) and defines the procedure for processing personal data and measures to ensure the security of personal data taken by Mikhailov Ivan Sergeevich (hereinafter referred to as the Operator).

1.1. The Operator sets as its most important goal and condition for the implementation of its activities the observance of the rights and freedoms of man and citizen in the processing of his personal data, including the protection of the rights to privacy, personal and family secrets.

1.2. This Operators policy regarding the processing of personal data (hereinafter referred to as the Policy) applies to all information that the Operator can receive about website visitors https://make-biz.com /.

2. Basic concepts used in Politics

2.1. Automated processing of personal data — processing of personal data using computer technology.

2.2. Blocking of personal data — temporary termination of the processing of personal data (except in cases where processing is necessary to clarify personal data).

2.3. Website - a set of graphic and informational materials, as well as computer programs and databases that ensure their availability on the Internet at a network address https://make-biz.com /.

2.4. Personal data information system — a set of personal data contained in databases and information technologies and technical means that ensure their processing.

2.5. Depersonalization of personal data — actions as a result of which it is impossible to determine, without the use of additional information, the ownership of personal data to a specific User or other subject of personal data.

2.6. Processing of personal data — any action (operation) or a set of actions (operations) performed with or without the use of automation tools with personal data, including collection, recording, systematization, accumulation, storage, clarification (updating, modification), extraction, use, transfer (distribution, provision, access), depersonalization, blocking, deletion, destruction of personal data.

2.7. Operator — a state body, municipal body, legal entity or individual, independently or jointly with other persons organizing and/or processing personal data, as well as determining the purposes of processing personal data, the composition of personal data to be processed, actions (operations) performed with personal data.

2.8. Personal data — any information related directly or indirectly to a specific or identifiable User of the Website https://make-biz.com /.

2.9. Personal data authorized by the subject of personal data for distribution — personal data to which an unlimited number of persons have access by the subject of personal data by giving consent to the processing of personal data authorized by the subject of personal data for distribution in accordance with the procedure provided for by the Law on Personal Data (hereinafter — personal data authorized for distribution).

2.10. User — any visitor to the website https://make-biz.com /.

2.11. Provision of personal data — actions aimed at disclosure of personal data to a certain person or a certain circle of persons.

2.12. Dissemination of personal data — any actions aimed at disclosure of personal data to an indefinite circle of persons (transfer of personal data) or familiarization with personal data of an unlimited circle of persons, including the publication of personal data in the media, placement in information and telecommunications networks or providing access to personal data to anyor in another way.

2.13. Cross—border transfer of personal data is the transfer of personal data to the territory of a foreign state to the authority of a foreign state, a foreign individual or a foreign legal entity.

2.14. Destruction of personal data — any actions as a result of which personal data is permanently destroyed with the impossibility of further restoration of the content of personal data in the personal data information system and/or the material carriers of personal data are destroyed.

3. Basic rights and obligations of the Operator

3.1. The Operator has the right to: — receive reliable information and/or documents containing personal data from the personal data subject; — in case the personal data subject withdraws consent to the processing of personal data, as well as sending a request to terminate the processing of personal data, the Operator has the right to continue processing personal data without consent the subject of personal data in the presence of the grounds specified in the Law on Personal Data; — independently determine the composition and list of measures necessary and sufficient to ensure the fulfillment of obligations provided for by the Law on Personal Data and regulatory legal acts adopted in accordance with it, unless otherwise provided by the Law on Personal Data or other federal laws.

3.2. The operator is obliged to: — provide the subject of personal data at his request with information concerning the processing of his personal data; — organize the processing of personal data in accordance with the procedure established by the current legislation of the Russian Federation; — respond to requests and requests of personal data subjects and their legal representatives in accordance with the requirements of the Law on Personal Data; — report to the authorized body the body for the protection of the rights of personal data subjects at the request of this body, the necessary information within 10 days from the date of receipt of such a request; — to publish or otherwise provide unrestricted access to this Policy regarding the processing of personal data; — to take legal, organizational and technical measures to protect personal data from unauthorized or accidental access to them, destruction, modification, blocking, copying, provision, dissemination of personal data, as well as from other illegal actions in relation to personal data data; — stop the transfer (distribution, provision, access) of personal data, stop processing and destroy personal data in the manner and cases provided for by the Law on Personal Data; — perform other duties provided for by the Law on Personal Data.

4. Basic rights and obligations of personal data subjects

4.1. Personal data subjects have the right to: — receive information concerning the processing of their personal data, except in cases provided for by federal laws. The information is provided to the personal data subject by the Operator in an accessible form, and it should not contain personal data related to other personal data subjects, except in cases where there are legitimate grounds for disclosure of such personal data. The list of information and the procedure for obtaining it is established by the Law on Personal Data; — to require the operator to clarify his personal data, block or destroy them if the personal data is incomplete, outdated, inaccurate, illegally obtained or not necessary for the stated purpose of processing, as well as to take measures provided by law to protect their rights; — to put forward the condition of prior consent when processing personal data in order to promote in the market of goods, works and services; — to withdraw consent to the processing of personal data, as well as to send a request to terminate the processing of personal data; — to appeal to the authorized body for the protection of the rights of personal data subjects or in court against illegal actions or inaction of the Operator during the processing of his personal data; — to exercise other rights provided for by the legislation of the Russian Federation.

4.2. The subjects of personal data are obliged to: — provide the Operator with reliable data about themselves; — inform the Operator about the clarification (updating, modification) of their personal data.

4.3. Persons who have provided the Operator with false information about themselves or information about another personal data subject without the latters consent are liable in accordance with the legislation of the Russian Federation.

5. Principles of personal data processing

5.1. The processing of personal data is carried out on a legal and fair basis.

5.2. The processing of personal data is limited to the achievement of specific, predetermined and legitimate goals. Processing of personal data incompatible with the purposes of personal data collection is not allowed.

5.3. It is not allowed to combine databases containing personal data, the processing of which is carried out for purposes incompatible with each other.

5.4. Only personal data that meet the purposes of their processing are subject to processing.

5.5. The content and volume of the processed personal data correspond to the stated purposes of processing. Redundancy of the processed personal data in relation to the stated purposes of their processing is not allowed.

5.6. When processing personal data, the accuracy of personal data, their sufficiency, and, if necessary, relevance to the purposes of personal data processing is ensured. The Operator takes the necessary measures and/or ensures that they are taken to delete or clarify incomplete or inaccurate data.