Am I taxed differently in a free zone?
There are two main jurisdictions to choose from if you’re thinking about the costs of setting up a business in Dubai: the mainland Dubai or a Dubai free zone. While there are a number of differences in regulations between the two areas, when it comes to taxes, they are basically the same.
Dubai is well-known as a business-friendly location that prides itself on its low tax rate, and across the free zones and the mainland, there is zero income and corporate taxation for almost all companies.
Zero taxation on businesses in Dubai free zones is just one of the many business friendly advantages to launching startups there. If you set up a business in one of Dubai’s free zones, you can maintain complete ownership of it. That means you do not have to negotiate terms with a shareholder, you have independent control over operations, and profit shares go directly to you. For optimising business setup in Dubai free zones, expatriate business owners are also not required to hold a no-objections certificate.
With the current focus in the UAE on economic development, all of Dubai is geared toward the growth of business and tourism with a combined focus on technological innovation, digitisation, and entrepreneurship. The Dubai free zones are especially primed to not only support such sectors, but also new company owners in particular, who are launching niche business ventures into the market for the first time.
With no income and corporate tax levied in Dubai free zones, new business owners have the opportunity they need to gain a solid financial footing for their companies during the first few years of establishment. This is important for the stability of any business setup in Dubai, as new business owners become familiar with the market, try different strategies to drive brand awareness, and adapt their revenue generation plans to ground realities. Additionally, no capital gains or withholding taxes are charged to businesses in Dubai free zones, and there are no charges for repatriating company profits to other countries.
In addition to zero income and corporate taxes in Dubai free zones, there are two options for conducting business setup with flexibility that contribute to cost savings. Business owners in free zones are not required to own physical office space. This makes the Dubai free zones a haven for freelancers, and there are even specific zones for companies that want to drive their sales through e-commerce platforms. It is also possible for business start up owners who live overseas to set up and incorporate companies in Dubai free zones whilst abroad.
If you’re thinking of setting up a company in one of Dubai’s free zones, contact Decisive Zone today to learn about all the advantages in these business jurisdictions.