In the first quarter of 2023, 137 companies in the UAE were fined a total of 65.9 million dirhams for non-compliance with anti-money laundering (AML) legislation. According to the Ministry of Finance of the UAE, inspections were conducted on companies in the non-financial sector, such as real estate agents, traders of precious stones, and precious metals.

The inspections were carried out in accordance with Federal Decree-Law No. 20 of 2018 “On Combating Money Laundering, Financing of Terrorism, and Illegal Organizations.” In total, the Ministry of Economy identified 831 violations of AML legislation, including the fined companies that failed to establish internal customer due diligence procedures based on the “UAE terrorist list” published in accordance with Cabinet Resolution No. 74 of 2020.

The Ministry of Finance of the UAE has issued two new ministerial resolutions that specify the tax regime for legal entities operating in the UAE’s free economic zones. These resolutions are Resolution No. 55 of 2023 “On the determination of relevant income” and Resolution No. 139 of 2023 “On relevant activities and excluded types of activities.”

Who can benefit from the tax regime for Free Zones?

The corporate tax regime for free economic zones is available to companies registered within the free economic zone. Such a corporate tax regime is applicable only within the designated boundaries of the free economic zones. The profit tax regime for Free Zone enterprises is applicable only to income derived from activities carried out within or from the free economic zone.

What income is considered “qualifying” for the application of the tax regime in Free Zones (at a 0% tax rate)?

The resolution provides a definition of the term “qualifying income,” to which the special tax regime for companies in Free Zones (tax rate of 0%) will apply.

qualifying income includes:

• Income derived from transactions with other entities within the free economic zone.

• Income derived from domestic and international activities related to any of the “qualifying activities.”

What are “qualifying activities”?

“Qualifying activities” include:

• Production of goods or materials.

• Processing of goods or materials.

• Ownership of shares and other securities.

• Ownership, management, and operation of vessels.

• Reinsurance services.

• Fund management services subject to regulation by a competent authority in the UAE.

• Capital and investment management services subject to regulation by a competent authority in the UAE.

• Headquarter services for related parties.

• Financing services for related parties.

• Financing and leasing of aircraft, including engines and spare parts.

• Logistics services.

• Distribution from a designated zone that meets the required conditions.

• Any ancillary activities related to the aforementioned activities.

Excluded Activities

Income derived from engaging in “excluded activities” will not be considered as “qualifying income,” regardless of whether it is obtained by a person registered in a Free Zone or even if it is obtained as a result of “qualifying activities.”

Excluded activities include:

• Income from transactions with individuals.

• Income derived from certain regulated financial services.

• Income derived from intangible assets.

• Income derived from real estate, excluding transactions with entities in the Free Zone concerning commercial real estate located within the free economic zone.

A person registered in a Free Zone but receiving income from “excluded activities” or income that is not “qualifying” will not be able to benefit from the special tax regime for Free Zones, even if such person meets the minimum income threshold requirements (de minimis).

What should be the “minimum income” of a company to qualify for the Free Zone tax regime?

To meet the requirements, the income earned by a resident entity in a Free Zone must not exceed the lesser of two amounts: either 5% of the total income or AED 5,000,000.

Income related to the internal or overseas permanent establishment of a Free Zone company and income derived from real estate located within the free economic zone, which is not subject to the Free Zone tax regime, are not considered when determining the minimum income. Instead, the associated taxable income will be subject to the regular corporate tax regime of the UAE, at a rate of 9%.

If the minimum income requirements are not met or if a Free Zone resident entity fails to meet other conditions for the application of the special tax regime, such entity will not be able to benefit from the special tax regime in the Free Zone for a period of five (5) years. During this period, the entity registered in the Free Zone will be considered a regular taxpayer, subject to a tax rate of 9% on all income exceeding AED 375,000.

According to a study by the consulting company Henley and Partners, in 2022, 5200 dollar millionaires relocated to the UAE. Australia (+3800), Singapore (+2900), Switzerland (+2200), and the USA (+1500) were also among the top five most popular jurisdictions for the migration of affluent individuals.

As for the “outflow” of millionaires, the leaders in 2022 were China (-10800 millionaires) and Russia (-8500). Moreover, as noted by the company, Russia’s figures were approximately half of the projected numbers, as the departure of millionaires was hindered by sanctions – issues with opening accounts for Russian citizens and the scaling back of investment citizenship programs.

India (-7500 millionaires), Hong Kong (-2800 millionaires), Brazil (-1800 millionaires), and the United Kingdom (-1600) are also among the top five in terms of “outflow.”

On June 5th, the Ministry of Finance of the UAE announced Cabinet Decision No. 56 of 2023 “On the Taxation of Non-Residents in the UAE” regarding the corporate tax law.

According to the decision, foreign non-resident companies will be subject to corporate tax on income derived from real estate and other immovable property located in the UAE. Additionally, such companies will be required to register in the UAE as corporate tax payers. These requirements apply to both commercial and investment properties.

Non-resident legal entities that own property in the UAE will be subject to corporate tax based on “net income,” which is calculated after deducting relevant expenses.

Income from real estate investments derived from immovable property in the UAE, owned directly or through a trust, fund, or other structure that is considered fiscally transparent for the purposes of UAE corporate tax, is generally not subject to corporate tax. However, this applies only if it is not a licensed entrepreneurial activity.

Furthermore, real estate investment trusts and other qualified investment funds may qualify for an exemption from corporate tax on income derived from investments in real estate in the UAE, subject to compliance with relevant conditions.

The financial regulators of the UAE have taken official permission to support cryptocurrency trading in the free economic zones of the Dubai World Trade Center, Dubai Multi Commodities Center.

This permission allows Free Zones to issue the necessary licenses for cryptocurrency-related financial activities, such as issuance, listing, trading, and licensing processes.

Subsequently, a public bitcoin fund (BTC) was listed on the local Nasdaq Dubai stock exchange by Canadian digital asset fund manager 3iQ.

For questions about obtaining licenses and introducing activities with cryptocurrency, you can contact Parus Management Consultancies, Dubai, UAE.

On September 11, as part of the UAE 50 Projects program, new types of Green Visa and Freelancer Visa were accepted.

Obtaining a Green Visa makes it possible to officially work without concluding an employment contract with an employer, obtain residency in the UAE and be a visa sponsor for your family

Green Visa can be obtained by real estate investors, entrepreneurs, highly qualified doctors, teachers, athletes, the best students and graduates of world famous universities, as well as heads of small and medium-sized enterprises, scientists and others.

Freelance Visa is available to self-employed workers from the UAE and abroad, specializing in areas such as artificial intelligence, blockchain and digital currencies.

Dubai has simplified the rules for obtaining a three-year investor visa when buying property.

According to the Dubai Land Department, it is now enough to invest 750,000 dirhams in ready-made real estate to obtain residency, and not a million, as it was before.

In this case, the investor gets the right to apply for a residence permit in the UAE with the possibility of extension and sponsoring his family.

To apply for a three-year UAE resident visa, the investor must provide a passport and an electronic copy of the certificate of ownership. The cost of obtaining an investor visa at the Land Department is about 12,000 thousand dirhams.

On October 1, 2021, the world exhibition EXPO-2020 started, during which many countries of the world will present their own achievements in various fields – from innovative developments to cultural heritage.

The peculiarity of this exhibition is that for the first time in the 170-year history of such events, each participating country received its own pavilion, including Ukraine.

WHERE IS THE EXHIBITION HELD?

Expo 2020 takes place at the Dubai Trade Center, designed specifically for the exhibition. It is located just minutes from Al Maktoum International Airport.

HOW TO GET TO IT?

Subscriptions are available for October 2021. The price of a one-day visit to the exhibition is 95 dirhams (US 26); The cost of multiple visits (up to 10 times within 6 months) is 495 dirhams (134 US). Persons under 18 and over 60 can visit the exhibition free of charge. The ticket price includes access to all pavilions, as well as to the events of the cultural exhibition.

The exhibition is open to the public until March 1, 2022.

Visitors to the World Expo 2020 are required to present COVID-19 vaccination certificates or negative PCR test results for coronavirus at the entrance. In this case, the PCR test must be done no later than 72 hours before visiting the exhibition. Any foreign vaccine approved by the UAE authorities will be recognized as organizers. Visitors who have not been vaccinated will be able to undergo PCR testing at the screening center located next to the EXPO 2020 exhibition center.

Source: Expo 2020 Dubai

https://www.expo2020dubai.com