In many respects UAE Taxation is a redundant phrase. There is no income tax, corporation tax or withholding tax! Companies have to pay 12.5% of each local employee's gross salary as an Employer Pension Contribution - but this doesn't apply to foreign workers. Similarly local employees make a statutory 5% social security contribution but foreign workers are exempt.
For the majority of international companies and contractors this means they have no dealings with the Emirati tax authorities at all. The only real issue is - will you be taxed anywhere else? For companies this is relatively straightforward. If you setup a local entity or branch in UAE, it will pay no tax. Unless it hires local staff or is working in banking or Oil & gas. Your head office will, at most, normally only pay tax on profits remitted by the branch to head office.
For individuals it is more complex:
Given there is no income tax in UAE we should phrase the question slightly differently : will I be taxed anywhere else for my earnings in the United Arab Emirates?
This is influenced by a few factors:
What is your country of tax residency. Will you be considered to be domiciled, for tax purposes, in the Emirates?
Is there a dual tax agreement between the UAE and your country of tax residency? Your country may also have a particular ruling which affects citizens who are working in the Emirates - for example the Australian Tax Office tries to tax Australian citizens who are doing contracts there.
If there is any doubt over your status we recommend doing some tax planning for your work there. Making sure that you take the right steps to minimise your tax can save you huge sums of money. Specialist tax advisors can advise on how you should structure your affairs and what to say to your local tax authorities to make sure you aren't caught by a double taxation shock.
How Do Umbrella Companies Help with UAE Taxation?
Even though you don't have to pay tax in the UAE it still helps to to get paid through a company which is appropriately registered and able to sponsor your work permit. You work as you ordinarily would, submit your timesheets to them and receive a prompt payment. It ensures you get a reliable, efficient and flexible payment service for your stint in the Emirates.
How We Can Help with UAE Taxation
We work closely with umbrella companies in UAE, and can help you find one to handle your tax payments for you. We have a detailed knowledge of the specialist services they provide, and we’ll suggest the best options for your needs. If you just have a question about UAE taxation, we’ll ask the experts for an up-to-date and reliable answer. If you’re a contractor in fields such as telecommunications, business analysis, IT project management, software development, testing or oil and gas, we can help you keep more of your earnings. Our service is completely free, and you’re under no obligation. Contact us today for help with UAE taxation!