WHY UK FIRMS SHOULD CONSIDER MOVING TO THE UAE?
1. Tax Advantages in the UAE
- Corporate Tax Rate: For businesses, the UAE’s corporate tax rate is highly competitive. As of June 2023, a 9% corporate tax applies to profits exceeding AED 375,000, while profits below this threshold are tax-exempt.
- No Capital Gains Tax: The UAE does not impose capital gains tax on the sale of assets such as shares, real estate, or other investments, making it an attractive destination for investors looking to grow and liquidate their assets.
- No Inheritance Tax: Unlike the UK, which imposes inheritance tax, the UAE does not charge any inheritance or estate taxes, preserving wealth for future generations.
- No Personal Income Tax: One of the main advantages of the UAE is its lack of personal income tax. This is a key benefit for both employees and business owners, as it allows individuals to keep 100% of their earnings.
2. Strategic Location in the Middle East
- Gateway to Emerging Markets: The UAE’s prime location provides easy access to markets in the Middle East, Africa, and South Asia, creating a strategic hub for UK businesses looking to expand in these regions.
- World-Class Infrastructure: With modern infrastructure, including airports, seaports, and telecommunications, the UAE offers logistical advantages that are crucial for international businesses.
3. Business-Friendly Environment
- Ease of Doing Business: The UAE’s government has created a business-friendly environment with minimal red tape. Company setup in Free Zones can be completed quickly, often within a few weeks, and is supported by simplified legal and regulatory frameworks.
- Attractive Free Zones: Many Free Zones in the UAE offer tax exemptions, 100% foreign ownership, and other incentives to businesses. These zones are designed to attract international companies, making the UAE a great choice for UK businesses seeking to set up in the region.
For businesses and individuals, navigating these benefits effectively requires expert guidance. Our tax services in the UAE can help ensure compliance and optimize your tax position.
TAX COMPARISON BETWEEN THE UK AND UAE FOR CORPORATES AND INDIVIDUALS
1. Corporate Tax Comparison
- United Kingdom: The corporate tax rate in the UK is 25% for businesses with profits over £250,000. For profits below £50,000, a small profits rate of 19% applies.
- United Arab Emirates: As of June 2023, the UAE imposes a 9% corporate tax on profits above AED 375,000, with profits below this threshold remaining tax-exempt.
2. VAT Comparison
- United Kingdom: The VAT rate in the UK is 20% on most goods and services.
- United Arab Emirates: The UAE has a relatively low VAT rate of 5%, making it more competitive compared to the UK’s 20% rate.
3. Dividends Tax Comparison
- United Kingdom: UK companies must pay taxes on dividends when paid to shareholders, with rates ranging from 7.5% to 38.1%, depending on the taxpayer’s income bracket.
- United Arab Emirates: There is no withholding tax on dividends in the UAE, making it an attractive destination for foreign investors to repatriate profits without additional tax charges.
4. Capital Gains Tax Comparison
- United Kingdom: The UK imposes capital gains tax on the sale of assets like shares, real estate, and other capital assets, with rates varying from 10% to 28%, depending on the asset type and taxpayer’s income.
- United Arab Emirates: The UAE does not impose capital gains tax on the sale of assets, including shares and real estate.
5. Personal Income Tax Comparison
- United Kingdom: In the UK, personal income tax is progressive:
- 0% for income up to £12,570 (personal allowance)
- 20% on income between £12,571 and £50,270
- 40% on income between £50,271 and £150,000
- 45% on income over £150,000
- United Arab Emirates: The UAE does not impose personal income tax on wages, salaries, or other income, allowing individuals to retain 100% of their earnings.
6. Inheritance Tax Comparison
- United Kingdom: The UK imposes an inheritance tax of 40% on estates valued above £325,000.
- United Arab Emirates: The UAE does not impose any inheritance or estate taxes.
CONCLUSION
The UAE offers a highly favourable tax environment for UK firms and individuals, providing several advantages over the UK, including no personal income tax, low corporate tax rates, no capital gains tax, and a range of business incentives. The UAE’s strategic location, modern infrastructure, and ease of doing business further enhance its appeal for UK businesses seeking expansion opportunities.
If you’re a UK business considering expanding to the UAE, we recommend consulting with professionals to ensure compliance and maximize the benefits available. At Creation Business Consultants, we specialize in helping businesses navigate tax regulations and optimize their tax positions in the UAE.
At Creation Business Consultants, we specialize in helping businesses navigate tax regulations and optimize their tax positions in the UAE. If you are interested to learn more, reach out to our team of consultants, and secure your complimentary expert consultation. Our team will take you through a journey on regulations to avoid any potential compliance issues. Contact us via email [email protected] or call +971 4 878 6240 today.
