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bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4191
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I am a UK national and me and my wife own a private

Customer Question

I am a UK national and me and my wife own a private limited business in UK and we are looking to open a free zone company in Dubai to deal with our asian and middle east clients. Also the new company will receive money from our asian and middle east clients in UAE bank account.
I have few queries:
1. Is it allowed by UK law for a UK based company directors to open a free zone company in Dubai?
2. How will we show the revenue in UAE company to UK authorities?
3. What would be the most tax efficient way to pay the directors in UK with money in UAE bank?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello Andrew, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. There is no UK law preventing you from opening a free zone company in Dubai at present. You will have seen the adverse media comment regarding Amazon, Starbucks, Vodafone and recently Google's tax arrangements so there is always a possibility of new legislation to negate such tax avoidance in the future. You do not need to declare any activities of the Dubai company to HMRC. The directors could open individual accounts in Dubai which would save on international transfer charges; that is the easiest way. Assuming that the UK directors are resident in the UK ie over 183 days in any one tax year then they are liable to UK taxation on their world wide income and their emoluments from the offshore company would be liable to UK Income Tax and have to be declared on their annual self assessment tax return. I do hope that I have not had to pour too much cold water on your scheme. There are also the costs of local directors, offices etc to be taken into account in such exercises. The big boys can afford it, but it might be a tad expensive for a smaller set up.
Customer: replied 1 year ago.
Hi,Thanks for your answer.Just one clarification, is UK income tax on money withdrawn from UAE company account for director salaries or the money received in the UAE company as well?Thanks
Expert:  bigduckontax replied 1 year ago.
No, it is just the salaries withdrawn which form part of the relevant director(s) income for the tax year of payment. The moneys received by the UAE company is a matter for the UAE taxman. Only oil and gas companies and subsidiaries of foreign banks are subject to UAE corporate taxation; other companies and individuals are too, but the rate is 0%. Please be so kind as to rate me before you leave the Just Answer site.