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bigduckontax, Accountant
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I am a director in a UK Ltd company and I am looking to open

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Hi,I am a director in a UK Ltd company and I am looking to open either a offshore company or freezone company in UAE. Only one director that will be me.What are personal and business tax implications I need to be aware of and also do the money in UAE company is also taxable in UK as I am UK national?Also when do I have to inform HMRC that I have opened a UAE company?Thanks
Submitted: 8 months ago.
Category: Tax
Expert:  bigduckontax replied 8 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

The Gov UK advice sheet on the subject is clear; it is:

'You must register an overseas company with Companies House if you want to set up a place of business in the UK.'

So if you are not using a place of business in the UK then there is no requirement to notify HMRC. The full advice can be found here:

https://www.gov.uk/register-as-an-overseas-company

The whole idea of offshore companies is to avoid UK taxation. All the big boys do it, Vodafone, Starbucks and Amazon are classic examples using tax haven companies to draw profits away from the UK tax authorities. Although the UK is attempting to stem this outflow these have not been particularly sucessful. There is one drawback. This is big business in tax havens and doesn't come cheap. The requirement to have local directors, registered offices all cost so the profits have to be large to support the infrastructure.

As far as tax is concerned that is a matter for the UAE and activities are not in general taxable in the UK. That is the whole point of an offshore company. Any emoluments paid to you as director resident in the UK would be subject to UK taxation. Under the Double Taxation Treaty between the UK and the UAE this cannot be taxed in both jurisdictions, the tax paid in one country being allowed as a tax credit against the liability in the other.

I do hope that you have found my reply of assistance.

Customer: replied 8 months ago.
Hi,Thanks for your reply.One clarification; UAE is tax free. So if I am going to withdraw salary or dividend from the UAE company and put in a UAE personal back account, will it still NOT be taxable in UK? Do I need to show income from UAE in my self assessment here in UK each year?Thanks
Expert:  bigduckontax replied 8 months ago.

If you are resident in the UK for more than 183 days in any one tax year then you are liable to UK taxation on your world wide income. Thus any salary or dividend received in or from the UAE will be aggregated into your income for tax purposes and must be declared on your annual self assessment tax return. Any tax deducted by the UAE would be allowable as a tax credit against any UK liability on the same income stream under the Treaty.

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bigduckontax, Accountant
Category: Tax
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Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 8 months ago.

Thank you for your support.

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