HOW TO SET UP A HOLDING COMPANY IN DUBAI PART 3 – WHAT ARE SOME OF THE TAX IMPLICATIONS?

You can see part 1 of the series here and part 2 here.

A businessman has the ability to centrally manage financial flows, freely move capital between holding companies around the world, capital between holding companies around the world, withdraw and deposit funds in the preferred jurisdiction, benefit from the absence of taxes on corporate income, issue loans to subsidiaries in order to optimize tax deductions.

UAE holding provides asset consolidation. The holding company in the United Arab Emirates ensures the consolidation of assets and the achievement of maximum capitalization ratios, providing a demonstration of financial stability and high solvency. This will allow attracting cheap credit resources, receiving investments from strategic investors, participating in tenders, and concluding contracts for large amounts.

The United Arab Emirates has a wide network of double taxation treaties. There are no taxes on income, assets, dividends, royalties, capital gains. There are no restrictions on the withdrawal and input of capital and profits. It is possible to obtain the status of a tax resident of the UAE for companies and individuals.

Table of Contents

By creating holdings and structures in the UAE, you get effective growth profitability of your business

Optimize tax costs, applying the provisions to avoid double taxation – The international structure of the holding is built in such a way as to minimize tax deductions and legally obtain maximum profit from international activities. To do this, the recipient of dividends, the parent company and subsidiaries must be subject to the provisions of treaties for the avoidance of double taxation. 

Even if there is no agreement on the avoidance of double taxation between the country of registration of the key company and the UAE, you can use a more complex holding structure – a mixed holding, built on the basis of several jurisdictions. The parent company, located in one of the UAE jurisdictions, will manage the transfer of assets in all divisions and distribute financial flows in order to minimize the risks of the most profitable optimization of tax deductions.

Take the opportunity concealment and protection of information about the ultimate owners of the business

Commercial legislation and judicial practice of the UAE allow concluding shareholder agreements, which are a legal instrument that protects the interests of each business participant and allows you to smooth out possible conflicts between partners. 

It is possible to hide the final beneficiary in a legal way, using one of the working schemes developed and successfully applied by the specialists who can offer effective structures for organizing activities that maintain confidentiality for the beneficiaries and are a reliable tool for doing business in the UAE.

Taking into account the difficulties that often arise when a businessman wants to conduct different areas of activity in the format of one legal entity, the creation of a holding solves this problem and allows you to create a multi-business with a convenient and understandable management and control system from the territory of the UAE. 

If the holding has a financing company, then it is established where there is access to cheaper financial resources and where the taxation of interest income is minimal. Thus, operating companies are created in the jurisdiction where the most favorable conditions for the business as a whole are provided. The UAE is an attractive jurisdiction for many reasons.

This technique allows you to minimize the tax burden for all companies included in the structure. The legal regulation of the so-called “transfer pricing” has significant differences in the laws of different countries. Therefore, to create the most effective scheme, it is recommended to contact lawyers who know the intricacies of international law.

Consolidate assets and create transparency of financial reporting – The location of the parent company of the holding in the UAE allows you to consolidate all the assets of the business and achieve high indicators of the capitalization ratio of the enterprise, which is a sign of financial stability and characterizes your solvency in the long term. 

This, in turn, allows attracting cheap credit resources, receiving investments from a strategic investor, participating in serious tenders and concluding large contracts. You will be able to use ready-made holding companies older than 2-3 years, established in the UAE, to provide audit and balance sheets for past periods in accordance with international standards to confirm the stability of your business. 

By certifying all accounting documents in an accredited audit company in the UAE, you increase the status of the company in the eyes of counter-parties and thereby confirm the “transparency” of your tax and accounting calculations.

Organize cash flows within the group, including merging and acquisition of existing assets abroad – The state has created all the conditions for the effective operation of holding structures on the territory of the country. You can centrally manage financial flows and freely move capital between your divisions around the world, make withdrawals, take advantage of the absence of corporate income taxes, arrange for the issuance of loans from the parent company to subsidiaries to optimize the tax base, and perform other operations. 

All these tools allow you to quickly regulate financial flows within the structure, make it possible to withdraw funds from the preferred jurisdiction and minimize the tax burden. Taking into account the global tendency to tighten control over the turnover of funds, it is recommended to seek the advice of a specialist in order to develop the correct scheme for organizing a holding.

Pained by financial indecision? Want to invest with Adam?

Financial Planner - Adam Fayed

Adam is an internationally recognised author on financial matters, with over 415.7 million answers views on Quora.com and a widely sold book on Amazon

Add a comment

*Please complete all fields correctly

Related Blogs

The Ultimate Guide To Becoming An EU Citizen