Hi all
I'm planning to move to Sharjah next month (Oct) from the UK, relocate my existing consultancy business and start some new business activities.
I have been liaising with a business consultant at the Shams Free Zone, who has given me some information, although I'm not sure how accurate the information is.
I understand that, due to relatively recent changes in legislation, restrictions on foreign ownership of mainland corporate entities have been lifted.
I know that Corporate Tax is payable on taxable profits over AED 375,000, but have read that small businesses with an annual turnover of less than AED 3 million can claim small business relief until the end of 2026.
The Business Consultant at the Shams Free Zone has told me (in writing) that the threshold for CT in the Shams Free Zone is higher at AED 1 million (i.e. not AED 375,000), but I am not convinced that this is correct, not least because the Shams website itself states "0% rate on taxable income that does not exceed AED 375,000"(!)
I think he is getting confused with the AED 1 million Corporate Tax threshold for individuals as per this clarification from the Federal Tax Authority:
"Starting from 1 January 2024, natural persons that are Resident Persons must submit a Tax Registration application for Corporate Tax if their Turnover from Businesses or Business Activities in the UAE exceeds AED 1 million within a Gregorian calendar year. If this threshold is met, a Tax Registration application must be submitted by 31 March of the subsequent Gregorian calendar year.
Natural persons that are Non-Resident Persons must submit a Tax Registration application for Corporate Tax if their Turnover from Businesses or Business Activities derived via a Permanent Establishment in the UAE exceeds AED 1 million during a Gregorian calendar year, starting from 1 January 2024. Such natural persons are required to complete a Tax Registration application within three months of meeting the requirements of being subject to Corporate Tax.
A natural person who is a Non-Resident Person will meet the requirements to be subject to Corporate Tax when they have a Permanent Establishment in the UAE and, in the Gregorian calendar year, they exceed the AED 1 million Turnover threshold derived from the Permanent Establishment."
I'm aware that there are certain "Qualifying Activities" that are potentially tax-exempt if carried out by a "Qualifying Free Zone Person", but my business activities fall outside of that list.
So, bearing all of that in mind, are there any benefits (other than networking) that make it worthwhile registering a business in a free zone as opposed to on the mainland?
And is anyone aware of restrictions placed on Free Zone Companies from operating on the mainland, renting an office, hiring staff, etc.?
Thanks in advance.
Hanif
