Why I’m Leaving My UAE Business Behind

The Shifting Tax Landscape in the UAE [00:00]

• The perception of the UAE as a tax-free paradise for entrepreneurs is changing, with the introduction of a 9% corporate tax.
• Many influencers and "bros" who previously promoted the UAE for its 0% tax are now acknowledging the new tax reality.
• Loopholes like paying oneself a large salary to avoid corporate tax are becoming less effective.
• The speaker is personally closing their UAE company because it no longer aligns with their business structure.
• If one's goal is to live in the UAE, establishing a local company might still be the best option, but this is a lifestyle choice rather than a purely strategic business move.

"What I'm most excited about is all the bros who've been slinging Dubai to everyone with a pulse are now having to admit 0% tax is over. 9% tax is in."

Re-evaluating Company Location vs. Personal Residence [01:25]

• A common mental block for entrepreneurs is the assumption that their company must be based where they live.
• The principle of "go where you're treated best" requires decoupling personal residence from business location.
• The UAE government understands that individuals can live there but operate companies elsewhere, and vice-versa, leading to potential tax implications.
• The speaker advises separating the goal of where to live from where the company should be based for optimal tax rates and administrative ease.
• Different clients have diverse priorities, necessitating bespoke plans rather than a one-size-fits-all approach.

"What I want you to do is to stop trying to put two goals into one bucket. Where do you want to live? And where should your company be based based on where's the best tax rate, maybe the lowest amount of paperwork, whatever it is that matters to you."

Alternative Jurisdictions for Company Formation [03:38]

• If not living in the UAE, entrepreneurs can consider other jurisdictions that may offer lower tax rates.
• Hong Kong still offers a dual-tier tax system where 0% tax is possible for certain businesses.
• For simpler businesses, traditional offshore jurisdictions like the British Virgin Islands (BVI) are viable options.
• The Seychelles has become "squirly," making it a less straightforward choice.
• The Cayman Islands might be suitable for businesses requiring a certain "patina," while Malta could be advantageous for businesses with European connections or royalty income.

"If you don't want to live there, the reality is you can go to other jurisdictions."

Challenges with UAE Banking for Non-Residents [05:37]

• The initial appeal of UAE company formation included minimal filings and easy setup, but banking has become a significant challenge for non-residents.
• While the government is friendly and bureaucracy is handled efficiently for those who pay more, banks have become more difficult, especially for certain free zones.
• Many banks in the UAE did not fully understand individuals who did not live in Dubai, viewing a residence permit as almost obligatory.
• The requirement to visit every 180 days to maintain a residence permit is inconvenient for global entrepreneurs.
• UAE banks generally do not understand remote operations as well as banks in jurisdictions like Asia, Switzerland, or Panama.

"What we've seen is that uh banks in the UAE more recently have become more difficult for certain free zones and so the cheap plug-and-play option doesn't always work as well for banking and people are getting some more questions now."

The Role of Holding Companies and Tax Treaties [13:36]

• The UAE's strength lies in its expanding tax treaty network, making it a potentially excellent location for holding companies.
• For investing in equities, particularly in Europe and Africa, the UAE offers favorable tax treaties.
• The UAE is considered one of the best jurisdictions for holding companies when investing in African equities.
• For European stocks, a UAE holding company can provide asset protection and estate tax benefits, potentially offering a better deal than holding stocks directly in some countries.
• The UAE is actively negotiating tax treaties, including one with Colombia expected within the next year.

"The UAE has done a great job not only negotiating visa-free travel for their own passport holders, which likely won't matter to you, but negotiating great tax treaties."

Differentiating Business Types and UAE's Best Use Cases [14:52]

• For active entrepreneurial businesses that process credit cards and receive wires from clients, a UAE company might not offer advantages if the owner and employees do not work there.
• For passive holding companies owning shares in public equities or other investments, the UAE can be a very interesting option, akin to a Berkshire Hathaway setup.
• The speaker emphasizes that there is no one-size-fits-all solution, and the best structure depends on individual circumstances and assets.
• The UAE's marketing focuses on personal sovereignty, but it's crucial to understand where it fits and where it doesn't for each individual's needs.
• The speaker advocates building structures based on where one lives, where customers are, and where one wants to go, rather than blindly following trends or influencers.

"So, people often misunderstand me where, oh, he just doesn't like the UAE. I'm going to Dubai. I'm very proud of it. But what I'm telling you is there's no one-size-fits-all."