Europe are well as the Middle East offer a plethora of options when it comes to tax planning and corporate set up. As explained in the main page of our website in detail (more information click here) price is not the only important factor to be considered. Rather other important factors should also be considered such as:
- Ease of doing business
- Judicial system
- Size of the country
These factors have been discussed in detail in our website section Find the Right Jurisdiction (which you can access by clicking here). The aim of this article is to give you our conclusions with our so far experience with the provision of complete services so as to guide you in the selection of the Middle East Jurisdiction.
Our services similarly to the EU and Offshore jurisdictions are the provision of incorporation, banking, accounting, audit tax and support services to our clients (more info).
What happens in the Middle East?
Like traditional EU (onshore) and non-EU (offshore) jurisdictions, the Middle East offers many options to all types of businesses and corporations depending on their purpose and service lines. Having said this they also have significant differences one which must examine thoroughly before deciding to incorporate locally.
Our experience to date has to do with the Incorporation in the UAE and in particular Dubai, Qatar and Saudi Arabia. Assuming that an investor or a business does not intend to trade within any of these three jurisdictions, then our conclusions are the below:
OUR CONCLUSIONS IN THE MIDDLE EAST
Qatar seems to be the winner.
Smaller, simpler and more transparent in Qatar you always get your moneys worth. In addition, Qatar is less expensive and smaller which means you can do a lot within a day; go to the bank, meet the auditors, have lunch, relax, finish off some meetings etc.
If you do not indent to do business within the country, then it is fast and easy to do it via Qatar.
Again, it seems that Qatar seems to be winner.
Significantly cheaper than Dubai and KSA with no hidden agendas and costs!
You pay what you expect, whilst in Dubai for instance you end paying significant direct taxes in almost all transactions and sometimes VAT (we have seen VAT in bank charges in Dubai!) which could derail your budget. Being the most luxurious Middle East destination, it is normal and expected that all services and goods will be significantly more expensive in Dubai than the rest of the Middle East.
Hence, when compared to KSA and Qatar expect higher costs in relation to:
- Company formation & maintenance
- Accommodation, food & inland traveling
- Everything you do!
At present and again we feel more comfortable in Qatar than Dubai and KSA but for different reasons:
Dubai is overpopulated with business, and this means insufficient workforce to cover the excessive demand for accounting, audit and banking needs of the large number of overseas companies which rushed to incorporate in Dubai following the EU sanctions. The service providers quality and expertise varies significantly in Dubai and truth been told, it is hard to receive high level services at European Standards.
KSA (Kingdom of Saudi Arabia) on the other hand started opening to international investors and corporations and there is still lots of room for improvement until the procedures and requirements are up to expectations. We have been experiencing teething problems which we believe will be resolved in due course.
Within the KSA it is usually required to have a majority shareholder (51%) been local contrary to the UAE freezones and Qatar QFC companies. Again this information maybe subject to change and depends off course on the licensing and type of company and services it offers.
Having explained the above anyone who relocates or incorporates in these three jurisdictions will pleasantly be surprised by the availability of information and online applications with the ministries of finance and tax departments and the ease of access to online information. However, and again, as expected, it is the actual implementation of what is written and agreed that matters and of course in the Middle East the understanding is different than in Europe.
Each jurisdiction has different taxation systems so different Tax and VAT laws can be expected in the whole of UAE and in Dubai whilst Qatar and KSA have their own taxes.
Want to learn more? Click here to read about the taxation of each of these three jurisdictions.
Even so, some principles remain the same and must be kept in mind by businesses and investors who want to relocate:
- Personal taxation is unlikely to be forced in the Middle East, at least at present.
This is against the local culture and if it will be implemented it will not take place in the near future. Having said all these of course some jurisdictions require the directors and employees to file their local tax returns even though no tax applies. In other words, the systems and procedures are in place and are working like any other EU jurisdiction, though no personal taxation applies.
- Trading within the jurisdiction
When the locally incorporated business / company trades within the jurisdiction it is incorporated -> local taxes will apply and in some cases VAT like any other jurisdiction. This is similar to other EU jurisdiction where overseas companies and investors may have more benefits than the local ones.
The Middle East will commonly allow tax free activities and transactions outside their country and emirate but will tax the company for all inland activities as appropriate.
- Use of Accountants, Auditors and Service Providers
The Middle East companies are rapidly changing and adapting to the new world requirements and standards (OECD whitelist, FATKA, CRS, TIEA). Some countries / emirates maybe also considering joining and which means they need to be more transparent and fully comply with EU directives, policies and sanctions!
Our experience shows that things are moving, and our clients need strong financial and tax advisers like CYAUSE Audit Services Ltd to assist them and keep them up to date with current developments.
Do we need local firms and local service providers? How does it work?
You will need local auditors to submit the audited financial statements of your company, but all the work can also be performed overseas. We tend to offer a combination of both depending on client needs and country. For some clients we perform the entire service and we use our associates to do the local filings. For others we do only the accounting work and assist them with the local auditors enquiries. In most cases, we do almost everything besides the local filings which at present we do not see the reason getting involved.
Feel free to contact us for a direct consultation and quotation on Middle East Companies at firstname.lastname@example.org or call me directly at on my cell phone +357 99 428 543.
- Importance of company’s license during incorporation
Unlike the rest of the EU and popular offshore jurisdictions where the Memorandum & Articles of associate cover many areas of services and are not restricting the Middle East Companies approach exactly the opposite approach. Unless a service in stipulated by the license the company can not perform it. This is key and it is something that we as auditors and consultants carefully scrutinize etc as accordingly to the local finance department a company will have to make amendments to its license or add another license prior to be able to perform such services.
As a result, some jurisdictions can change or add this extra license easier than others and this is also something that maybe relevant for some companies and businesses.
So which jurisdiction do we recommend at present?
At present and in the absence of any need to be physically established either in Dubai, in Qatar or KSA we believe that Qatar can meet the expectations of any international investor and business without hidden expenses and unforeseen difficulties.
This recommendation off course is valid at the time of writing this article as local structural as well as tax and legal changes do occur in all jurisdictions which impact their efficiencies and all the factors mentioned above.
Disclaimer: These views are our views based on our specific experience with these three jurisdictions.