Which taxation laws apply to RAKEZ companies?

The taxation laws that apply to RAKEZ companies:

  1. Corporate tax: Free zone companies in RAKEZ are not subject to corporate tax. This means that businesses operating in RAKEZ do not have to pay any corporate taxes on their profits.
  2. Value-added tax (VAT): VAT is a consumption tax that is applied to most goods and services sold in the UAE. The standard VAT rate in the UAE is 5%. Free zone companies in RAKEZ are not subject to VAT on goods and services sold to other free zone companies. However, free zone companies are subject to VAT on goods and services sold to mainland companies or to consumers in the UAE.
  3. Import duty: Import duty is a tax that is applied to goods imported into the UAE. The import duty rate varies depending on the type of goods being imported. Free zone companies in RAKEZ are not subject to import duty on goods imported for their own use in the free zone. However, free zone companies are subject to import duty on goods imported for resale to mainland companies or consumers in the UAE.
  4. Personal income tax: Personal income tax is a tax that is applied to the income of individuals in the UAE. The personal income tax rate varies depending on the level of income. Free zone employees are not subject to personal income tax on their salaries or other income earned in the free zone. However, free zone employees are subject to personal income tax on their income earned in the UAE, such as rental income or investment income.
  5. Social security contributions: Social security contributions are a tax that is applied to the salaries of employees in the UAE. The social security contribution rate is 17% of the employee’s salary. Free zone employees are not subject to social security contributions on their salaries or other income earned in the free zone.

Here are some additional points to keep in mind about taxation in RAKEZ:

  • Withholding tax: Withholding tax is a tax that is applied to certain types of payments made by businesses in the UAE. The withholding tax rate varies depending on the type of payment. Free zone companies in RAKEZ are not subject to withholding tax on payments made to other free zone companies. However, free zone companies are subject to withholding tax on payments made to mainland companies or consumers in the UAE.
  • Tax treaties: The UAE has tax treaties with a number of countries. These treaties provide for reduced or no taxation on certain types of income earned by residents of the treaty countries. Free zone companies in RAKEZ can benefit from these tax treaties if they have clients or suppliers in the treaty countries.
  • Tax residency: The tax residency of a company is determined by the location of its place of effective management. The place of effective management is the place where the company’s key management and control functions are exercised. Free zone companies in RAKEZ are considered to be tax resident in the UAE, even if they do not have any physical presence in the mainland.

Conclusion:

RAKEZ is a free zone in the UAE that offers a number of benefits to businesses, including exemption from corporate tax for the first 10 years of operation, no import duties, and a low tax rate on VAT. If you are considering setting up a business in the UAE, RAKEZ is a good option to consider. If you are looking for a professional and reliable company to help you with RAKEZ business setup, I highly recommend BizDaddy.