When talking about the Emirate of Ras Al-Khaimah in the UAE it should be noted that it is not as famous as neighboring Dubai and Abu Dhabi, but for sure not less attractive for international business and potential foreign investors. This is due to favorable geographical location, which provides access to markets in the Middle East, India, Africa and other regions.
The economy of Ras Al-Khaimah is growing rapidly due to such industries as manufacturing sector, financial services sector, construction, real estate and tourism industry. Investment climate of the Emirate is acknowledged by international experts as the most favorable. Thus, according to the international publication FDI Magazine, Ras Al-Khaimah has been acknowledged as the best place for direct foreign investment.
Legislation of Ras Al-Khaimah exclude such concepts as corporate taxes, taxes on profits, value added taxes, taxes on dividends and capital gains. Business registration in specialized economic zones provides 100% participation of foreign nationals as shareholders and owners of the company. There are no restrictions with respect to capital repatriation, as well as currency exchange control, quotas and trade barriers.
Ras Al-Khaimah – special aspects of tax jurisdiction
If we compare tax jurisdiction of Ras Al-Khaimah with other similar tax havens, it is possible to identify some differences. UAE has its own specifics, taxes have never been applied here. This is the main differences of attitude to business in the UAE. Government budget revenues are mainly generated from proceeds of oil and gas sector and other sources, but not at the expense of business taxation.
Oil and gas sector have provided rapid development of the economy, concurrently developing other economic sectors, especially international trade and tourism. Nowadays investment climate in Ras Al-Khaimah attracts considerable foreign investments into local economy and serves as its main driver. In fact, tax laws and regulations of UAE are of recommendation nature, except for the banking, oil and gas sectors. Moreover, recommendations of the state in matters of tax planning are not applied to special economic zones. In particular, unique business opportunities are open to companies incorporated in specialized economic zone of Ras Al-Khaimah.
Ras Al-Khaimah FTZ - features and advantages
Ras Al-Khaimah Free Trade Zone - is a governmental project designed to ensure favorable investment climate for foreign businessmen. Procedure for incorporating a company on the territory of a specialized zone is simple. Both offshore and onshore companies may incorporate here, which is useful for building cost-effective business schemes.
The main advantage of incorporating in the free trade economic zone is a complete exemption from tax payments in case of 100% foreign participation.
It is worth mentioning relatively low threshold for import duties, and complete absence thereof for most product groups. Local currency – Dirham is tied to dollar and is freely convertible into any other currency.
Ras Al -Khaimah - tax policy of the Emirate
Benefits of tax planning of this region are available not only to representatives of business and foreign investors. Loyal and liberal tax policy is equally applicable to businesses and individuals. Thus, tax policy excludes income tax on individuals and makes the Emirate attractive for foreign professionals and skilled workers.
It should be taken into account that the system of direct taxation contradicts the traditional tax policy of the UAE. Despite of federal form of the country, here you will not find here the federal taxation.
In addition to already mentioned advantages, foreign nationals may acquire ownership of real estate in Ras Al-Khaimah, which is also exempt from tax.
International tax planning
The Emirate of Ras Al-Khaimah is increasingly considered by foreign businessmen as the opportunity for effective tax planning. The United Arab Emirates government has a number of ratified international agreements for avoidance of double taxation, that allows to reduce significantly tax payments in relevant jurisdictions.
Bilateral international agreements have been concluded by Ras Al-Khaimah with the following countries: Canada, Australia, France, Italy, Germany, Romania, Poland, Czech Republic, Finland, Egypt, India, Lebanon, Indonesia, Malaysia, Morocco, Malta, New Zealand, Singapore, Thailand , Pakistan, Sudan, Belarus, Ukraine, Turkey and Tunisia.
Ras Al-Khaimah - taxation of offshore companies
Offshore companies incorporated in RAK free trade zone, have the following advantages:
- 100% withholding tax exemption;
- No value added tax;
- No capital gains tax;
- Dividends are taxed only on the territory of the state where they are distributed;
- Revenues from royalties are taxed only on the territory of the State where they are received;
- The same applies to taxation of accrued interest;
- No tax, which is formed by regular deductions from wages;
- No fees for repatriation of financial assets;
- Offshore companies are fully exempted from export and import duties.
Jurisdiction of Ras Al-Khaimah at international level
At international level the RAK has gained a strong reputation of transparent tax-free jurisdiction. It is important to note that legal practice of the Emirate excludes illegal schemes and possibilities for "money laundering".
International experts acknowledge that opportunities for tax planning are the main factors that attract foreign nationals who come to live and work here.
If you have any questions regarding this tax jurisdiction, do not hesitate to contact us. Please visit other sections of the website and discover all aspects and advantages of effective tax planning.
