Are you a professional looking to set up a business in the UAE for taxation purposes? Setting up a professional firm could be the answer for you. We will walk you through the steps of forming a professional firm in the UAE for tax reasons in this post, along with the requirements, advantages, and difficulties of this business model.Your Trusted Tax Partner
What is a Professional Firm?
A professional firm is a business established to provide professional services, such as legal, accounting, engineering, or consultancy. In the UAE, a professional firm is defined as a business based on the UAE Civil Code, where the main objective is to engage in the practice of a profession. The incorporator of a professional firm places a greater emphasis on their professional activities than on gaining from the actions of those connected to them.
Legal Requirements for Setting up a Professional Firm for Taxation
To set up a professional firm in the UAE for taxation purposes, you need to follow specific legal requirements, including:
Obtaining a Professional License
The first step towards setting up a professional firm is to obtain a professional license from the relevant Emirate Department of Economic Development (DED). The DED requires the following documents: Copy of passport of application, copy of applicant's UAE Recidenec visa, copy of applicants qualifications and experience certificates and no-objection letter from the employer (if employed).
Choosing a Legal Structure
A professional business can be founded as a limited liability company, a partnership, or a sole proprietorship. (LLC). Each legal structure has advantages and disadvantages, and choosing the proper system for your business is essential based on your requirements.
Meeting the Capital Requirements
Depending on the Emirate and legal structure, different minimum capital requirements for establishing a professional company in the UAE for taxation reasons apply. For example, in Dubai, the minimum capital requirement for a sole proprietorship is AED 50,000, while for an LLC, it is AED 300,000.
Registering for Taxation
Once the professional firm is established, it is essential to register for taxation with the Federal Tax Authority (FTA). The FTA requires all businesses with an annual turnover of AED 375,000 or more to register for VAT.
Maintaining Proper Accounting Records
Complying with the UAE's taxation regulations is essential to maintain proper accounting records. This includes keeping track of all income, expenses, and taxes paid.
Benefits of Setting up a Professional Firm for Taxation
Establishing a professional firm in the UAE for taxation purposes offers several benefits, including:
As a professional firm, you can take advantage of the tax benefits available to businesses in the UAE, such as the absence of corporate income tax and low VAT rates
Better Management of Tax Obligations
By setting up a professional firm, you can better manage your tax obligations and ensure compliance with the regulations in the UAE.
Access to Tax Professionals
As a professional firm, you will have access to tax professionals who can assist you in managing your tax obligations and ensuring compliance.