RAK Freezone, broadly known as Ras Al Khaimah Economic Zone (RAKEZ), is a free trade zone located in the north of the United Arab Emirates (UAE). It is an ideal location for entrepreneurs and investors looking to set up their businesses in the region due to its tax-free environment and range of services and facilities. In this article, we will explore the tax benefits of a RAK Freezone company and why it is so attractive for international businessmen.
Tax-Free Environment
One of the biggest advantages of setting up a company in RAK Freezone is the tax-free environment. The free zone offers 100% foreign ownership and 100% repatriation of profits, making it an attractive destination for entrepreneurs and investors. Additionally, there is no personal income tax, corporate tax, or withholding tax in the UAE, making it an ideal location for businesses looking to save money on taxes.
This tax-free environment is particularly attractive for international businessmen who want to minimize their tax liability. By setting up a company in RAK Freezone, they can take advantage of the tax-free environment and save money on taxes that they would have otherwise paid in their home country.
Value-Added Tax (VAT)
The UAE introduced a Value-Added Tax (VAT) in 2018, which applies to most goods and services at a rate of 5%. However, companies operating in RAK Freezone are exempt from paying VAT, making it an attractive location for businesses looking to minimize their tax liability.
This exemption from VAT is particularly beneficial for businesses that operate in the retail or hospitality sectors, which typically have high sales volumes and may be subject to significant VAT payments in other countries.
Double Taxation Treaties
The UAE has signed double taxation treaties with more than 90 countries, including the United States, the United Kingdom, France, Germany, and China. These treaties are designed to eliminate double taxation, which can occur when the same income is taxed in two different countries.
The double taxation treaties provide a mechanism for businesses to claim a tax credit or exemption in one country if they have already paid tax on the same income in another country. This can be particularly beneficial for international businessmen who have operations in multiple countries.