Our answer is – it is not that simple, and the FTA (Federal Tax Authority) are too smart for that one.
Employment income (aka salary & wages) is indeed tax free in Dubai and the rest of the United Arab Emirates. It is also allowed as a deductible expense from your taxable business profits for corporation tax.
However, there are now strict transfer pricing rules that ensure a director / owner of the business is paid a salary in line with their market value. If the salary is deemed to be excessive, it will be disallowed when computing your taxable profits for corporation tax.
Your remuneration strategy as a director and/or owner of the business is key to your future tax planning, so we strongly advise that you seek professional advice.
As licensed accountants and tax advisers in the United Arab Emirates, we would be happy to support you and your business. Get in touch with us now and start the conversation! We’re eager to hear from you and provide top-notch service. Don’t hesitate, contact us today!