Navigating Taxes in Ras Al Khaimah: A Comprehensive Guide

Navigating Taxes in Ras Al Khaimah

Ras Al Khaimah is considered a favourable destination for conducting free zone or offshore business. The benefits the jurisdiction provides to both free zone and offshore companies have made RAK an attractive centre for doing business.

 In addition to that, most business individuals prefer Ras Al Khaimah offshore company formation because of the favourable tax policies. But before the RAK offshore company setup, one must be aware of the different types of taxes in the region.

So, in this write-up, let's focus thoroughly on taxation for an offshore company formation in RAK.

A Complete Outlook at Tax Incentives Encouraged in RAK Free Trade Zone-UAE

Every free zone in the UAE (United Arab Emirates) gets tax leverage for import duties on goods brought into these free zones. Now, RAK has two free zones, which are the Ras al-Khaimah Free Trade Zone and the Ras al-Khaimah Media Free Zone. What makes the Ras al-Khaimah Free Trade Zone an attractive trade zone among entrepreneurs is the trade barriers, including taxes, tariffs, and quotas, have been removed here to promote international trade. 

An Overview of Tax for the RAK Offshore Company Registration

 While opting for a RAK free zone company setup, knowing the RAK tax will help you decide whether it would be a suitable destination for conducting business.

Corporate Tax  

It should be noted that the jurisdiction is considered to be a "no tax" emirate for an RAK offshore company setup. This means there are no direct corporate, sales, or wealth taxes. The 100% tax exemption policy has been undertaken for an RAK offshore company registration. You can enjoy this for up to 50 years, not longer.  

Value Added Tax ("VAT")  

Another familiar taxation imposed in Ras Al Khaimah is the value-added tax. This came into the UAE at the Federal Level on 01 January 2018. Also, the VAT is imposed on the supply of goods and services, and the standard value of VAT in UAE is 5%.

However, you don’t have to pay any VAT for a Ras Al Khaimah offshore company formation. All offshore companies are exempted from VAT in the RAK. VAT can be imposed if your business includes any taxable supply in the UAE. 

Excise Tax

While conducting business in the UAE, you should be well-clear about the excise tax. The excise tax was enacted on 01 October 2017, and applies to tobacco items, caffeinated drinks, and carbonated beverages. Since offshore companies are exempted from all sorts of taxes, it includes the excise tax. 

Hotel and Tourism Taxes

The Emirate of RAK imposes different taxes on hotels dependent on the worth of the lodging administrations. In order to know about it in detail, you can get the assistance of a business setup consultant.

Since the RAK offshore company registration comes under being a non-resident company, an offshore company in the RAK does not have to pay any hotel or tourism taxes. 

Personal Income Tax and Social Security

There is no liability to pay personal income tax in RAK. Under the labour law, foreign workers are qualified for the end-of-service gratuity after finishing of at least one year of employment.

Advantages of Using Ras Al-Khaimah Offshore Companies

While opting for offshore company formation in RAK, the following advantages you can gain by choosing the respective jurisdiction.

  • Exempt from withholding tax 
  • Exempt from value-added tax
  • No capital gains tax
  • No fees for the repatriation of financial assets
  • Offshore companies are fully free from export and import duties

 Business Setup Worldwide's Role in Supporting Clients

Ras Al Khaimah is one of the first offshore destinations that is becoming more prominent in the offshore business world. Tax exemption will benefit you if you are looking for tax leverage.  Contact us if you need any assistance with RAK offshore company cost or anything related to the offshore company formation in RAK.

FAQs

List a few business activities you can conduct in the RAK-free zone.

A few business activities that you can conduct in the RAK-free zone are
Trading business
Manufacturing business
Consulting company and service-based businesses

How many days does it take to incorporate an offshore company in RAK?

Starting a company in RAK takes around 2-3 working days.

Is there any requirement to appoint an auditor for starting an offshore company in RAK?

No, there is no requirement to appoint an auditor for starting an offshore company in RAK.

How many days does it take to form an RAK-free zone company?

Forming an RAK-free zone company takes around 7-10 working days.

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