The United Arab Emirates (UAE) has established 45 free economic zones to attract foreign investment and promote economic growth in the region. One of these free economic zones is the Ras Al Khaimah Economic Zone (RAKEZ). RAKEZ, located in the emirate of Ras Al Khaimah, offers a wide range of advantages to investors, including competitive tax regimes.
RAKEZ has established an appealing low-tax ecosystem to foster foreign direct investment. As a result of RAKEZ’s offshore status, investors can avail themselves of several tax advantages such as exemption from value-added tax (VAT), income tax, and other taxes.
This makes RAKEZ an ideal location for businesses looking to reduce their tax liability while still enjoying access to the wider UAE market and infrastructure.
This blog will delve into the several tax advantages provided by RAKEZ and how companies can utilize them to boost their earnings. We will discuss the tax structure in RAKEZ and provide insight into how businesses can take advantage of low-income tax rates to enhance their bottom line. Additionally, we provide helpful tips to ensure compliance with relevant tax laws and regulations.
If you are a business owner looking to expand your operations while minimizing your tax burden, RAKEZ could be the ideal location for your investment. Join us in exploring the tax benefits in RAKEZ and how you can leverage these opportunities to grow your business.
RAKEZ: A Tax-Free Zone for Businesses in the UAE
Firstly, RAKEZ is a tax-free zone, which means that there aren’t any corporate or personal income taxes in the UAE, whether it’s in Ras Al Khaimah or any other emirate. This factor can prove beneficial to businesses as it can contribute greatly to their bottom line.
However, there is a 5% value-added tax (VAT) requirement that all companies in RAKEZ must abide by. This implies that businesses must be aware of the regulations, stay compliant, and properly file VAT returns.
Corporate Tax Regime Changes
It’s also important to note that future developments may occur in the UAE Corporate Tax regime that could affect businesses operating in RAKEZ. Starting from June 2023, businesses with profits exceeding AED 375,000 will have to pay a 9% corporate tax. It’s crucial for businesses with increasing profits to understand and re-evaluate their tax strategies, stay compliant, and meet the tax filing requirements.
Obligations to Submit Audited Financial Statements
To steer clear of a penalty of AED 2,500, companies registered with RAKEZ ought to furnish their audited financial statements to auditors that are approved by RAKEZ, within six months from the closure of their financial year.
Dual License Structure
Lastly, RAKEZ offers a dual license structure. Businesses can operate in both the economic zone and the UAE mainland without having to rent additional facilities by obtaining a dual license. This option is preferred by many companies as it allows them to effortlessly establish their presence in multiple locations.
Financial Guide: Reducing Costs and Improving Profitability in RAKEZ
RAKEZ provides several advantages for entrepreneurs, including a tax-free environment, simplified company registration, and affordable business facilities. These benefits can help entrepreneurs save significantly on operating costs, boost profitability, and help them set up and run their businesses efficiently with minimal hassle.
Simplified Company Registration
RAKEZ enables effortless company formation by providing a simplified process, freeing up entrepreneurs to concentrate on essential business operations. This can help entrepreneurs save time and effort in setting up their businesses.
Affordable Business Facilities
At competitive prices, RAKEZ provides a range of modern amenities and infrastructure-equipped office spaces, warehouses, and industrial units. This can help entrepreneurs save money on operational costs and improve their overall profit margins.
Financial Optimization and Compliance
RAKEZ assists companies with their specific needs, providing practical and efficient solutions to ensure financial optimization and adherence to the latest tax regulations. Compliance is essential for entrepreneurs to avoid penalties and maintain their business operations without any interruptions.
Compliance and Financial Statements
RAKEZ offers a comprehensive list of value-added services, including accounting, bookkeeping, corporate bank account opening, registration and filing of VAT, corporate tax, and compliance.
Companies must submit audited financial statements prepared by RAKEZ-approved auditors within six months from the end of the financial year, with a fine of AED 2,500 imposed for non-compliance.
Customized Business Setup Packages
RAKEZ offers customized business setup packages tailored for entrepreneurs, providing cost-efficient solutions and a fast business establishment process. These packages can help entrepreneurs save time and money, providing them with a quick and hassle-free way to set up their businesses.
Tips for Minimizing Expenses
Accounting firms can provide viable ways to cut expenses and boost business profits, offering valuable insights and strategies for financial optimization. Entrepreneurs can consult with accounting firms to identify potential areas for cost savings and take measures to minimize expenses.
Banks and Financial Services in RAKEZ: How to Benefit?
Ras Al Khaimah Economic Zone has established partnerships with various banks and financial institutions to provide a range of banking and financing solutions for its clients. From digital banking solutions to strategic alliances and partnerships with several banks, businesses in RAKEZ can benefit in various ways.
Digital Banking Solutions
RAKEZ has partnered with Wio Bank to offer clients access to the latest digital banking solutions, enhancing the ease of financial transactions and management. With Wio Bank, businesses can enjoy a more streamlined and convenient banking experience.
Quick Apply Digital Kiosk
RAKEZ has collaborated with RAKBANK to facilitate the opening of bank accounts for RAKEZ clients through a digital kiosk. The application process is now more efficient, which benefits small and medium-sized enterprises (SMEs) by allowing them to easily open accounts and begin operations faster and with less hassle. This move promotes streamlined processes that help businesses operate more efficiently.
Strategic partnerships have also been established by RAKEZ with financial institutions like the Commercial Bank of Dubai (CBD) and Noor Bank. These alliances provide clients with quick and efficient banking and financing solutions that cater to the diverse needs of businesses operating within the economic zone.
RAKEZ’s banking partners include WIO, EDB, RAKBANK, Mashreq, FAB, ADCB, Commercial Bank of Dubai (CBD), and Emirates NBD. These banks offer a wide range of services and benefits to meet the unique needs of businesses.
Whether a business needs basic banking services or advanced financial solutions, they can rest assured that they’ll find the right banking partner in RAKEZ.
Benefits for SMEs
RAKEZ’s focus on supporting SMEs is clear through several initiatives aimed at simplifying the banking process and enhancing the business environment. These initiatives enable investors to carry out their businesses with ease, allowing SMEs to thrive in the RAKEZ economic zone.
The tax benefits in RAKEZ offer a compelling opportunity for businesses to thrive in a tax-efficient environment. With the recent updates in UAE corporate tax, RAKEZ has been actively assisting companies with their specific needs, providing practical and efficient solutions to ensure adherence and financial optimization.
The economic zone offers businesses an extensive range of value-added services, such as accounting, bookkeeping, corporate bank account opening, and compliance. These services provide additional support to help businesses thrive within the zone.
The tax-free status, cost-efficiency, strategic location, customizable business packages, and simplified administrative processes make RAKEZ an attractive choice for investors and entrepreneurs. The availability of digital banking solutions and strategic alliances with various banks and financial institutions further contribute to the ease of doing business within RAKEZ.
To leverage the low-income tax and explore the numerous advantages of setting up a business in RAKEZ, contact our team for comprehensive support and guidance. Whether it’s understanding the latest tax regulations, optimizing your business finances, or accessing digital banking solutions, we are committed to facilitating a seamless and efficient business environment. Take the next step towards establishing your business in RAKEZ now.