Dubai has many free zones which offer various advantages, and among these free zones, the Dubai Biotechnology & Research Park or simply Dubai Science Park is the only one dedicated to those interested in operating the pharmaceutical, biotechnology, and medical technology sectors.
Starting a company in Dubai Biotechnology & Research Park has many benefits, among which a fast business registration procedure, dedicated licensing procedures in accordance with the profile of the company and many tax advantages.
When it comes to the taxation of companies in Dubai Biotechnology & Research Park, these must comply with a few regulations, some of them regarding the introduction of the value added tax. Our company formation specialists in Dubai explain below how companies are taxed in Dubai Science Park. You can also rely on us for assistance in registering a business in Science Park or in Dubai mainland.
What are the taxes to be paid by companies in this free zone?
It is a well-known fact that Dubai is a very advantageous emirate from a taxation point of view. The lack of income tax on individuals and companies expands in Dubai’s free zones, including in Dubai Biotechnology & Research Park. This means that companies operating here will not pay any corporate tax. Only branches of foreign companies established in this free zone will be applied a 20% tax on their corporate incomes.
Taxation of foreign shareholders in companies set up in Dubai Science Park
One of the greatest advantages of the Dubai Biotechnology & Research Park is that it allows for full foreign ownership. Even if foreign investors, natural persons or companies, will not face any tax issues in Dubai Biotechnology & Research Park, they need to consider the following:
- they can be taxed in their home countries on the incomes generated in the Dubai Biotechnology & Research Park;
- if their home country has signed a double tax treaty with the UAE, certain tax exemptions are available;
- under the same double tax treaties, if no exemptions are available, deductions could be obtained by the foreign owner of the company;
- the operations completed by companies owned by foreign investors are free of taxes in Dubai Biotechnology & Research Park.
Our company registration consultants in Dubai can help foreign entrepreneurs interested in registering companies in Dubai Biotechnology & Research Park.
The VAT and the excise tax in Dubai
One of the newest taxes introduced in Dubai is the value added tax, as the excise tax already existed for a while. An important aspect to consider when setting up a free zone company in Dubai is that it must pay both the value added and the excise taxes when selling goods and services, including in the Dubai Biotechnology & Research Park.
The VAT is established not only at one of the lowest rates in the region, but in the world – 5%. However, certain deductions and exemptions from this tax apply in Dubai Science Park. Among these, healthcare services are exempt from the VAT, therefore companies in Dubai Biotechnology & Research Park can benefit from VAT exemptions as long as they provide such services.
When it comes to the excise tax, it applies only on the sale of certain products such as tobacco, carbonated drinks, and unhealthy products. In Dubai Biotechnology & Research Park, only companies selling such products will be applied the excise tax which represents 50% or 100% of the price of these goods.
Tax compliance for companies in Dubai Biotechnology & Research Park
Even if they will not be imposed with the corporate tax, companies in Dubai Biotechnology & Research Park must register with the tax authorities and file tax returns which, in the case of foreign shareholders, must also be filed with the tax authorities in their home countries with the purpose of being granted tax deductions or reductions.
Also, companies in Dubai Biotechnology & Research Park must also register for VAT and file returns which demonstrate the collection and payment of this tax. The VAT returns in Dubai must be filed on a monthly or quarterly basis, depending on the annual income of the company.
We offer accounting services to foreign company owners who need to maintain their accounting books in Dubai.
Tax advantages in Dubai Biotechnology & Research Park
Those who set up companies in Dubai Biotechnology & Research Park will benefit from the following tax advantages:
- no corporate tax;
- free repatriation of profits;
- no taxes on the operations completed here;
- various customs exemptions on import and export activities.
For full information on the taxation of companies in Dubai Biotechnology & Research Park, please contact us. You can also rely on us if you want to set up a company in Dubai.