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Taxation of Companies in Hamriyah Free Zone

Taxation of Companies in Hamriyah Free Zone

Sharjah is one of the most important emirates in the UAE. Its most important free zone is Hamriyah which hosts a great number of companies, mainly for the tax incentives they are granted. The taxation of companies in the UAE is made in accordance with the specific laws of the emirates where the business is located in. However, the taxation of companies in free trade zones, like Hamriyah, is established by the free zones’ authorities.

Our Dubai company registration consultants can assist foreign investors who want to open companies in Hamriyah Free Zone.

How are companies in Hamriyah Free Zone taxed?

The Emirate of Sharjah enabled its Tax Law in 1968 and through it the income tax to apply to companies in the oil and gas and the financial industries. While the taxes imposed to oil and gas companies are applied depending on their annual income, branches of foreign banks will pay a tax applicable at a 20% flat rate. It must be known that these rates apply only if the companies are registered in Sharjah and not in Hamriyah Free Zone. Foreign investors carrying out operations in Hamriyah Free Zone will benefit from several tax exemptions. Among these are:

  • 50-year tax exemptions from the corporate tax;
  • free repatriation of profits;
  • no capital gains tax;
  • no withholding tax, such as dividends or interest taxes;
  • 100% import and export tax exemptions.

However, foreign shareholders in companies in Hamriyah Free Zone must pay attention to the taxation rules in their countries.

Taxation of foreign shareholders of companies in Hamriyah Free Zone

Considering the Hamriyah Free Zone Authority allows for full foreign ownership in a company, the number of foreign investors opening companies here is very large. Even if they benefit from many tax exemptions in Hamriyah Free Zone, they must pay attention to the taxes they are liable to pay in their home countries. However, it is helpful to know that in case the UAE has signed double taxation agreements with the shareholder’s home countries, additional tax deductions or exemptions are available.

If you want to open a company in Hamriyah and need more information on the taxation of foreign shareholders, please contact our company formation agents in Dubai.