Should You Buy Dubai Property in Your Name or a Company?

They will have to cancel the golden visa. If a person is buying outside his or her country, there are a lot of questions that they have. The land department doesn't allow a foreign entity to own an asset over here. It has to be held by a domestic company, a UAE based company. They can 100 percent be the owners of the corporation. The 9 percent corporate tax, it's on your companies. It's not an individual. Individual tax, personal tax is still zero. There is no VAT between free zone to free zone. Should you purchase property in Dubai through a corporation or a business? We're going to address that today on the Dubai Connect podcast. Ziba Majithia to answer these questions. Awesome. Thank you, GG. We love being over here. I love it and I'm sure everybody else loves being here. Well, I'm honored because I believe that one of the main differentiators that I think sets my company apart and what I'm doing is that I'm able to provide answers beyond just purchasing a property. 100 percent. You're just not doing a sale. You're building a relation, right? And helping them through the post sales process to be able to strategically make the best decisions as they build the portfolio. 100 percent. Because especially if a person is buying outside his or her country, there are a lot of questions that they have. And you are addressing all of that in absolutely the best way. Thank you. And a huge part that you're one of my secret weapons. I love that one. Because you worked in banking, right? Share actually a little bit more about your background. People can go to my previous podcast to know about you, but share a little bit about your history here. Sure. So I'm obviously Ziba Majithia. I've been in banking for over 10 years. Worked in banks like HSBC and Emirates and Bidi, both extremely strong banks. Started my career with a bank called Yes Bank, which nobody in India would know at that point of time that there was a bank named Yes Bank, including my mom, because I was one of the first lot that joined the bank. This was back in 2006. And it was just funny, but amazing bank. And I quit three years ago and started out my own firm, which is into consultancy. So what we essentially do is we guide clients for corporate services like opening companies, incorporating companies, banking, golden visas, visas, bills, accountancy. That's what we do. And being that you have a history in banking, you're obviously very immersed in the real estate world here. You deal with global investors, particularly, right? In the majority, I would say probably 100 percent. Yeah, global. So then I believe that you are really positioned to answer the question. First of all, this was on her quiz yesterday in one of our little sessions. Can someone in the United States purchase a property in Dubai through their corporation in the US? So no, you cannot, because the land department doesn't allow a foreign entity to own an asset over. It has to be held by a domestic company, a UAE-based company, which could be 100 percent owned by the person, or it could be owned 100 percent by an international company. That's allowed. Again, why? Because we don't know what is happening at the international level. What if there's a shareholding pattern structure change or anything of that sort of activity change or the company becomes diluted over a period of time? We don't know what happens. So in that case, UAE has just allowed their domestic companies to be the first layer as owners, and then of course you could have another entity on top. And that's true to anywhere, not just US. So nowhere in the world. So now let's go to the next question then. Most of my clients are investors, and they're purchasing off-plan projects. Can a foreigner then open a corporation here in the UAE? Yes, absolutely. They can 100 percent be the owners of the corporation, unlike how it was earlier, where mainland companies had to have a local as a 51 percent shareholder. Now they can 100 percent own the company. Could be a mainland free zone company either. And then they could buy a property vis-a-vis that company. Possible. And do they have to be here to start that company? Absolutely not. We can do everything remotely. So Gigi, what we tell our clients is that always get your groundwork right. Okay, it's like baby steps, right? You don't go directly to XYZ. So if there is something which you know that you have to buy from a corporate structure, first get the corporate structure in place, and then you buy a property. So now what would be the reason why somebody should purchase a property in the name of a corporation? Is there a dollar amount, a property amount, quantity, before you feel that it's important for someone to set up a corporation to purchase? Absolutely not. You can, the property is under 1 million. You can very well set up, because it's not stopping you. Or it's not capping you that if you have X amount of property, then only you form a company. Absolutely not. But then where is that sweet spot where you suggest that they do it? Is at what point do you think, yes Gigi, let's advise this client to start their corporation before they purchase? Okay, so for some clients what happens Gigi, is that they prefer to do it from their corporate structure. Reason is because world over corporate tax is still higher than, I mean it's still lower than personal tax. So when there is, so whatever amounts that they're receiving in the company, a lot of them do not take in their personal name over there. They would leave it in their corporate, in their company because they've already paid tax. The moment they shifted from the company to their personal, they end up paying tax. So now in this case, if this company wants to buy a property, right? They can directly, so sometimes they don't, because they directly as a foreign company cannot buy an asset over here, they would register another company over here, which then would buy a property under that name, which we just discussed in the beginning. Second is it also helps them for asset protection, better taxation, right? The only disadvantage that is there is that tomorrow, I mean they can't get a golden visa basis, that particular property because it's held on a corporate name. And as per the golden visa rules with where property is concerned, it needs to be held in a person's name. How long does the process take to open a business here? If my clients in America, they're going to purchase in the next week or two. Is that enough timetable to create a property? It could be a few hours to maximum a week. Super fast. Right. And can you share with us, I know taxes were what, about a year and a half ago, that the UAE start to incorporate in corporate tax, which is still less than the majority of the world's top markets. But what is it? 9 percent at what amount? What income amount? Okay. So first of all, the 9 percent corporate tax, it's on your companies. It's not an individual, individual tax, personal tax is still zero. Now, if the company makes a profit over 375,000 dirhams or 100,000 dollars, that's when they pay the excess amount on the excess amount, they pay at 9 percent as your corporate tax. Okay. However, there are a lot of exceptions. Like if it's a small, small, medium business, for example, the turnover is below 3 million, there are a lot of exemptions which are granted. So literally it could mean that your corporate structure is paying negligible or no corporate tax. Okay. Great to know. And I don't know if we have enough time to answer this. What is the difference between all the free zones? Okay. So first of all, we have over 50 free zones in the UAE. A lot. What is a free zone? So a free zone, in a nutshell or in simple language, if I explain it to you, right? Where your mainland company was concerned, at a point you required a local to be there on the license. And honestly, this is still misconceptions even in the United States. People still don't realize that you can start a company here, own it 100 percent no longer having a sponsor. Yeah, yeah, yeah, 100 percent. So earlier mainland, what was happening is you had to have a local company as the owner, as the shareholder. So at 51 percent and the foreign expat had to be at 49 percent. A lot of people were not comfortable with that. So what the government did is, and also to develop a few pockets, okay, which were not popular, they made these free zones. They made free zones in Dubai, Abu Dhabi, Sharjah, Ras Al-Khaimah, all these places, right? These pockets were given advantage over a mainland in terms of 100 percent ownership by a foreign, by a foreigner was allowed. There is no VAT between free zone to free zone. So if you're trading and if you're qualified for VAT, but however, if it's happening within the free zones, you don't pay that VAT. So all these advantages were given for free zones. Now, which one is better? We have, you can't really say which one is better. They all are great. They all do the work. We are more partial to Dubai free zones because they're super fast, but we work with all free zones. But is it free zone? The differentiator is what the project is or what the company is, for example, I want to start a jewelry brand. Is that a certain free zone then that I go to? Okay, great question. So now what happens is, see, for example, if you want to start a jewelry brand, you'd ideally want to be towards where your peers are, right? Because your market is over there. So you would keep it towards those free zones, which is your DMCC. Or if you want to have something which is into pharmaceuticals, you would be there in healthcare city. Okay, so the free zones are more the area. Yeah. Is that, I mean, I'm still trying to understand? It is an area. These are areas, 100 percent. Right. Okay. And some of them have a high concentration of a particular industry. For example, if you say about DAVSA, they would want to have where the logistic companies are. Logistic companies would want to be there because it's ease. They have their office over there. Plus whatever logistics are happening, it's close to them. So those are more specific. Yes. But then you have other ones, other free zones like your Medan or your Ivesa, which are very general. So you could have your, you could be dealing into anything and have your business set up over there. But those still have to be applicable to that 9 percent corporate above the? All of them are. All of them are. Mainland free zone offshore, all applicable to 9 percent. And obviously, if my clients come to you, that's part of what you do, is help guide them and strategize on where to set that, which free zone to set up, right? Yes. Okay. And you can do this all virtually. Absolutely. Today's Zoom has become so important and essential. So thank you for answering. I mean, I think in a nutshell, what I'm understanding, and correct me if I'm wrong, you cannot purchase a property in Dubai through a corporation outside of the UAE. Correct. You can as a foreigner, open a business and a corporation in the UAE. Virtually. If any of your clients have already bought a property and then they realize that they want to buy it via a corporate structure and they haven't registered the property, they've bought it in the personal name. So you could actually request the developer not to do the registration at that time, but to have it registered once the company is incorporated. Okay, Ziba. Let's say I already have a client. You know how launches go here, right? When you're talking to talk to your developers, we don't have time to sit. Let's talk to Ziba. Let's figure out if you want to start a corporation. Call us. You lost your chance. Yeah, yeah, yeah. Okay. So let's say the booking has already been created. Yeah. But then do I have time then to help them? What do I do at that point if we already want to book this unit? Say the client has signed up the booking form. Has paid the token amount, right? You can obviously request the developer to keep it on hold, that the client would like to buy the property from the company name. Meanwhile, you get the client started for the company incorporation process. We finish it really fast. Once the company is incorporated, they can very well have the property registered in their company name. So developers are happy to wait during that bit because they know how fast the processes are and then they can have a property via the company. Okay, then I'm going to ask another question. What if they've already completed their purchase? What about all my clients who've already purchased but don't have a corporation? Can they transfer? 100 percent. They can't. So it is, for example, if say it's owned by Mr. John for simplicity purpose. Now John sets up a corporation, right? Which is 100 percent owned by John. In that case, he can transfer it. Okay, land department allows that. But he will have to pay a stamp duty or a transfer charge or your DLD charge. What is the transfer tax if they're transferring it from their name into their own corporation? 0.125 percent. It's nothing. Amazing. Now another question though. If they had the golden visa tied to that property and now they're transferring it into a corporation, what happens to the golden visa? So they will have to cancel the golden visa or transfer the golden visa to another property. So then, yeah. So then that's in the scenario where someone owns, let's just say they own one project. That's worth a two million dirham. At that point, if they make a decision to transfer that into a corporation, then they do lose their golden visa. Yes, 100 percent. Okay. Okay. So those are important advantages and disadvantages to understand, right? Yeah, absolutely. Okay. Fantastic. Well, thank you so much, Ziba. Thank you, Gigi. Thank you not only for being a guest on the Dubai Connect podcast, but being incredibly responsive with all my investors. Because as I mentioned before, I think you're my secret tool and weapon that differentiates my offering for global investors not just purchase a property, but be able to strategically build a portfolio, minimize their taxes, protect their assets here, create the golden visa, open a bank account, right? So all of the financial concierge needs are provided by you. Yes, we try hard. Thank you very much. Thank you. I hope that you were able to gather some information and answers to questions you've been asking. If you have more questions, feel free to send away. Make sure to like, subscribe, follow, and stay tuned for the next episode of the Dubai Connect podcast. Until then, happy investing.