I'm Digital Nomad living in UAE and Thailand with 0% tax
Hi, I'm Manabu.
Today, I will explain a tax strategy for Digital Nomad.
Table of contents
- 1. How much tax as a Digital Nomad in UAE
- 2. Compare: Free Zones vs Remote work visa
- 3. Compare to the other countries with UAE
About the author
I'm Japanese live in UAE and Thailand. I'm a founder of CodeBegin, an online programming school for Japanese, as well as an influencer with over 800,000 followers on Twitter and YouTube.
1. How much tax as a Digital Nomad in UAE
It's 0%, completely free.
- 0% tax on income
- 0% tax on crypto
- 0% tax on dividends
Problem: Consider your tax residency
It is subject to your current residency status. In my case, I'm Japanese with dual residencies in the UAE and Thailand. I am non-resident in Japan.
How the Japanese government views residency status
Basically, these things are important:
- Where do you get your income?
- Do you own a home in Japan?
- Where are your assets located?
Anyway, it depends on your current situation. Please consider consulting with a tax accountant in your country.
The reason why I have a residency Visa in Thailand
UAE is a good place for incorporation, but it's not the best place to live.
I like Southeast Asia, like Thailand, Malaysia, and Philippines. Because they have nice weather, friendly people, and a low cost of living.
Thailand, in particular, is the best country for me to live in. Thailand's people are very friendly, and the food is really delicious.
If you want to live in Bangkok, I recommend getting a Thailand Elite Visa, a residency program that allows you to stay in Thailand for 5 to 20 years.
The cost is estimated to be around $20,000 (depending on the period you want to buy). I obtained my visa through this agency. The website is in Japanese, but it's an excellent agency for getting your visa without any hassle.
2. Compare: Digital Nomad VISA vs Free zones
There are two ways for Digital Nomads to enjoy 0% income taxes.
- Method1. Digital Nomad VISA
- Method2. Free zones
In a nutshell, the comparisons are as follows:
Method1. Digital Nomad VISA
- Cost: approximately $611(Source: this post)
- Maximum length of stay: One year
- Pros: visas are inexpensive and simple to obtain
- Cons: visas are only valid for one year
Method2. Free zones
- Cost: approximately $15,000 USD(Source: my experience)
- Maximum length of stay: unlimited as long as the extension
- Pros: Not too expensive, easy to extend your visa
- Cons: need to renew it every year, need accounting fee
In this post, I'll go over free zones in detail because I currently own a company in the UAE and have experience in this field.
How to start your business in Free Zones
It's not difficult to establish your company in UAE. Simply find an agency that will set up your document and then send it to the UAE government.
I use a company called Virtuzone, which provides services such as incorporation, accounting, and postal service. Their customer service is sometimes slow to respond, but I am generally satisfied.
*There are soooo many companies that will not even respond to my email.
How much are the annual costs?
In my experience, the details are as follows:
- Setting up fee: $8,000 ~ $20,000
- Meintanace fee: $5,000 ~ $13,000/year
- Accounting fee: $2,000 ~ $10,000/year
Let's dig in one by one.
Setting up fee: $8,000 ~ $20,000
Setting up fee is the fee of incorporation. You must pay it to the UAE's government as well as your agency if you use it.
The cost of incorporation really depends on location in which you wish to register your business. In my case, I choose DMCC, Dubai Multi Commodities Centre.
Dubai Multi Commodities Centre (DMCC)—voted Global Free Zone of the Year for four years in a row—is home to 15,000 companies, with a further 170 joining every month.
It's best to consult with your agency about where to register your company because it varies depending on the type of business.
The agency advised me to register my company with DMCC, because my business areas include blogging and selling digital products. I'm satisfied with it.
Maintenance fee: $5,000 ~ $13,000/year
The following are the maintenance fees:
- License fee: $5,000 ~ $13,000/year
- Office address: Hundreds of dollars per month
- Postal service: Hundreds of dollars per month
The corporate tax rate in the UAE is 0%, but you must pay a Licence fee. In my case, I pay around $13,000 to keep my corporate license in the UAE.
Accounting fee: $2,000 ~ $10,000/year
You must submit your company's accounting. In my case, I outsourced this task to CALX, an accounting firm in the United Arab Emirates. The cost is around $6,000 to $8000.
Also, you should remember VAT Registration. A business must register for VAT if its taxable supplies and imports exceed AED375,000(=$100,000) per year. If you forget to do so, you may face fines from the government.
Most hassle part: opening a bank account
The most challenging aspect of establishing a company in the UAE is opening a corporate bank account. Basically, most banks don't like Digital Nomad because they seem to be high risk for bankers.
To avoid hassle with opening your corporate banks, it is much better to locate your business in a location trusted by banks (eg: I chose DMCC, one of the most well-known locations for people who want to start a business in a free zone).
In the following chapter, we will compare the UAE to other countries.
3. Compare to the other countries with UAE
Let's consider the following options:
- Portugal: 0% tax
- Singapore: 17% tax
- Georgia: 15% tax
Also, we will consider a perpetual traveler, someone who travels from place to place, never putting down roots and legally avoiding paying taxes. Okay, let's dig in.
Portugal: 0% tax
Living in Portugal as a Digital Nomad is one of the best options. Please see the following:
- 0% tax on foreign income
- 0% tax on crypto
- 0% tax on dividends
- 0% tax on wealth
- 10% tax on pension
- 20% tax on freelancing
Suppose you want to move to Portugal, then better to use Rebase.co, a new, safe, and easy-to-use platform for becoming a legal and fiscal resident in countries that want to attract remote workers. It was created by Pieter Levels, founder of Nomad List.
The problem of immigration to Portugal
One problem for non-EU citizens is as follows:
- You have to rent or buy a place to live
- You have to spend at least 6 consecutive months OR
- You have to spend at 8 non-consecutive months per year
There are slightly bigger problems for non-EU citizens.
The best part about being a Digital Nomad is always being free, right? So the condition of minimum stay is something I'd like to avoid.
But, I'm going to visit Portugal this year and observe the atmosphere. Then, if it's good, I'll think about moving there.
Singapore: 17% tax
Singapore is also a good option for Digital Nomad because the business environment is well-organized. However, there is a problem with your company's maintenance fee.
When I tried to set up my business in Singapore, I realized that the maintenance fee was quite high. Compared to the UAE, the price will be two to three times higher.
Singapore is an option if you can afford it. I think the business environment is far superior to UAE. I mean, UAE is becoming gradually improving, but there are still a lot of problems right now(eg: Poor quality of customer support).
Georgia: 15% tax
Georgia is becoming popular among the Digital Nomad in Japan. The reason for this is as follows:
- Low cost of living($1,312/mo)
- Can stay for one year without a visa
- Co-working space is increasing
The condition of a VISA depends on your passport, but I guess that in comparison to Singapore and the UAE, the visa condition in Georgia is much easier.
IT Virtual Zone is a 0% tax
Virtual Zone (IT Zone) is a special tax regime that gives advantageous tax rates for IT-related businesses. For IT companies like IT consulting, software development companies, or crypto businesses.
If you are approved, then you can enjoy 0% income taxes. Dividends are taxed at a rate of 5. It is still relatively low, right?
Georgia is great for investor
If you are like an investor, forex trader, or crypto trader, then living in Georgia is one of the great options. Because needless to say, it's 0% tax, but also there are no tasks other than living there for 6 months.
One big problem for Digital Nomad
Stripe is not available in Georgia. So for me, it's one of the most significant issues when it comes to doing my business there.
Of course, you can use PayPal and 2Checkout instead of Stripe; these tools are extremely time-consuming.
Why? Because always they ask me like so:
- Send me your residency proof
- Send me the reason for this transaction
- Send me a shipping record of your product
These are extremely time-consuming. That's why I don't like that. I'd rather not do my business than being asked like this.
Perpetual traveler: 0% tax
Lastly, consider the option of perpetual traveler(PT).
Problem: Can't open a business bank account
Only a problem with becoming a PT is opening a business bank account. Most banks, I think, will not accept the opening of a business account for PT.
My friend's case: He is a travel YouTuber who makes money from his channel. When I met him abroad, he told me he gets his money from a Japanese bank using his credit card.
Also, he said that the Japanese tax accountant informed him that he doesn't need to pay his taxes to Japan because he doesn't live in Japan. It really depends on your situation, so please consult with a tax accountant in your country.
Crypto increases PT
If your source of income is all from crypto, then there is no problem becoming a PT. Because only the problem with being PT is related to banking. If you don't use a bank, then the problem goes away.
The more crypto gets mass adoption, the number of PTs will increase, I guess. This situation triggers another problem of how the countries try to collect taxes from people like this.
However, it is still too early to become a PT. The situation will change in two to three years. At that point, I'll think about becoming a PT.
Okay, that's all for my blog. Thanks for reading. If you have any questions or request you want to know more about, just let me know by replying to me on Twitter. Thanks!