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How To Pay As Low As 0% Tax For Digital Business

Updated: Oct 18, 2023


In this article we will talk about ways of lowering taxes for digital business legally so that entrepreneurs could keep more of their own wealth and money.


A lot of people run online businesses, starting with ecommerce, to online marketing, consulting, media, or doing any type of business where they are generating revenue online, by using credit or debit cards via payment gateway or collecting transfer from clients (more about payment gateways and card processing in this article).


Usually online entrepreneurs are looking into places like Dubai (UAE) to lower their taxes by establishing a company in a free zone there. And it is a good way to lower corporate tax to 0%.


But how do you also keep payment processors and clients happy when they are paying you to your local account? Often clients are from non-offshore jurisdictions like UK or EU and they might not want to pay using AED to your local UAE bank account.


So how can you make your clients happy when they need to pay to your company account, even though your company is set-up in off-shore jurisdiction so that you can legally pay 0% corporate or income tax? Here are simple steps:


Intermediary structure: a simple structure is to have two different entities – one is UAE company (or any other traditional offshore entity) and a company somewhere else to have payment processors or payment methods. The UAE entity can be a marketing management entity, and the other company (onshore that deals with clients) would then send money to your marketing company based in UAE, that is going to be the one paying 0% corporate tax.


Such structure is called intermediary company structure where the goal is to have an intermediary step in front of offshore entity.


Onshore bank account: another great tactic is to have an onshore bank account for your offshore entity that you can incorporate in any of the traditional offshore jurisdictions such as UAE, Belize, Seychelles, Mauritius, BVI and so on.


Opening EU or UK based bank account for offshore company is not an easy task. A lot of banks will refuse such account opening, while fintech and digital banks will require first having an EU based account with other bank or provider before opening an account with them. Or having a local based account with local bank first is a must and even so they can only provide nested accounts without individual named IBANs.


But there is still a few players in the market, that can open EU or UK for offshore entities without these strict requirements. However, a full due diligence will be carried out before account opening. We can recommend best digitals banks for offshore entity account with individual named account IBAN in the EU or UK, do not hesitate to get in touch with us.


Having named account in the EU or UK, would automatically allow you to collect payments from global clients in their local currency and will easy business dealings.


How to incorporate a company in Dubai Free Zone or any other traditional offshore Jurisdiction?


Often people want to reduce their corporate tax close to 0% but don’t know where to start. It is indeed possible to do everything on your own when it comes to company in incorporation and setting up bank accounts. However, some jurisdictions have requirements for local directors or even an office.


The most straight forward way is to work with corporate services provider that will handle everything from A to Z when it comes to company set-up in a specific jurisdiction. Yes, it might not be the lowest cost pathway but it will guarantee that everything will be done in-line with local compliance.


We work with several corporate service providers around the world helping their clients to set-up bank accounts for their newly established companies. We would be happy to recommend corporate service providers based on your desired jurisdiction.


Conclusion


There are several ways to lower corporate taxes as low as 0%. It depends on the clients that a specific business is serving and how the owner wants to structure the group. The two viable solutions are low cost and low maintenance solutions that were discussed in detail.





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