Dubai company setup for US citizens
The UAE has no personal income tax, but US citizens and green card holders remain taxable in the US wherever they live. A UAE structure has to be designed with US rules in mind.
US tax follows you
The United States taxes its citizens and green card holders on worldwide income regardless of residence. Moving to Dubai changes how you are taxed rather than whether you are taxed.
Points to review with a US tax adviser
- Foreign earned income exclusion (FEIE) can exclude a portion of earned income each year if you meet the bona fide residence or physical presence test.
- Controlled foreign corporation rules. A UAE company owned by US persons may be a CFC. Its income can be taxed in the US before it is distributed, under Subpart F or the GILTI rules.
- Entity classification. Some UAE entities can elect how they are treated for US tax purposes, which changes the outcome significantly.
- Reporting. Form 5471 for interests in foreign companies, FBAR for foreign accounts above the threshold, and Form 8938 under FATCA. Penalties for missed forms are high.
- No treaty. The US and UAE do not have a comprehensive income tax treaty.
Banking
UAE banks report accounts of US persons under FATCA. Some banks are more comfortable with US clients than others; we introduce you to banks with established US-client onboarding.
Structure
US consultants often use a free zone company or freelance permit. Whether an LLC-type free zone entity or another form is better depends on the US classification analysis.
Practical points
- US citizens receive a visit visa on arrival in the UAE.
- US driving licences can generally be converted to UAE licences.
- US documents need an apostille, then UAE attestation.
Common questions
Is a Dubai company a way to avoid US tax?
No. For US persons it is a way to operate from the UAE legally and efficiently while meeting US obligations. The right structure can reduce double taxation and paperwork.
Can I claim the FEIE if I own the company?
Owner-employees can often claim the FEIE on salary, but company profits are analysed separately under the CFC rules.
Official sources
We check our guidance against these official sources. Always confirm current fees and rules before acting.