Types of Withdrawals and Their Tax Treatment
- Owner’s Salary
- Tax-free for individuals (no personal income tax)
- Must be reasonable for corporate tax deductions
- Dividend Payments
- No withholding tax in UAE
- Must come from after-tax profits
- Director Fees
- Subject to 9% corporate tax if paid to corporate directors
- Tax-free for individual directors
- Loan Repayments
- Not taxable if properly documented
- Must follow arm’s length principles
- Capital Withdrawals
- No tax on original capital investment
- Must distinguish from profits
Key Considerations
- Corporate Tax Impact: Withdrawals must not reduce taxable income artificially
- Transfer Pricing: Related-party transactions must follow market rates
- Documentation: Maintain clear records of all withdrawals
- Free Zone Rules: Some zones have specific distribution policies
Common Mistakes to Avoid
- Mixing personal and business expenses
- Failing to document shareholder loans
- Withdrawing profits before tax payments
- Ignoring free zone regulations
How Ez Bizz Corporate Services LLC Can Help
- Advise on tax-efficient withdrawal methods
- Prepare proper documentation
- Ensure compliance with corporate tax laws
- Handle free zone requirements
Contact Us:
Phone: +971 52 610 6577
Email: info@ezbizzsetup.com
Frequently Asked Questions
Are personal withdrawals from my business taxable?
Not if properly structured as salary or dividends
Do I pay tax when taking profits from my LLC?
No direct tax, but must come from after-tax profits
Can I take money as a loan from my company?
Yes, but must have proper agreement and repayment terms
How often can I withdraw profits?
No legal limit, but maintain proper records
Understanding withdrawal rules helps optimize your business finances while staying compliant. Professional advice ensures you avoid costly tax mistakes.