ANCPA Auditing is led by Ashraf Noureldin, a California licensed CPA. The firm prepares USA tax filings for people across the UAE and the GCC: USA citizens and green card holders, non-Americans with any USA income, active or passive, and anyone married to a USA citizen.
Who must file
You are a USA citizen or green card holder, and one of these applies:
- You control the company: you own more than 50% of its votes or of its value at any time in your tax year.
- You bought shares that took you to 10% or more of the company's votes or value.
- You own 10% or more of a company controlled by USA owners who each hold 10% or more.
First we check how the IRS sees your company. For most companies in the UAE and the GCC the answer is a corporation, and Form 5471 applies. If the company has been treated differently, another form is used instead.
What is filed
- Form 5471, with the schedules for your category of owner: the company's accounts in USA format, its owners, and money that passed between you and the company.
- It is attached to your own USA return, Form 1040, and filed on the same date, including any extension.
- For most Americans living abroad that means 15 June, or 15 October with an extension.
Penalty
- USD 10,000 for each company, for each year the form is missing or late.
- If the IRS sends a notice and the form is still not filed 90 days later, another USD 10,000 for every 30 days, up to USD 50,000 more for each failure.
- The IRS can also reduce the credit you claim for foreign tax.
Your position at a glance
- You own more than 50%. You control the company. Form 5471 every year.
- You own 10% or more, and USA owners who each hold 10% or more control the company together. Form 5471 every year.
- You bought shares that took you to 10% or more. Form 5471 for that year.
- You own less than 10%. Usually no Form 5471. If you sign on the company's bank account, the FBAR may still apply.
Is the company's profit taxed in the USA?
The question we hear most. The answer depends on who you are, not on where the money is paid. Paying it into a bank in the GCC, never through the USA, changes nothing.
If you are not American and have no green card
The USA taxes you only on income from the USA. Income from the GCC is not its business, active or passive.
- Your GCC company's profit: not taxed in the USA.
- Dividends from your GCC company: not taxed in the USA, unless the company earns much of its income from business inside the USA.
- Your salary for work in the GCC: not taxed in the USA.
- Rent, interest and investments in the GCC: not taxed in the USA.
- Income from the USA: taxed. For example rent from a USA property, a share in a USA business, or pay for work done in the USA. It goes on Form 1040-NR. USA dividends have 30% taken at source.
- Forms for your GCC company: none.
- Own it through a USA LLC? The answer changes with how the LLC is taxed. See Form 5472: when your USA LLC owns your GCC company.
If you are a USA citizen or green card holder
The USA taxes you on all your income, wherever it comes from, active or passive. It all goes on your own return, Form 1040.
- Your salary for work in the GCC: Form 2555 can exclude up to USD 130,000 for 2025 and USD 132,900 for 2026. Above that, taxed.
- Your GCC company's profit: taxed every year, even with no dividend, when you own 10% or more and USA owners who each hold 10% or more own more than half. There is no tax-free amount. The rate is your own rate, up to 37%.
- Dividends from your GCC company: profit already taxed in an earlier year is not taxed again. Other dividends are taxed at your own rate, up to 37%, because no GCC country has an income tax treaty with the USA.
- Rent, interest and investments in the GCC: taxed at your own rate.
- Forms: Form 1040, Form 5471 for the company, the FBAR for your accounts, and Form 8938 at the higher limits.
Is it double tax for an American?
- No, not as a rule. Profit taxed in the year it is earned is not taxed again when it is paid to you.
- One exception, by choice. You can elect to be taxed like a USA company on the company's profit: about 12.6% a year from 2026, instead of up to 37%. The price is that a dividend paid later is taxed again, less the tax you already paid.
- Local corporate tax, such as the UAE's 9%, is paid by the company where it is registered. With the election it can be credited against the USA tax.
What usually works best for an American owner
- Pay yourself a fair salary for the work you do. Up to the Form 2555 limit, it is not taxed in the USA.
- Choose the election year by year, counting the tax on the dividend later, not only this year's saving.
- Check the ownership. If USA owners do not own more than half, the profit is taxed only when it is paid out as a dividend.
- Plan before the year ends, not when the return is due. The right mix depends on your figures, and we work it out with you.
Missed years
If Form 5471 was never filed, the Streamlined procedures may let you catch up without these penalties, if you qualify.
Questions to ask yourself
- Am I a USA citizen or green card holder?
- Do I own 10% or more of a company in the UAE or the GCC, mainland or free zone?
- Was Form 5471 attached to my USA return every year?
In short
- An American who controls a company in the GCC, or owns 10% or more of one that Americans control, files Form 5471 every year.
- It goes with your own USA return, on the same date.
- A non-American living in the GCC pays no USA tax on a GCC company's profit or dividends. An American can, wherever the money is paid, but the same profit is not taxed twice unless the election is chosen.
- Each missing form can cost USD 10,000 per company, per year. Missed years can often be fixed through the Streamlined procedures.
About the author
Ashraf Noureldin is a USA CPA (California) and UAE Tax Agent with more than 25 years in accounting, audit and tax. He founded ANCPA Auditing L.L.C, an audit and tax firm in Emirates Towers, Dubai. USA returns are prepared and signed in Dubai and e-filed through our USA associates in Texas and California. For a question about your own case, email info@cpaauditing.ae, call +971 4 319 7316 or WhatsApp +971 56 620 0575.
This article is general information only. It is not tax, legal or financial advice for any person or company. Take advice on your own facts before you act.