Dubai, and the United Arab Emirates in general, are known for their tax-free status. This often attracts expatriates to Dubai who seek to minimize their overall taxation.
Dubai’s tax regime is indeed appealing, but it does not mean that its fiscal system is entirely devoid of taxes.
Here’s a comprehensive overview of taxes in Dubai.
Personal taxes
There are no taxes or social charges in the United Arab Emirates for individuals:
- No income tax
- No capital gains tax
- No tax on received dividends
- No social security contributions
- No inheritance tax
Taxes on companies and professional activities
VAT
The only tax currently applicable is the 5% Value Added Tax (VAT), which is levied on invoices issued to the United Arab Emirates when applicable.
Corporate Income Tax
A corporate income tax, with a rate of 9%, is planned to be implemented from January 2024 (with the first tax declaration due in September 2025) for companies with annual profits exceeding AED 375,000. However, companies with an annual turnover below AED 3 million will be exempt from this tax until 2026. It’s important to note that dividends received, distributed, and capital gains remain untaxed.
Custom duties
The customs duty for importing goods into the United Arab Emirates (outside of free zones) is generally 5%. However, certain products such as energy drinks, alcohol, and pork may have higher taxes.
Other taxes
It’s worth noting that there are other taxes in the United Arab Emirates, including:
- Property tax, which is calculated based on the value of real estate at the Dubai Land Department and is paid along with the electricity bill.
- Tolls (Salik).
- Various taxes on the profits of banks and oil companies, as well as taxes on gasoline, among others.
What about tax residency in the United Arab Emirates?
It’s important to distinguish between a residence visa and tax residency in Dubai.
Regarding the residence visa, if you spend more than 183 days between two trips outside Dubai, your visa will be automatically canceled. This means that if you leave Dubai, you must return within 183 days for at least one night to prevent your visa from being canceled. Some investors may have a visa that allows them to stay outside the country for more than 12 months.
As for tax residency in the UAE, you should have been present in the UAE for at least 90 days in the last 6 months.
It’s crucial to be cautious not to become a tax resident of another country due to meeting that country’s internal criteria. Therefore, it’s important to thoroughly understand the applicable tax regime in such cases. We strongly recommend living in Dubai to maintain your tax residency there.
Double Taxation Agreement (DTA)
A tax treaty for the avoidance of double taxation has been signed between the United Arab Emirates and numerous other countries, including France. For French tax residents, this treaty is highly beneficial as it helps reduce the tax liability on income derived from a company in the UAE. Belgian, Swiss, and other nationals also benefit from similar tax treaties. We invite you to read more about this on our website.
