Taxation in the UAE

The United Arab Emirates is one of the few remaining jurisdictions globally that, until now, does not levy corporate and or individual income tax on its populace. Neither does the UAE levy any form of capital gains tax or withholding tax on its residents.

This is an added benefit to business owners looking to setup their businesses in UAE, or investors that have existing business setups in Dubai and the UAE.

In actuality, a certain subsection of the economy of the UAE is taxed. Varying levies are imposed on companies engaged in activities related to the domestic oil and gas industry, and as well as foreign international banks. The companies that are taxed form a narrow scope and are in limited numbers.

On the other hand, companies incorporated within free zones in the UAE are not taxed due to the enforcement of an extendable corporate income tax holiday lasting 15 to 50 years, depending on the free zone.

All of the above results in a consensus description of the UAE as a light-touch taxation jurisdiction.

A recent comparison found that the UAE is the top-ranked destination for highest take-home pay after tax and social security obligations, ahead of jurisdictions like Hong Kong and Singapore.

The main tax levied on residents is a 5 per cent Value Added Tax (VAT) rate, first introduced in 2018. Excise tax is also imposed on goods such as carbonated drinks, energy drinks, tobacco products, electronic smoking devices and sweetened drinks.

Customs duty are also applicable for the import and export of goods, in line with worldwide practices.

Summary Points of Taxation Policies in the UAE


• Zero Income Tax on Individuals and most Corporates

• Zero Capital Gains Tax

• Zero Withholding Tax

• 5 per cent VAT rate

• Corporate Taxation only on certain activities

• Excise Tax for selected goods and products

• Customs Duty apply

The allure of a legal tax-free income has always been attractive to foreign nationals, combined with strong socio-political stability, excellent connectivity between East and West and first-rate infrastructure and services, all make the UAE an excellent choice for individuals to relocate and reside within this Middle Eastern regional trade hub.

Taxation is no longer the main driver for various considerations and developments and is merely one factor amongst the many that private individuals and corporate entities have to assess before deciding on the suitability of a jurisdiction.

Speak to us today to find out more about how the UAE can be the best-placed jurisdiction for you beyond the immediate taxation benefits.

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