Taxation in the UAE is governed by Law Decree No. 47, dated December 9, 2022. There is no income tax imposed on individuals in Dubai or the other emirates. Corporate taxes apply only to oil-related businesses and banks with foreign capital. Value-added tax (VAT) is charged on most goods and services, while excise taxes are levied on items such as alcohol, carbonated beverages, tobacco products, and other goods deemed harmful to health or the environment.
The UAE’s fiscal legislation is established at the federal level, though additional regional taxes may apply to tourists and property landlords.
Tax system in the UAE
The UAE offers a highly favorable tax regime for residents, citizens, and expatriates. Individuals are not subject to income tax, which exempts self-employed professionals and freelancers from the need to register with tax authorities. Additionally, there are no taxes on dividends, gifts, luxury items, inheritances, or real estate transactions in the country.
Free Economic Zones (FEZ) provide additional tax benefits, including the absence of restrictions on property purchases by non-residents, unrestricted capital imports from abroad, and exemptions from duties on foreign-manufactured goods. These incentives make the UAE an attractive destination for both businesses and individuals seeking financial efficiency.
Taxation of individuals in the UAE
Tobto ain tax residency status in Dubai or other emirates, individuals must follow a specific procedure to secure a Tax Residency Certificate:
- Choose the eligibility basis—either employment or property ownership.
- Obtain a UAE resident visa through the UAE Consulate.
- Relocate to the UAE, start employment, and open a personal bank account.
- Pay the state fee, which in 2023 amounts to 1,000 AED (approximately 258 EUR).
- After six months of residence and employment, submit an application for a Tax Residency Certificate to the UAE Ministry of Finance.
To apply for tax residency, the following documents are necessary:
- A completed application form.
- A passport with a valid UAE resident visa.
- Personal bank account statements covering the last six months.
- Proof of residence, such as a lease agreement or property ownership documentation.
- An employer’s letter specifying the applicant’s position and salary, or alternative documentation demonstrating sufficient financial resources for living in the UAE.
Obtaining a Tax Residency Certificate enables individuals to avoid double taxation with countries that have agreements with the UAE. Additionally, official tax residency in the UAE provides full confidentiality regarding an individual’s income.
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Taxes and rates for residents and foreigners in the UAE
- Income tax.
The UAE tax system is highly favorable for individuals, as no taxes are levied on salaries, pensions, capital gains, copyrights, inheritance, gifts, or property owned by individuals.
- Real estate tax.
A 5% duty is applied to the purchase of commercial properties. Additionally, a fixed tax on property transfer amounts to 540 AED (approximately 139 EUR). The fee for state registration of objects is 2,000 AED (516 EUR) if the purchase price is up to 500,000 AED (129,000 EUR) and 4,000 AED (1,032 EUR) if the purchase amount exceeds this level.
- Rental tax.
Rental taxes in the UAE differ depending on the type of property and the emirate. For commercial properties, a mandatory city tax of 10% is applied to rental income. For residential properties, the tax rates vary across emirates. In Abu Dhabi, only foreign citizens are required to pay a rental fee, which is set at 3% of the annual rent. Conversely, in Dubai and Sharjah, rental taxes are applied uniformly to all tenants, regardless of nationality. In Dubai, the rental tax rate is 5% of the annual rent, while in Sharjah, it is set at 2%. These variations reflect the regional policies governing real estate taxation within the UAE.
- Tourist tax.
Regional authorities in the UAE impose a variety of fees on hotels, restaurants, and holiday accommodations, contributing to the overall cost of hospitality services. For hotel stays, a 10% fee is applied to the total room cost, capped at a maximum of 30 days. Additionally, a service charge of 10% is levied, along with a city tax that ranges between 6% and 10%. Specific emirates have their own additional fees. In Dubai, hotels charge an extra fee ranging from 7 to 20 AED (1.8–5.2 EUR) per night, depending on the hotel category, a regulation in place since 2016. In Abu Dhabi, an additional resort tax of 4% is applied to the total cost of the stay, alongside a flat fee of 15 AED (3.9 EUR) per night. Similarly, in Ras al-Khaimah, tourists are required to pay a nightly fee of 15 AED (3.9 EUR) per room. These charges ensure a standardized revenue framework for regional authorities while contributing to the development of local tourism infrastructure.
- Vehicle registration tax.
In the UAE, there is no tax on car ownership, making it an attractive destination for vehicle enthusiasts. However, certain fees are applicable to vehicle-related transactions. Registering a vehicle costs 420 AED (approximately 108 EUR), while transferring ownership involves a fee of 350 AED (around 90 EUR). Although the country does not impose a transportation tax, customs duties are applied to imported vehicles. The duty amount depends on several factors, including the vehicle’s class, value, engine size, and technical specifications. These charges are designed to regulate vehicle imports while maintaining the tax-friendly environment the UAE is known for.
The UAE is undeniably an appealing destination due to its tax advantages and favorable residency programs for foreigners. To explore these opportunities in detail, you can book a .
Tax refund in the UAE
Since November 18, 2018, the UAE has introduced a simplified process for claiming VAT refunds on eligible purchases made in Dubai and other emirates. Tourists can reclaim VAT paid on items such as appliances, electronics, clothing, and other goods from stores participating in the Tax Refund for Tourists Scheme. To qualify, the purchaser must request an invoice from the seller, verifying the registration of the purchase under the VAT Refund Scheme.
At departure points such as airports, bus stations, or seaports, tourists can use dedicated terminals to process their VAT refunds. This involves entering passport details, the invoice number, and the traveler’s credit card information. Refunds can be issued either in cash or as a transfer to a bank card.
Additionally, foreign companies that do not conduct business or hold a registration in the UAE are also eligible to claim tax refunds, further extending the scheme’s benefits.
Taxation of legal entities in the UAE
To legally operate a company in the UAE, the founder must obtain a Certificate of Tax Residency (also known as a Certificate of Commercial Activities). The process for acquiring this certificate involves several key steps:
- Establish and officially register your company in the UAE, ensuring you obtain all necessary statutory documents.
- Obtain a resident visa.
- Relocate to the UAE.
- Open a corporate bank account.
- Secure an office and staff.
- Pay the state duty of 1,750 AED (approximately 452 EUR).
- After six months of commercial activity, submit an application to the UAE Ministry of Finance for the Certificate of Tax Residency.
To apply for a Certificate of Tax Residency based on business activity, the following documents are required:
- The founder’s passport with a valid UAE visa.
- Registration documents for the company.
- Bank account statements for the company covering the last six months.
- Tax reports for the previous six months.
- A lease agreement or proof of ownership for the business premises.
Tax residency in the UAE provides significant advantages, including strict commercial confidentiality and the protection of information about company founders and assets. Additionally, there are no taxes on dividends distributed by UAE-registered companies, making the jurisdiction highly attractive for businesses.
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UAE taxes for businesses
- Corporate tax.
UAE companies are subject to a corporate tax rate of 9% on profits exceeding 375,000 AED (approximately 96,500 EUR) annually. However, businesses registered in Free Economic Zones (FEZ) are exempt from corporate tax for a period specified by the regulations of the respective zone.
- Value Added Tax (VAT).
VAT was introduced in the UAE on January 1, 2018, and is regulated under Federal Law-Decree No. 8. The fixed VAT rate is 5% and applies to the sale of goods across various categories and the provision of services. Companies must register as VAT payers and file their returns through the Federal Tax Authority’s official website. Filing requirements depend on annual revenue: companies with annual income below 150 million AED (38.6 million EUR) file quarterly returns; companies with income exceeding this threshold must file returns monthly.
- Excise tax.
Excise tax is imposed on the production, import, storage, and sale of goods deemed harmful to human health or the environment. This includes carbonated drinks with sugar or artificial sweeteners, concentrates for such beverages, alcohol, energy drinks, and tobacco products. Since December 1, 2019, electronic smoking devices and liquids have also been subject to excise tax. The primary goal of this tax is to reduce the consumption of harmful substances while contributing to the state budget. The Digital Excise Stamp (DTS) system ensures compliance with standards for the import and trade of cigarettes and tobacco products.
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Tax benefits for companies registered in the UAE
Foreign entrepreneurs who establish businesses in the UAE’s Free Economic Zones (FEZs) enjoy some of the most significant tax advantages. With more than 40 FEZs across the country, each specializing in specific industries such as trade, technology, healthcare, research, logistics, and design, businesses can benefit from tailored support and incentives.
Key advantages of doing business in the UAE include:
- An accelerated process for registering a company and starting operations.
- Foreign entrepreneurs can fully own their businesses and assets.
- Easy withdrawal of capital and profits without restrictions.
- No corporate tax for the duration specified by the regulations of the respective FEZ.
- Direct entry into regional and international markets.
- No duties on imported goods within the FEZs.
Countries with double taxation treaties with the UAE
The UAE has established agreements with 139 countries to eliminate double taxation. These treaties allow individuals registered as residents of Dubai or other emirates to pay taxes in the UAE, even if their income is earned in their country of origin. The agreements aim to promote trade and capital flow, encourage investments, and protect individuals and businesses from additional or hidden tax burdens.
The UAE’s double taxation treaties extend to nations across the European Union, Africa, Asia and major economies like Canada and the United Kingdom. These agreements underscore the UAE’s commitment to fostering global economic cooperation and providing a favorable environment for international businesses and investors.
