The UAE is quickly becoming one of the top areas for foreign investment. Thanks to the introduction of the UAE Golden Visa, most foreign nationals want in on the action.
But before you jet off it’s important to understand how taxes in the UAE work for foreign investors and residents.
In this guide you will learn about:
Overview of UAE Taxes
Category | Details |
Tax Year | 1 January – 31 December |
Currency | United Arab Emirates Dirham (AED) |
Personal Income Tax | 0% (No personal income tax) |
Corporate Tax | 9% (for profits above AED 375,000) |
VAT | 5% |
Excise Tax | 50%-100% on certain goods |
Real Estate Transfer Tax | 2%-4% (varies by emirate) |
Social Security Contributions | 17.5% (for UAE nationals only, employers contribute 12.5%) |
Tax Authority | Federal Tax Authority (FTA) |
Tax Return Deadline | Corporate tax: Typically, 9 months after financial year-end |
Tax Form for US Residents | Form 1040 (for US tax reporting, as UAE has no personal income tax) |
The Tax System in the UAE
The UAE operates under a territorial taxation system, meaning that individuals and businesses are taxed only on income generated within the UAE, while foreign income (worldwide income) is not subject to taxation.
Who pays tax in the UAE?
The UAE has a residency-based tax system. This means that citizens and residents are not taxed in the UAE based on immigration status.
An individual is considered a tax resident if they meet one of the following conditions:
- They spend 183 days or more in the UAE within a 12-month period.
- They have a primary permanent place of residence in the UAE and spend at least 90 days in the country during the same period.
How does tax work for expats in the UAE?
Expats in the UAE are not considered tax residents unless they meet one of the above criteria. Additionally, there is no income tax in the UAE for expats or residents.
Expats in the UAE can benefit from the Double Taxation Agreements (DTAs) that the UAE has with various nations. Bilateral Investment Treaties (BIT) also help, with a total of 243 DTAs and BITs.
Both agreements allow for expats to be totally exempt from UAE tax or to have a much-reduced tax rate on profits and investments.
Additionally, to make things more transparent, the UAE has also started using the Common Reporting Standard (CRS). This is a global standard that allows for the exchange of tax information between participating jurisdictions, ensuring everything is fair.
Do I need a tax ID number in the UAE?
No, you don’t need a tax ID number in the UAE as there is no personal taxable income. However, if you are conducting business in the UAE you will need to register the business to ensure you pay for VAT and corporate taxes.
For example, if you plan to obtain the UAE Golden Visa there is an option to invest in a UAE business. Here, you will need to ensure that the company has a Tax Registration Number (TRN) to submit tax returns.
Read our UAE Golden Visa Guide
Types of Tax in the UAE
Income tax
There is no personal income tax in the UAE. Individuals do not pay taxes on salary in the UAE. This is one of the main benefits of investing in the UAE and why UAE citizenship is quickly becoming one of the most popular options for foreign investors.
Additionally, the UAE is a top option for those looking to retire overseas. Since the UAE does not impose personal income tax, pension income and other earnings are not taxed. This allows retirees to retain more of their income and savings, enhancing their financial security during retirement.
Retirees also benefit from a robust healthcare system in the UAE, ensuring access to high-quality medical services. Plus, with the absence of inheritance tax in the UAE, retirees can pass on their wealth without additional tax burdens, making estate planning simpler.
Municipal taxes
Municipal taxes in the UAE vary by emirate but are usually based on property value. For example, in the ever-popular Dubai, municipal taxes are set at 5% of the property’s value. Taxes applicable in UAE are for both commercial and residential properties in Dubai.
Property taxes
There are currently no property taxes in the UAE. However, if you want to make a UAE real estate investment, there is a 4% transfer fee that is usually split between the owner and the seller.
Corporate tax
A 9% corporate income tax was introduced in the UAE effective June 1, 2023, forming part of indirect taxes. The UAE corporate tax rate is applicable to businesses with profits exceeding AED 375,000 from annual taxable supplies. This rate is relatively low compared to many other countries.
It’s important to understand the UAE taxes for businesses as investigations are becoming much more common for businesses operating in the UAE. Seeking tax advice for the first corporate tax return is highly recommended.
Value-added tax (VAT)
Value-added tax is basically the only tax to be aware of in the UAE as an individual. The UAE VAT rate stands at 5%, which is relatively low compared to many other countries, particularly in Western Europe.
However, there are certain products and services that are exempt from VAT in the UAE, including:
 | Exported goods and services: Shipments and services delivered outside the GCC region. |
 | International transportation: Cross-border movement of goods and passengers. |
 | Investment-grade precious metals: Trading in high-purity precious metals, such as gold and silver. |
 | Newly built residential properties: Sales of recently constructed homes. |
 | Education and healthcare services: Specific categories of educational and medical services. |
Whether you are a resident or a tourist you are liable for VAT when making purchases in the UAE as it forms part of government revenue. Luckily, for tourists, you may request VAT refunds when you leave the UAE if you still have the goods that are from a recognized retailer.
Excise tax
While there is VAT in the UAE, there is also excise tax. This is a tax on goods that the UAE Federal Government deems harmful to the environment or human health. Here are some examples:
Product | Tax rate |
Energy drinks | 100% |
Tobacco products | 100% |
Electronic smoking devices | 100% |
E-cigarette liquids | 100% |
Carbonated drinks | 50% |
Products with added sugar and sweeteners | 50% |
Inheritance tax
The UAE does not impose an inheritance tax. This means that estates are not taxed upon death, making it favorable for estate planning.
Cryptocurrency tax
The UAE does not have specific regulations imposing taxes on cryptocurrency transactions. As of November 2024, income from cryptocurrency trading is generally not taxed. However, crypto earned through a business may be subject to corporate taxes in UAE if they exceed the profit threshold.
This is important to note as the UAE ranks third most crypto-friendly nation in the world.
Payroll tax
Payroll tax in the UAE is mandatory for employees who are nationals of the Gulf Corporation Council (GCC). There is a 17.5% payroll tax for the social security regime. For UAE nationals there is a 5% tax, while employers pay an additional 1.5% towards the regime.
Residents from other GCC countries may have different social security contribution requirements based on the rules of their home country. However, non-GCC nationals are exempt from social security in the United Arab Emirates.
It is always best to understand what you are liable for. For example, those with a UAE passport may be liable for different taxes compared with expats. It all depends on your employment and citizenship status.
UAE Taxes for US Citizens
While the UAE does not require US citizens to pay personal income tax, it is essential for US nationals to comply with US tax laws, including:
- Foreign Bank Account Report (FBAR): US citizens are required to file an FBAR if their foreign banks balance exceeds more than $10,000 at any point throughout the year.
- Reporting of worldwide income: All citizens of the US are required to report their worldwide income on their US tax returns with Form 1040. There are some allowances for foreign-earned income, including foreign tax credit. However, the income still needs to be reported, regardless of the amount.
- Foreign Account Tax Compliance Act (FATCA): US nationals are required to report foreign financial assets.
Is there a tax treaty between the US and UAE?
No, there is currently no tax treaty between the US and UAE. So, while the zero personal income tax advantage of the UAE remains in place for those with a UAE visa for US citizens, it is up to US citizens to ensure they remain compliant with US tax regulations.
Benefits of the UAE Tax System
Benefits of the UAE tax system include:
- No Personal Income Tax: The UAE does not levy personal income taxes on individuals, allowing tax residents to retain more of their earnings.
- No capital gains tax: There is no capital gains tax on investments, making it attractive for investors and entrepreneurs.
- Corporate tax advantages: While a corporate tax of 9% was introduced for companies earning above AED 375,000, this rate is still lower than in many developed countries. Free zone businesses may benefit from a zero-tax rate on qualifying income.
- Tax Residency Certificate (TRC): Tax residents can obtain a TRC from the UAE Federal Tax Authority, which helps in claiming benefits under double taxation avoidance agreements with other countries, preventing double taxation on income.
- Legal recognition of tax residence: A TRC serves as legal proof of tax residency, which can be essential for various financial and legal transactions.
- Simplified regulatory environment: The UAE’s business-friendly regulations make it easier for tax residents to operate and manage businesses without excessive bureaucratic hurdles.
- No reporting obligations for residents: Unlike many countries, the UAE does not require tax residents to report their bank account balances or income earned outside the UAE.
How Can Global Citizen Solutions Help You?
Global Citizen Solutions is a boutique migration consultancy firm with years of experience delivering bespoke residence and citizenship by investment solutions for international families. With offices worldwide and an experienced, hands-on team, we have helped hundreds of clients worldwide acquire citizenship, residence visas, or homes while diversifying their portfolios with robust investments.
We guide you from start to finish, taking you beyond your citizenship or residency by investment application.
Frequently Asked Questions About Taxes in UAE
How much tax do you pay in UAE?
The UAE does not impose income tax on individuals. However, a 5% Value Added Tax (VAT) is applied to the purchase of goods and services, which is collected at each stage of the supply chain and ultimately paid by the end consumer. There is also a 9% corporate tax for earnings over AED 375,000.
Are taxes high in UAE?
No, compared with many other countries, UAE taxes are relatively low. The UAE tax system is designed to be resident and business-friendly, inviting foreign nationals to invest and live in the UAE.
Is UAE fully tax-free?
No, the UAE is not completely tax-free. However, it is one of the most tax friendly places in the world. There is no personal income tax, VAT is low, and UAE corporate tax only applies when companies meet specific taxable profits thresholds.
Do citizens pay tax in UAE?
UAE citizens do not pay income tax on any earning within the Emirates, including wages, salaries, and freelance income.
Do you pay taxes in UAE as an expat?
There are no specific expat taxes in the UAE and there is no net income tax. There are also Double Taxation Treaties between the UAE and a variety of other countries to ensure expats are not taxed twice on the same thing.
Does the US have a tax treaty with the UAE?
No, the US does not have a tax treaty with the UAE as of November 2024. However, there are other double taxation treaties between the UAE and other countries.
Is there capital gains tax in the UAE?
No, there is no capital gains tax in the UAE.
What is a qualifying free zone person?
A Qualifying Free Zone Person is an individual or business that meets specific criteria set by the UAE’s tax authorities to benefit from favorable tax treatment within a Free Zone. Free zones in the UAE offer various incentives, such as tax exemptions, to attract foreign investment and business activity. You will generally hear about this when applying for a UAE Golden Visa when you can invest in a UAE business within a free zone.
Is there a Dubai tax rate on salary?
No, there is currently no UAE tax rates on salary in Dubai or the UAE as a whole.
Do foreigners pay taxes in Dubai?
No, foreigners (expats) in Dubai do not pay personal income tax on their salaries or other personal earnings. The UAE, including Dubai, has a 0% personal income tax policy. However, foreigners in Dubai may be subject to a 9% federal corporate tax, 5% VAT, and 2%-4% real estate tax.
Is there inheritance tax in the UAE?
No, there is no inheritance tax UAE. This means that estates are not taxed upon death, making it favorable for estate planning.
Do Americans pay tax in Dubai?
Americans living in Dubai are generally not subject to UAE personal income tax, as the UAE does not levy income tax on individuals, including expats. However, US citizens must still consider their tax obligations under US tax law, which operates on a worldwide income basis.
Is there income tax in the UAE?
The UAE does not impose income tax on individuals. However, it applies a 5% value-added tax (VAT) on goods and services, which is collected at each stage of the supply chain and ultimately paid by the end consumer.
Is Dubai tax-free for foreigners?
No, while there is no personal income tax for foreigners in Dubai, there are other taxes, including:
- 9% corporate tax on profits over AED 375,000.
- 5% VAT on goods and services.
- Excise tax on tobacco and sugary drinks.
- 2%-4% real estate transfer tax and tourism taxes on hotel stays.
Does the UAE have property taxes?
The UAE does not have a national property tax. However, there is a real estate transfer tax between 2%-4% based on the Emirate the property is located in.
Are freelancers taxed in the UAE?
Freelancers in the UAE are generally not subject to personal income tax. However, if a freelancer operates as a business and exceeds the threshold of AED 375,000 in annual profits, they will be subject to 9% corporate tax.
