Bathed in year-round sunshine and defined by a lifestyle that blends modern luxury with global connectivity, Dubai has become far more than a travel destination. From its world-class infrastructure and safety to a cosmopolitan population drawn from every corner of the globe, the emirate offers an environment where ambition thrives. This unique mix of quality of life, strategic location, and economic vision has made Dubai a natural magnet for entrepreneurs, investors, and multinational companies alike.
This appeal is not accidental. UAE’s status as a legal tax-free haven has positioned it as an emerging global business hub thanks to its business-friendly policies. Investors are increasingly taking advantage of the fiscal framework established by the Federal Tax Authority (FTA), under which you can still pay zero tax provided certain requirements are met.
With no personal income tax and one of the most favorable corporate tax regimes worldwide, taxes in Dubai remain a key attraction for international enterprises looking to minimize liabilities and expand globally. The country’s robust system also includes Free Zones such as the International Free Zone Authority (IFZA) Centre and Abu Dhabi Global Market, as well as a strategic VAT framework.
These factors, combined with comprehensive double tax treaties and attractive tax residency incentives, make the UAE, and especially Dubai, an unparalleled destination for optimizing taxes and accelerating business growth.
Taxes in Dubai and the UAE
Taxes in Dubai are designed to attract global businesses, offering low corporate tax rates, extensive Free Zones, the absence of personal and capital gains tax and comprehensive double tax treaties.
Personal Income Tax in Dubai and the UAE
A UAE residence visa allows one to become a tax resident of the country and legally optimize their taxes.
Individuals, both citizens and residents, do not pay any personal income tax whatsoever. They are also not subject to taxes on interest, dividends, wealth, luxury, inheritance, gifts, and capital gains.
The above makes taxes in Dubai very appealing for individuals seeking clarity and legal stability.
Corporate Income Tax in Dubai and the UAE
UAE has implemented Corporate Income Tax (CIT) in the country.
Natural persons and juridical persons do not pay CIT for taxable Income up to and including AED 375,000 (circa USD 100,000). Taxable Income exceeding AED 375,000 is subject to a 9%.
Entities incorporated in any of the Free Zones available in the region, carrying out qualifying activities are not subject to CIT.
UAE resident companies can apply for Small Business Relief if their revenue does not exceed AED 3,000,000 (circa USD 817,000) for the relevant tax period and all previous tax periods.
If granted, Small Business Relief will allow companies to be treated as having no taxable income in a relevant tax period and all previous tax periods ending on or before December 31, 2026.
Additionally, individuals who perform executive functions in the company can set a salary of up to USD 200,000, which will be considered a fully deductible expense.
CFC Rules in the UAE
The UAE does not currently implement rules for controlled foreign companies (CFCs).
This means that foreign income earned by UAE residents through their controlled foreign entities is not subject to additional UAE taxation.
Exit Tax in the UAE
The UAE does not impose an exit tax. Individuals and companies relocating their assets or operations out of the UAE are not subject to a tax on the transfer of these assets.
Withholding taxes
Currently, the withholding tax (WHT) rate is set at 0%, meaning that certain types of income sourced from the UAE and earned by non-residents are not subject to WHT, provided the income is not connected to a permanent establishment (PE) in the UAE.
Taxation for Holding Companies in the UAE
In a Free Zone:
Holding Companies in UAE Free Zones may qualify for a 0% tax rate if they meet the criteria for Qualifying Free Zone Persons (QFZPs).
Outside a Free Zone (Mainland):
Holding Companies in Mainland UAE are generally subject to a 9% CIT unless they meet the requirements for the participation exemption regime outlined in Article 23 of Federal Decree No. 47 of 2022.
UAE Tax Rates
Here is a brief table summarizing the key taxes in UAE:
| Tax Type | Description | Rates/Details |
|---|---|---|
|
Corporate Income Tax |
Since June 2023, a 9% tax has been imposed on businesses earning AED 375,000+ annually, with exceptions for oil and gas. |
9% on earnings over AED 375,000; 0% on lower earnings; oil and gas sector: 55%. |
|
Value Added Tax (VAT) |
A 5% tax on goods and services for companies earning AED 375,000+ annually, with voluntary registration for lower earnings. |
5% rate; exemptions include financial services, healthcare, education, and local transport. |
|
Withholding Tax |
Currently at 0%, attracting investors. |
0% withholding tax. |
|
Property Transfer Tax |
A fee on property transactions, varying by emirate. |
Dubai: 4% of property value; Abu Dhabi: 2%. |
|
Excise Tax |
Introduced to curb harmful consumption, applied to specific goods like tobacco and sugary drinks. |
100% on tobacco energy drinks and 50% on carbonated and sweetened drinks. |
|
Customs Duty |
A tax on imported goods, generally 5%, with higher rates for alcohol and tobacco. |
5% on most imports; 50-100% on alcohol and tobacco; exemptions for goods from certain countries. |
|
Municipal Rental Tax |
A tax on rented properties, added to the tenant’s bill, differing by emirate. |
Residential: Dubai 5%, Abu Dhabi 3%, Sharjah 2%; Commercial: 10% (varies 6-10% by emirate). |
Main Free Zones in the UAE
A UAE Free Zone is a designated area within the United Arab Emirates offering favorable economic conditions to attract foreign businesses.
Free Zones are designed to boost international investment by reducing bureaucracy and offering modern infrastructure.
Setting up in a Free Zone involves straightforward registration and licensing processes, which are more efficient than mainland business setups.
The cost of opening a company in the United Arab Emirates varies between EUR 6,000 and EUR 10,000. This price is influenced by the selected Free Zone, the number of visas needed, and the type of business you plan to register.
Free Zones in Dubai
IFZA Free Zone
The International Free Zone Authority (IFZA) provides a cost-effective setup with various business activities and flexible office solutions, further enhancing Dubai’s attractiveness. In our opinion, IFZA is not only the best but also the largest free zone in Dubai, and since we are official partners, we can help you incorporate your entity there seamlessly and benefit from low taxes in Dubai.
Other Dubai Free Zones
Free Zones in Dubai, such as the Dubai Multi Commodities Centre (DMCC) and Dubai Silicon Oasis, offer 100% foreign ownership, repatriation of profits, and no customs duties.
Abu Dhabi and Sharjah Free Zones
Abu Dhabi Free Zone
Abu Dhabi’s Free Zones, like Abu Dhabi Global Market (ADGM) and Khalifa Industrial Zone (KIZAD), offer businesses tax incentives and strategic advantages.
Sharjah Free Zone
Sharjah offers several Free Zones, including the Sharjah Airport International Free Zone (SAIF Zone), providing tax exemptions and logistical benefits.
Double Tax Treaties
The UAE has established a network of double tax treaties with over 100 countries.
These treaties aim to avoid double taxation and prevent fiscal evasion, offering benefits such as reduced withholding tax rates on dividends, interest, and royalties and providing clarity on tax matters for businesses operating internationally.
Obtaining a tax residency certificate in Dubai helps businesses and individuals benefit from the UAE’s extensive double tax treaties, reducing the tax burden on international income.
Tax Residency in Dubai and the UAE
To become a tax resident in Dubai and, consequently, in the United Arab Emirates (UAE), individuals and companies must meet specific eligibility criteria.
For companies
When a company is registered in the UAE, it is automatically considered a tax resident. However, applying for a Tax Residency Certificate (TCR) is only possible after one year of registration.
This certificate is needed to confirm the UAE tax residency in another country and avoid double taxation.
For individuals
To qualify as a UAE tax resident, individuals can obtain a TRC under two options: the 183-day rule, which also applies for Double Tax Treaties (DTA), and the 90-day rule, which requires additional ties to the UAE.
183-Day Rule:
Stay ≥183 days in the UAE within any 12-month period (days need not be consecutive).
- Documents: passport + residence visa/Emirates ID + entry/exit report.
- Grants a TRC valid for both domestic purposes and DTAs.
90-Day Rule (Domestic TRC only, with ties):
Stay ≥90 days but <183 days, and
Hold a UAE residence permit (or be a UAE/GCC national), and
Have a permanent home in the UAE (rented/owned, with Ejari or utility bills) or be employed/operate a business in the UAE.
Documents: passport + residence visa/Emirates ID + entry/exit report + proof of home or employment.
Grants a Domestic TRC (not valid under DTA).
Many UAE DTAs include clauses limiting treaty benefits to UAE nationals, so eligibility must always be assessed on a case-by-case basis.
How Can We Help You?
Dubai and the UAE stand out as premier destinations for global enterprises with its strategic free zones, attractive corporate tax rates, and comprehensive VAT system. Furthermore, it is one of our favorite destinations for individuals due to the absence of income tax, like, with some nuances, Panamá, Costa Rica, the Dominican Republic and Paraguay.
Along with the opportunities offered by the UAE, the FTA also imposes heavy fines and penalties for non-compliance with the regulations of relevant authorities.
With TaxMove, setting up your company in Dubai becomes seamless. As official IFZA partners with deep expertise in international structuring, we handle every step so you can complete the process in the shortest possible time, often within a single week. Our team understands the local and tax nuances inside out, making us your best partner to move forward with confidence and establish your business in Dubai.
Book your free consultation with TaxMove today and make Dubai your new home base.
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What are the taxes in Dubai?
The UAE does not levy personal income tax and applies a 9% corporate income tax only on taxable profits exceeding AED 375,000. Profits below this threshold are taxed at 0%, and many businesses can still pay no corporate tax by qualifying for Small Business Relief
How does the UAE's corporate tax system work?
As of June 2023, the UAE applies a 9% corporate income tax only on profits above AED 375,000, with profits below this threshold taxed at 0%.
Are there any withholding taxes in the UAE?
The UAE does not impose any withholding taxes, making it an attractive destination for international investors.
How can I become tax resident in the UAE?
You can become a UAE tax resident by spending at least 183 days in the country. In some cases, individuals may qualify under the 90-day rule if they have strong ties to the UAE, such as a permanent home, employment, or a business presence in the country.
What is the "Small Business Relief" in the UAE?
The Small Business Relief allows UAE resident persons with revenue not exceeding AED 3,000,000 to be treated as having no taxable income for the relevant tax period and previous tax periods ending on or before December 31, 2026.
What are the benefits of setting up a business in a UAE Free Zone?
Businesses in UAE Free Zones enjoy 100% foreign ownership, repatriation of profits, no customs duties, and various other tax incentives and streamlined administrative processes.
What is the cost of opening a company in Dubai and the UAE?
The cost of opening a company in the United Arab Emirates varies between EUR 6,000 and EUR 10,000. This price is influenced by the selected Free Zone, the number of visas needed, and the type of business you plan to register.
Is there an exit tax for individuals or businesses leaving the UAE?
The UAE does not impose an exit tax on individuals or businesses transferring assets or operations out of the country.
Does the UAE have double tax treaties with other countries?
Yes, the UAE has double tax treaties with over 100 countries, providing benefits such as reduced withholding tax rates on dividends, interest, and royalties, and preventing double taxation on international income.
