Taxation in the UAE
- Which authority is authorized to withhold taxes in the UAE?
- Taxes for individuals in the UAE
- Income tax in the UAE
- VAT
- Tax on dividends in the UAE
- Social tax
- Is there an annual fee to be paid in the UAE?
- Other taxes
- What are the advantages of tax residency in the UAE?
Taxation in the UAE
The UAE (United Arab Emirates) is an attractive place to create a young company and optimize the tax burden, since the country has fairly low taxes and constantly attracts foreign investment into the country.
Which authority is authorized to withhold taxes in the UAE?
In the United Arab Emirates (UAE), the Ministry of Finance is the authorized body for tax collection and withholding . It determines tax policy and manages the country's financial resources, including the collection of taxes and various duties in the UAE.
Taxes for individuals in the UAE
Individuals operating in the UAE do not pay any taxes. Thus, there is no personal income tax in the UAE today.
Income tax in the UAE
From July 1, 2023, income tax was introduced in the UAE. Thus, the following tax rates came into effect, namely:
- tax 0% — for companies with an annual net profit of up to AED 375;
- 9% tax for companies with profits exceeding AED 375;
- 20% tax - paid by branches of foreign banks;
- tax 55% - paid by foreign companies engaged in oil and gas production.
There is no UAE corporate tax on dividends received and capital gains.
VAT
The standard VAT rate in the UAE is 5%. It is required to be paid by companies with an annual profit of more than 375 dirhams. To pay tax, a company must register on the FTA website as a VAT payer.
If the company has a profit of more than 187 dirhams, but does not exceed the threshold of 500 dirhams, then registration is voluntary.
VAT is paid quarterly within 28 days after the end of the tax period.
Tax on dividends in the UAE
There is no tax on dividends, interest or royalties in the UAE.
Social tax
Social contributions are paid only in respect of citizens of the UAE and other countries that are members of the Gulf Cooperation Council (GCC).
The social tax rate is 17,5%:
- 12,5% is paid by the employer;
- 5% is withheld from the employee's salary.
A higher social tax rate is established only in Abu Dhabi at 20% (the employer pays contributions of 15%, the remaining 5% is withheld from the employee’s salary).
Is there an annual fee to be paid in the UAE?
In the UAE, registered legal entities pay AED 2000 annually to the tax authority. The fee is payable at the end of each year of registration of the company.
Other taxes
In the UAE, there are taxes and fees for the hotel and tourism business.
The tax rate for commercial real estate is 10%.
A municipal tax is also charged on rented premises, equal to the annual rental cost. Tax may be collected from both the tenant and the landlord.
What are the advantages of tax residency in the UAE?
Obtaining tax resident status in the UAE not only helps to avoid double taxation, but also allows an individual to come to the country once every 180 days, open bank accounts, rent housing for personal purposes and business, use a simplified tax system, etc.
Comprehensive consulting: Taxes, Audit, Accounting, SOF
Taxation in the UAE
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