Salary taxes and other personal income in Dubai, UAE - full information

The United Arab Emirates is the world’s only country with almost no taxation. This young Arab country has achieved incomparably high standards of living that are backed by the robust economy, beneficial tax regime and 0% tax on salary in Dubai and other Emirates of the UAE.

The Economic stability of the UAE is proved by the fact that the national economy of the country has recently undergone a significant decrease in oil prices. Experts say that this has become possible owing to the well-diversified national economy and the availability of the various means to top up the state budget.

As of today, there is no personal and corporate income taxation in the United Arab Emirates. It means that the UAE provides the unique possibility of receiving a 100% tax-free salary in Dubai and other Emirates. And this is by all the applicable rules and regulations.

It is important to take into account that there is no unified federal tax legislation in the UAE. That is why each Emirate is free to introduce any taxation. However, no Emirate is likely to change a tax-free regime and sacrifice a UAE tax-free salary in the nearest future.

The 1969 Dubai Income Tax Decree specifies that all the legal entities that are engaged in business activities on the territory of the Emirate are liable to taxation rate on a sliding scale from 0% to 55% depending on the size of their income. However, in practice, only petrochemical companies and representative offices of foreign banks are liable to taxation. All other legal entities are fully exempted from corporate income taxation.

In spite of the fact that the Dubai Income Tax Decree was adopted, it does not have real force. In fact, any major legal entity can negotiate a possibility of avoiding high taxation with the local authorities of the Emirate of Dubai. This applies to all the local and foreign companies that are looking to reduce and optimize taxation rate on the territory of the Emirate. Means companies, when paying salaries to their staff, do not have to make any contributions to the state in the form of taxes on the salaries paid.

Moreover, such favourable tax conditions for corporate tax as well as the taxation on the salaries paid applies to all the legal entities irrespective of their tax residence. Therefore, both resident non-resident companies and other legal entities may take the advantages of the tax-free regime.

Dubai tax-free salary rate for natural persons

Speaking about natural persons, it should be noted that the Dubai residents do not have to pay personal income tax on any form of income, including income derived from real estate transactions, salary, dividends, inheritance, etc.

In general, it is correct to say that all the types of personal and corporate personal income are completely tax-free on the territory of the Emirate of Dubai, the UAE. The effect of the tax-free regime at source also extends to foreign remittances in all the forms, including royalties, dividends, interests, fees for various technical services and all other types of capital gains of any nature.

The UAE Government and the local authorities of the Emirate of Dubai support the right of natural persons to receive tax-free salary and not to pay taxes on the gained income and discard all the recommendations to introduce income taxation, which is continuously made by the International Monetary Foundation (IMF) and other international organizations. Thus, there are no changes expected in the UAE legislation in regards to personal taxation rate and tax-free salaries in Dubai.

Thus, as of today, the personal income of whatever nature is taxed at 0% rate in the United Arab Emirates.

Conclusion on taxation of all types of income including salary

The Government of the Emirate of Dubai puts all the efforts to maintain the attractiveness of the Emirate and welcomes foreign natural persons and legal entities to carry out their activities in the favourable tax tax-free environment.

The Emirate of Dubai is the unique jurisdiction that provides for the possibility of receiving a 100% tax-free salary and other tax-free personal and corporate income of any nature.