Tax Rate in Dubai and the rest of the UAE

Nowadays, many entrepreneurs and investors choose the UAE among other countries of the world to launch business or establish a company for international business. One of the key reasons inducing them to select the UAE is the convenient taxation system of the state.

The UAE is largely tax-free as there are more than 40 free trade zones within the country exempt from income from business activities – no matter is this is passive or active income. One of the main advantages of free trade zones in the UAE (apart from a very lenient taxation system) is a permission to have the whole company in foreign ownership.

If you’re operating a gas or an oil production company or a subsidiary of a foreign bank, you’ll have to pay taxes equal to 55% of the company’s profits according to the United Arab Emirates tax rate. However, in this case the tax rate in UAE depends on the company and the emirate. As for branches of foreign banks, they are subject to 20% taxes according to the tax rate UAE.

What is the tax rate in Dubai?

As far as Dubai tax rate is concerned, the rules of the free trade zones valid throughout the UAE apply here as well. As long as your company does not deal with oil or gas production or it not is a branch of a foreign bank, you will be exempt of taxes. There are some other minor taxes imposed on business in Dubai like license fee and company establishment card. For physical persons - tourist dirham, a departure tax charged at the airports or a tax paid along with the utility bills as well as municipal taxes applied to restaurants.

Please, note that in order to be able to enjoy the benefits of the beneficial tax rate of Dubai you have to be a tax resident of the emirate. In order to get tax residence you have to register your company in the one of the free zones of Dubai or other emirate and obtain your visa over such company.

Getting tax residency under the UAE jurisdiction is beneficial since it allows you to avoid personal income and corporate tax (provided your company is registered and resident in the UAE), withholding tax on dividends or interest and royalty income tax.

When talking about tax rates in Dubai it is important to note that bedsides to the beneficial tax system the country has minimal requirements on tax declarations. Means for business – you need to file yearly audit report, but there would be no tax except of VAT. And for physical persons – there is no necessity to file any income tax declaration.