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Taxes in Abu Dhabi, UAE – tax-free place for your business with low tax rates

Abu Dhabi is the capital and one of the most popular cities of the United Arab Emirates. It is the major political and industrial centre of the country. Besides, it is the significant cultural, commercial, and business hub of the Emirates.

The Abu Dhabi tax-free environment is the key for carrying on profitable business and attaining personal financial independence.

The Emirate is the highly demanded place among those businesspersons and investors who are looking for the possibility to optimize taxation and carry out activities under the Abu Dhabi tax-free regime.

As of today, there are no taxes charged other than the flat rate of 50% for oil and gas companies, 20% tax on the profits of the branches and representative offices of the foreign banks and flat rate service tax on hotel and entertainment services.

The corporate taxation of such legal entities is carried out by the Abu Dhabi Income Tax Decree of 1965. This document specifies the system of applying corporate income tax for all the legal entities that are engaged in the trade or business activities on the territory of the Emirate of Abu Dhabi, UAE. In fact, the tax is levied only on the activities of oil and gas companies and branches or representative offices of foreign banks. The taxation is as follows:

Income Tax rate
> 1000000                               0%
1000000 - > 2000000          10%
2000000 - > 3000000          20%
3000000 - > 4000000          30%
4000000 - > 5000000          40%
5000000 >                             55%

There is no corporate taxation in Abu Dhabi with the exception of the petrochemical companies and foreign banks, which are liable to corporate taxation at the certain rate. Moreover, there are no personal income taxes as well as withholding taxes, value added or sales taxes. Thus, Abu Dhabi is a tax-free jurisdiction.

The advantages of carrying on tax-free business in Abu Dhabi

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The Emirate of Abu Dhabi is the attractive tax-free business destination that offers numerous competitive opportunities and advantages for carrying on profitable business.

The Abu Dhabi legislation provides the possibility of setting up the following types of legal entities on the territory of the Emirate:

  • Limited liability companies – carrying on the most types of businesses owned by foreign nationals;
  • Partnerships – are not suitable for foreign entrepreneurs and investors as the general partners must be UAE nationals and limited partner cannot run the business;
  • Professional firms – branch offices of the foreign companies.

Each type of legal entities is appropriate for certain types of activities. Besides, each legal entity should obtain the proper business licenses for carrying out certain business activities. Foreign entrepreneurs and investors may choose from six types of business licenses for the Abu Dhabi, the UAE, companies:

  • Commercial license;
  • Agricultural license;
  • Professional license;
  • Occupational license;
  • Industrial license;
  • Tourism license.

The Government of the Emirate of Abu Dhabi has created the so-called Free Trade Zones – specialised areas that provide beneficial opportunities for carrying on business. Among them there are:

  • Abu Dhabi Airport Free Zone (ADAFZ) – logistics, transportation and other activities;
  • Abu Dhabi Global Markets (ADGM) – international financial centre for local, regional and international businesses;
  • ADPC - Khalifa Port and Industrial Zone (KPIZ) – development and trade activities;
  • Twofour54 – media content making businesses;
  • The industrial City of Abu Dhabi – industrial sector and the related services;
  • Higher Corporation for Specialized Economic Zones (ZonesCorp) – investors developments and the related services;
  • Masdar City Free Zone – global clean-technology cluster, development of the renewable energy systems and cleantech industries.

When establishing a company in one of the Abu Dhabi free trade zones foreign entrepreneurs and investors get the opportunity to take the advantages of the excellent business environment offered by the Emirate. The local authorities support conception and further development of such FTZs to attract foreign investments and maintain Abu Dhabi tax-free reputation.

Among the numerous advantages of carrying on business on the territory of the Abu Dhabi Free Trade Zone, the UAE, there are:

  • Possibility of 100% foreign ownership of the legal entity;
  • No need to involve a local partner;
  • Possibility of full repatriation of capital and profits;
  • Full tax exemption
  • Assistance with labour recruitment;
  • Governmental support on other business issues, etc.

The Emirate of Abu Dhabi is the popular tax-free jurisdiction for setting up companies and carrying profitable business.

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