Types Of Taxes In Dubai

Taxes in Dubai 

1. Corporate Tax

A new corporate tax system was implemented by the UAE government in June 2023. This is applicable to enterprises with net income > AED 375,000.

There is a flat 9% corporate tax rate. However, companies that earn < AED 375,000 annually are exempt from paying taxes.

Conversely, companies in the oil and gas sector pay a 55% tax because they are not subject to the corporate tax rate. 

2. VAT (Value Added Tax)

On January 1, 2018, the UAE implemented Value-Added Tax (VAT). The normal VAT rate for the majority of goods and services is 5%. 

On the other hand, some items and services are VAT-free or have a 0% rate (if specific requirements are met).

The necessary VAT registration level for enterprises with UAE residents is AED 375,000. On the other hand, the optional registration threshold is AED 187,500. 

There is no registration threshold for non-resident enterprises providing services on which UAE VAT must be imposed.

3. Income Tax

In Dubai, there is no income tax or other similar private charges, and officials claim that none are expected. It makes no difference how you make a living. You can trade cryptocurrencies, generate money from rentals, or work with stock markets. You will be subject to 0% tax.

As long as you have a UAE residency visa and don’t possess an authorized address outside of the country, all personal revenue in the UAE is exempt from taxes. 

4. Municipal/ Property Tax

In the majority of Emirates, a municipality tax is levied on properties, primarily based on the yearly rental price. Renters are responsible for paying the tax. In some situations, both property landlords and tenants must pay different fees. 

For instance, in the Emirate of Dubai, the yearly cost of renting commercial buildings is subject to a municipality tax of 2.5%, which the property owners pay. On the other hand, the annual rental price of private residences is subject to a tax of 5%, which the residents contribute.

When real estate or land is transferred, there could be a registration cost. In Dubai, the registration fee could also be charged for the direct or indirect transfer of stock in a real estate holding company.

5. Excise Tax

The United Arab Emirates implemented an excise tax on carbonated drinks, soft drinks, tobacco, and tobacco-related products on October 1, 2017.

The UAE expanded the scope of its excise duty on December 1, 2019, to cover flavored drinks, smoking equipment, and fluids consumed in electronic smoking devices and tools. 

The following are the applicable tax rates:

• There should be a 100% tax on tobacco and tobacco products, energy drinks, fluids utilized in electronic smoking devices and tools, and tobacco and tobacco goods.
• 50% free of tax on all flavored and carbonated beverages.

6. Inheritance Tax

A federal system does not govern inheritance taxes in the UAE. Nonetheless, the use of the inheritance in the absence of a will is dependent upon the deceased’s Muslim faith.

The UAE can use the inheritance rules of the foreign national’s home country in place of those of Muslims. Islamic Sharia law will govern how Muslims split their inheritance.

7. Payroll Tax 

Workers who are nationals of the Gulf Corporation Council (GCC), which includes the UAE, are obligated to pay 17.5% into social security. 

Nationals of the UAE pay 5% (deducted automatically from their paychecks), with their employers covering the remaining 12.5%.