Taxes in Dubai and the entire UAE are a key topic for entrepreneurs seeking optimal tax solutions. The lack of income tax, favourable regulations and duty-free zones make Dubai a business-friendly place. Dubai, as part of the UAE, offers clear and transparent tax laws. Such policy fosters international business growth.
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Taxes in Dubai – No Income Tax in Dubai
A key advantage of Dubai’s tax system is the lack of personal income tax and corporate taxes for most businesses. Moreover, according to the authorities, there are no plans to introduce them. Employees do not have to worry about fiscal burdens. Companies can reinvest all the profit generated in further development of the business. It doesn’t matter how you earn the money.
All private income in Dubai is 100 % tax-free for individuals with a UAE resident visa and no official residence outside the UAE.
Taxes in Dubai – Is VAT Applied in Dubai?
In 2018, VAT was introduced in Dubai at a rate of 5%. However, it applies only to end consumers and is passed on by local companies. Dubai businesses must add VAT on their invoices only if their annual turnover exceeds 90 000 EUR. Only after reaching this threshold does the company have to register for VAT.
Taxation in Dubai is mainly focused on domestic transactions. Invoices issued for international customers (cross-border transactions) are not subject to VAT. There are no additional taxes on the export of services or goods for companies operating in the international market.
Taxes in Dubai – Free Zones in Dubai
Although the UAE taxes include a corporate tax introduced in August 2023 at a rate of 9%, most small and medium-sized enterprises (SMEs) can still remain completely exempt from taxes if they meet two conditions:
- 0% tax if the annual profit remains below 375 000 AED (approximately 95 000 €).
- 0% tax for companies and individuals with annual revenues not exceeding 3 million AED. They can benefit from the so-called “small business relief“. This relief will only be available until the end of 2026.
Despite the introduction of corporate tax, taxation in Dubai remains unique compared to other countries. After all, the UAE still does not have an income tax. Accounting is uncomplicated, and most small and medium-sized businesses can easily stay below the 375 000 AED threshold (salaries, dividends, etc.).
There are no regulations or ministerial decisions clarifying the details about the Freezones.
| What Are the Benefits of Free Zones? | – no income tax – exemptions from customs duties on imports and exports – full ownership of foreign investors – minimal formalities when setting up a company |
Taxes in Dubai – Benefits for Foreign Companies
Dubai attracts foreign investors thanks to favourable tax regulations and minimal bureaucratic burdens. A company in Dubai can operate legally while enjoying various tax benefits. It is worth noting that entrepreneurs gain:
- full ownership of companies in free zones;
- no fiscal burden on profits;
- access to developed infrastructure and international markets.
For more details on how to set up a company in Dubai, visit our dedicated website.
Taxes in Dubai – Summary
Dubai offers favourable tax conditions for individuals and businesses. No income tax, low VAT rate, numerous duty-free zones and transparent legal regulations make it one of the most attractive places to do business.
Want to learn more about how to set up a company in Dubai and benefit from preferential tax conditions? Contact our team of experts who will help you through the entire process step by step. Open your company in Dubai and enjoy the benefits of a friendly tax system!
FAQ about Taxes in Dubai
Is there income tax in Dubai?
No, there is no income tax for individuals or most businesses in Dubai. The exceptions are oil and banking companies.
What is the VAT rate in the UAE?
The VAT rate is 5% and applies to most goods and services. There are exceptions for education and healthcare.
What are Dubai Free Zones?
Duty-free zones are areas where companies are exempt from taxes and duties, which is beneficial to business development.
Do I have to pay VAT as an entrepreneur?
Yes, if your company’s annual turnover exceeds 375 000 AED.
What duty applies to imported goods?
The standard duty is 5%, but companies in free zones can be exempt from it.
Is Dubai an attractive destination for foreign companies?
Yes, favourable tax conditions, duty-free zones, and low charges make it an ideal business place.
What are the benefits of running a company in a free zone?
No taxes, duties and full control over the company.
Does VAT apply to all sectors?
No, sectors such as education, healthcare and certain financial services are exempt from VAT.
What taxes do oil companies pay?
Oil companies pay income tax ranging from 20% to 55%.
How to start a business in Dubai?
You can set up a company in a free zone or as an offshore company using preferential legal conditions.
