There is no income tax on individuals in the UAE.
On 1 June 2023, the UAE introduced a federal income tax that applies to:
Corporate tax rates:
Such a taxation system provides small business relief. Until 31.12.2026, companies whose income did not exceed AED 3 000 000 (~ USD 816 800) in the current tax period and in previous tax periods are exempt from income tax. This benefit is not provided to members of a multinational group of companies or qualifying free zone persons.
Companies incorporated in a free economic zone are subject to taxation, but there are situations where a 0% rate applies. For this purpose, the company must be recognized as a qualifying free zone person:
There are no universal criteria for all kinds of activity. The tax authority will assess this criterion in each case individually.
The following criteria are taken into account, among others:
Qualifying income includes:
Excluded activities include banking, insurance, finance, some transactions with individuals, etc.
Qualifying activities include production and processing of goods and materials, holding shares and other securities for investment purposes, financing and leasing aircraft, and some other activities.
Related parties must apply the arm’s length principle when making transactions. It means that the price of a transaction between the parties must be the same as if the transaction was made between two unrelated parties.
The minimum requirements are met if non-qualifying income of the free zone resident does not exceed the lowest of the following in the tax period:
On 1 January 2025, the law introducing a Domestic Minimum Top-up Tax (hereinafter referred to as DMTT) came into force in the UAE.
Large multinational companies must pay the minimum 15% income tax rate in each country where they conduct business.
Multinational company is a group that includes two or more companies whose tax residency is in different jurisdictions or includes a company that is a tax resident in one jurisdiction and is taxed for its activity through a permanent establishment in another jurisdiction.
The rules apply to companies with consolidated global revenue of EUR 750 000 000 or more received during 2 of 4 financial years.
Social contributions are payable only to nationals of the UAE and other member states of the Gulf Cooperation Council (GCC).
The contribution rate for UAE nationals is normally 17,5%:
Higher rates are set in Abu Dhabi: 20% (the employer's contribution is 15%).
The standard VAT rate in the United Arab Emirates is 5%.
Sales of some goods and services are subject to a 0% rate, for example:
There are also transactions that are not subject to VAT. In particular, they include financial services, residential buildings, except for residential buildings that are specifically subject to a zero rate.
VAT registration is required if:
There is also voluntary registration, which is an option for persons whose taxable turnover does not exceed the compulsory registration threshold and who would like to register to pay VAT (for example, for VAT deduction). In this case, taxable transactions must exceed AED 187 500 (~ USD 51 000).
There is no tax at source in the UAE.
Municipal tax is collected on rented premises. Generally, the tax base is the annual rental value.
The tax is usually levied on tenants, in some cases both tenant and landlord.
The rate for commercial property is usually 10%.
Registration fees may be charged, particularly for land and real estate transactions.
There are also fees in respect of hotel and tourist businesses.
The UAE has entered into 106 Double Tax Treaties (DTC) and 8 Tax Information Exchange Agreements (TIEA) with the following jurisdictions:
106 DTCs: Albania, Algeria, Andorra, Angola, Argentina, Armenia, Austria, Azerbaijan, Bangladesh, Barbados, Belarus, Belgium, Belize, Bermuda, Bosnia and Herzegovina, Botswana, Brazil, Brunei, Bulgaria, Cameroon, Canada, China, Comoro Islands, Costa Rica, Croatia, Cyprus, Czech Republic, Egypt, Estonia, Ethiopia, Fiji, Finland, France, Georgia, Greece, Guinea, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Jersey, Jordan, Kazakhstan, Kenya, Korea (Republic of), Kosovo, Kyrgyzstan, Latvia, Lebanon, Liechtenstein, Lithuania, Luxembourg, Malaysia, Maldives, Malta, Mauritania, Mauritius, Mexico, Moldova, Montenegro, Morocco, Mozambique, Netherlands, New Zealand, Niger, North Macedonia, Pakistan, Panama, Paraguay, Philippines, Poland, Portugal, Romania, Russia, San Marino, Saudi Arabia, Senegal, Serbia, Seychelles, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, St. Vincent & the Grenadines, Sudan, Switzerland, Syria, Tajikistan, Thailand, Tunisia, Turkey, Turkmenistan, Ukraine, United Kingdom, Uruguay, Uzbekistan, Venezuela, Vietnam, Yemen, Zimbabwe.
8 TIEAs: Argentina, Colombia, Denmark, Faroe Islands, Finland, Iceland, Norway, Sweden.
In addition, the UAE has signed and ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The Multilateral Convention entered into force for the UAE on September 1, 2019.
On February 22, 2017, the UAE signed the Multilateral Competent Authorities Agreement on the Automatic Exchange of Financial Account Information under the Common Reporting Standard (CRS MCAA), under which the UAE receives information from its financial institutions and automatically exchanges this information with other jurisdictions on an annual basis. The automatic exchange began in September 2018.
There are no currency controls in the UAE.
