The tax system in the UAE attracts investors from all over the world with its loyalty. There are not many types of fees that are found in other states, and those that are are still lower. Let’s consider what real estate tax and other types of tax payments are in the most technologically advanced emirate – Dubai.
Taxes when buying a home
A lot of foreigners come to Dubai to buy a home. This is the main reason why tax fees are higher here than in other emirates. Luxury apartments and houses, office space of the largest corporations, international educational facilities – all this creates a high demand. Buying a property, you will have to pay several types of taxes.
During the purchase and sale transaction, you need to pay the Transfer fee or, in another way, the property transfer tax. There must also be a realtor who has a license – this is specified in the legislation of the UAE.
If we are talking about the primary market, the seller must pay for its services (the commission fee is 2% of the amount), if it is about the secondary market, the amount should be divided equally between the parties.
If the housing was bought using a mortgage, then you will additionally have to pay 1% of the loan amount.
A 4% fee must be paid to the Land Department. This rule has been in effect since 2013.
In many cases, the payment must be made in full by the buyer. But, sometimes, in the course of the transaction, you can count on preferential terms. For example, divide the amount between the seller and the buyer proportionally, which is more common in transactions on the secondary market. In general, it all depends on the terms of the contract.
You also need to pay an administrative fee – 540 dirhams.
But according to the norms of local legislation, if we are talking about inheritance or donation of an object, you also need to pay only 4%.
When buying a house on credit, you must pay a fee of 0.25% of the loan amount and 290 dirhams.
The amount of the contribution is fixed and depends on the price of the purchased housing: if you purchase an object for 500 thousand dirhams and below, the amount will be 2000 dirhams, if more expensive, then 4000 dirhams. It is paid once.
Fee for the certificate of ownership
If you have signed a deal, submit a request for a certificate of ownership to the court at the place. This document will confirm the legality of the ownership of the object. It is issued within 3 days. Payment of the fee is $ 70.
One of the most popular opportunities to receive passive income in Dubai is renting out housing. According to local legislation, neither the landlord nor the tenant must pay any taxes. All conditions are established between the two parties and are specified in the contract.
If the owner wants to use the services of a real estate agent, he will have to pay 5%. Specialists will take on all the responsibilities of finding a tenant and other legal nuances.
Housing maintenance fee
Property owners in Dubai pay a fee for various public services, for example: street lighting, maintaining the cleanliness of the common area, overhaul. The payment is 10% of the bill every month (per square meter): for an apartment – 128 dirhams, for a private house – 33 dirhams.
Utility bills are formed from meter readings. Tariffs are different – they depend on the area and the period of resource consumption. On average, $ 50 for water and electricity, provided that 1 person lives. The total bill is from $100 to $200. At the same time, you need to pay separately for the phone, Internet and TV – 800 dirhams per month.
Insurance of immovable objects in the UAE is voluntary. The smaller check that can be paid is 400 dirhams per year.
There is another source of expenses – the air conditioning system. It is included in utility bills for those who use air conditioners. In summer, the total amount is more than $ 100, in winter – $ 50.
From 1.01.2018, VAT of 5% is valid for tenants or buyers. Payment terms: when renting and selling commercial properties. Exception: transactions with residential real estate – payment does not apply to them.
Advantages of the UAE taxation system
- There is no tax on rental housing, an annual contribution to the apartment.
- For non-residents, there is a refund of 85% VAT for purchases in the Emirates.
- No donation/inheritance fees (only the fee for the transfer of ownership rights);
- There are no corporate and income taxes. The first one can be charged only from oil companies and foreign banks.
- Employees who work abroad do not have to pay social insurance contributions. The only exceptions are citizens of the Emirates and the Persian Gulf countries.
- In 40 free economic zones, corporations are completely exempt from import and export taxes.
- There is a double taxation avoidance agreement between the UAE and 140 countries of the world.
- Most tax services can be obtained online, for example, VAT refund, get a certificate of tax residency, calculate import and export tariffs.
Even if we take into account the real estate tax in Dubai and other fees described above, they will be lower than in many countries.And if we add to this the fact that there is a high level of security, stability and demand for the city as a resort and business center, then the attractiveness of the investment increases significantly.