The UAE has been a sought–after place to live, work and do business for several decades in a row. One of the main reasons is the high salary, flexible taxation. Dubai’s tax system differs from most standard schemes abroad. For example, there are not many mandatory business taxes here, nor are they levied on individuals, as is done in other states. Let’s consider what taxes in Dubai still need to be paid.
UAE taxation
The system is distinguished primarily by the absence of income tax. At the same time, there is no single tax code in the state, and individual fees are set by the government of individual regions. This is the reason for the difference in interest rates. Among other things, the fine capitalization rule/general rule on combating tax evasion is not relevant for the Emirates.
National fees are regulated by a special FTA office.
Taxes in Dubai for individuals
Income tax
It is not levied on individuals, as well as inheritance tax, luxury, capital gains, gifts. In addition, foreign citizens with residence in the Emirates do not have to pay a pension contribution.
For the purchase of real estate
By itself, the purchase of a real estate object does not fall under the % payment, but other fees must be paid. For example, if you decide to transfer ownership rights, the amount of the fee will depend on the chosen emirate. In Dubai – 4% of the price. The payment is divided equally between both parties, if it is a mutual decision and there are no other conditions. Also, the buyer must pay the registration fee (at a time). The final receipt will be calculated taking into account the real estate price:
- 2000 AED when the cost of the object is less than 500,000 AED;
- 4000 AED at a cost of more than 500,000 AED.
The last fee is considered to be the payment for the issuance of a certificate of ownership. You need to pay directly after the end of the transaction. The fixed amount is 250 AED.
For real estate rental
It is usually included in the payment of the tenant’s utility bills and varies from the emirate:
- Dubai – 5% of the rental fee for the year.
- Abu Dhabi – 3%. The locals don’t pay.
- Sharjah – 2%. Valid for everyone.
At the same time, the rent of a commercial real estate object is 10%.
For the maintenance of real estate
Ownership of immovable property is not taxed. Only maintenance is paid: cleaning, landscaping. The price is per square meter – more often from $ 15 to $ 60. This amount is debited once a year in advance. When renting out housing, it comes to the owner’s account.
For tourists
The percentage of city tax in Dubai and other emirates will depend on the region you choose. For example, for tourists Ajman and Sharjah is 10%, Dubai – 7%. The tourist tax is not the only fee that is required from visitors. There is also a hotel. Hotel guests and tenants of hotel apartments must pay from 7 to 20 dirhams per rented room per day. The exact % depends on the star rating of the selected hotel. For example, if there are five stars, then the amount will be 20 AED per night, if there are two stars – 10 AED. Payment of tax on accommodation in Dubai hotels is taken only for thirty days of staying at the hotel.
In addition to these fees, the emirate requires a 7% municipal fee from each sale of the hotel. We are talking about the income that was received from the services rendered to guests and visitors. It just includes the rent for a hotel room, food, drinks and other services.
In the same way, in the capital of the United Arab Emirates, hotels charge 4% of the municipal fee. At the same time, hotels in each emirate charge an additional fee for service, which is equivalent to 10% of the total revenue from hotel sales.
Transport tax in Dubai
Car ownership is not subject to %, but there is a registration fee – 420 dirhams and 350 dirhams for those who have decided to transfer the rights of the owner.
There is no tax on transport in the country. The customs duty on the import of a car, which is paid by a foreign citizen when entering Dubai, will depend on the class, price, engine capacity and parameters of the technical part of the car.
Also, if desired, you can pay 500 dirhams for checking the vehicle for suitability for its use.
What taxes in Dubai apply to legal entities
VAT
The standard rate is 5% and is accrued when the company’s profit exceeds the established amount of 375,000 AED or $ 100,000 per year. The amount should be repaid 28 days after the end of the reporting period for the quarter. Before that, you need to register a business as a taxpayer on the FTA website.
With the company’s earnings for the year net from 187 to 375 thousand dirhams, registration becomes voluntary at the discretion of management.
The 0% VAT rate in Dubai is applicable for businesses that specialize in certain types of activities. It’s about:
- international transportation of passengers and goods, including transit;
- maintenance of land, air and water vehicles that are used for such transportation;
- export of goods outside the Persian Gulf countries;
- investments of funds in some metals;
- providing services in the field of preschool, secondary and higher education;
- sale of immovable objects, if less than 3 years have passed since the date of construction;
- providing some basic services in the field of medicine.
Dubai income tax
It is charged from those enterprises that produce oil and gas – 55%. Also, foreign banks belong to the category of payment of this fee – they pay 20%. From 1.06.23 for other enterprises, it is 9% – this applies to companies whose profits per year are more than 375,000 AED and $ 100,000.
Excise
This fee was introduced in 2017. The obligation to pay falls on the companies that participate in the production process, transportation, storage of excisable products.
The bid will depend on the type of product:
- for carbonated drinks, concentrates, powders for their preparation – 50%;
- for non–carbonated energy drinks and their concentrates – 100%;
- for products with sugar/sweeteners – 50%;
- for cigarettes, tobacco products – 100%;
- for electrical devices for smoking, cassettes, liquids, cartridges for them – 100%.
Corporate for business
Many people often wonder if there is an income tax in Dubai and other emirates?
Yes, it is 9% and is provided for organizations that have more than 375,000 AED per year. Firms registered in the FEZ do not have to pay it for a certain period, which is established by the rules of these zones.
Taxation in different countries
The United Arab Emirates has signed an agreement on the absence of a double taxation system with certain countries. Their number reaches 137 states: Ukraine, Russia, Uzbekistan, Belarus, Kazakhstan, etc.
Therefore, foreign citizens who have come to the country to work do not pay income tax in Dubai and other emirates to the state treasury. But their country can charge it.
The process of obtaining the status of a UAE tax resident
The agreement on the abolition of double Taxation exempts UAE tax residents from fees from certain incomes of individuals and firms:
- real estate and its alienation;
- business;
- use of sea, air transport;
- dividends, %, royalties.
You can’t get this status automatically – you need a special certificate. To receive it, certain conditions must be met:
- For individuals – the presence of a resident visa, housing, as well as residence in the country for at least 180 days.
- For legal entities – the period of existence must be at least a year on the day of filing the application. They will also require financial statements.
To issue a tax resident certificate and not pay income tax both in Dubai and in your country, you need to:
- Create an account – register on the FTA website. To do this, it is enough to enter standard data and come up with a password.
- Log in. After registration, you will be redirected to the login page – enter your username and password.
- Submit an application. You can do this in the LC – just click on “Create a certificate”, enter your personal tax number and select the desired category (individual / legal entity). After you select a country, download the documentation in electronic form. Click on “Send”, pay the fee.
- Get a certificate. After payment, you will be given access to the document file.
List of documents for individuals:
- passport;
- Emirates ID;
- resident visa;
- a document confirming that you have a home;
- information about sources of income;
- bank statements for the last 6 months;
- accounting documentation on the number of days of stay;
- tax forms from the state for which the certificate is required (if available).
For legal entities:
- trade license;
- founders’ agreement;
- passport;
- Emirates ID, owner’s visa;
- financial statements for last year;
- housing rental agreement;
- bank statement for 6 months.
To issue a certificate, you need thorough preparation. To avoid mistakes and save your time, you can turn to narrow-profile specialists. They will help you get a new status, and you can start taking advantage of it.
Now you know which taxes in Dubai are relevant for 2023. It continues to become a global business cluster, and such a unique taxation system and state policy as a whole contribute to this process.
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