UAE Tax Essentials
What you need to know about the UAE tax system
The UAE currently has no system of federal income taxation. In practice, income tax legislation is only for foreign banks, and oil and gas companies. There have been no public announcements from the UAE regarding the potential introduction of corporate income tax other than IMF references, government-run economic impact studies, or general statements to the media.
The tax types you often find in the UAE
The UAE introduced a VAT levy in 2018. It applies to goods and services sold locally at a standard rate of 5%. Products or services sold outside the UAE are not charged VAT.
Most emirates charge municipal taxes, particularly on property. The amount is generally determined by the rental value of the property and is the tenant’s responsibility.
For example, in Dubai, it is currently imposed at five per cent of the annual rental value for tenants or five per cent of the specified rental index for property owners. You may also have to pay a registration fee on the transfer of ownership of land or property. Continuing with our Dubai example, this emirate levies a land registration fee at a rate of four per cent of the sale value of the property (shared between the buyer and seller), payable to the Dubai Land Department.
What to know about personal tax contributions in the UAE
There are no personal income taxes in the UAE, along with no income tax return filing requirement. If you are a citizen of a GCC country, you will be subject to a Social Security regime. Social security payments do not apply to expatriates. Instead, expatriates that work for an Emirati employee have the right to a gratuity payment (or an “end of service” benefit). However, it’s important to note that end of service benefits are not applicable to employees who are Emirati nationals. As the UAE has double-taxation avoidance treaties with more than 60 countries, those expatriates looking to take advantage of those benefits can apply for a Tax Domicile Certificate (TDC), which requires you present documents certifying your residency records and your income. Want to know more? You can find out about all of this and more in detail in our free Guide.