UAE TAX-FREE. In this article we’re going to lay out the truth about taxes in Dubai.
The answer to the above question is positive: YES IT IS, but in certain circumstances.
UAE TAX-FREE: individual taxes
Individuals who live in Dubai pay no tax on income, property, or capital gains. This does not mean that there are no taxes at all, however; import duties, which are taxes on goods imported from outside the country, are charged, as are taxes on property rental payments and some hotel and entertainment services. Local citizens contribute a small percentage of their income to social security. There is no sales tax, but there are high taxes on alcohol and other products that are considered haram. Although value added tax (VAT) — a consumption tax similar to sales tax — is not charged, the International Monetary Fund (IMF) has recommended that the UAE consider implementing such a system.
Concretely, if you earn your income in Dubai but are tax resident elsewhere, you may be subject to taxation on your income – this is because where you pay tax and what you pay it on also depends on where you are resident for taxation purposes. Alternatively, if you move permanently to live and work in the UAE then you may be able to earn your salary in Dubai 100% free of income taxation.
UAE TAX-FREE: corporate taxes
There is no corporate income tax for most businesses located in the UAE; however, Dubai does tax the income from foreign banks and oil companies. The region also contains a number of economic free zones, which offer economic incentives to encourage investment and commercial development. While these free zones are not entirely tax free, the incentives offered there make them come very close. Companies which are run within free zones are given certain tax exemptions for at least 15 years, at the end which they may request an exemption for another 15 years. In addition, there are no import or export taxes in the free zones.
At this point, a question comes spontaneously: why choose Dubai?
The tax-free income, sophisticated business technological infrastructure, international outreach and the opportunity to establish offshore companies are synonymous with Dubai. Despite the fall in the real estate and construction sectors, trading companies are flourishing and the services industry is back on track. Dubai business licenses are available for both mainland and free-zone, but the licensing criteria varies according to the type of company been setup and the range of activities undertaken by that company.
UAE TAX-FREE: Dubai (mainland) licenses are issued for the following activity types
- Commercial Trading,
- service providers and professional consultancies,
- tourism and travel agencies,
- manufacturing and processing,
- branch and regional offices.
UAE TAX-FREE: Dubai business environment
Internationally standardized, highly efficient, excellent service quality and advanced infrastructure welcome the entrepreneur in Dubai. As one of the most developed and modern states in the world, Dubai offers a large number of benefits.
UAE TAX-FREE: The key advantages are
Free enterprise system
Latest telecommunications infrastructure
Modern public transportation and roads system
High-end financial and services sectors
Prime residential property and office premises
Affordable and reliable utilities such as gas, water and electricity
Internationally acclaimed education, health and government services
Urbanized living conditions
UAE TAX-FREE: costs in Dubai
A Dubai business setup has several advantages from a cost factor viewpoint. Most benefits are correlated to the type of business being setup, but in general, there are some guaranteed advantages, including:
- No income taxes,
- no corporate taxes,
- no trade barriers,
- no foreign exchange controls,
- competitive energy costs,
- competitive real estate costs,
- competitive labour costs,
- competitive import duties (4% with several exemptions).
UAE TAX-FREE: doing business in Dubai free zones
Special incentives are available for free zone business setups, including the following:
- 100% foreign ownership and control,
- renewable 15-year guarantee of no taxation
- no customs duties,
- flexible investment options,
- efficient transport and distribution facilities,
- full administrative and recruitment support.