Taxes in Dubai and the UAE: an overview for expats and business owners

1. Overview in one table

Not included here are licence, visa and government service fees. These are not taxes but fixed charges that vary with your setup.

2. How businesses are taxed

Corporate tax

For financial years beginning on or after 1 June 2023, a federal corporate tax applies. The rate is 0 per cent on taxable profit up to AED 375,000 and 9 per cent above that.

Two special regimes matter to expats. A free zone company can obtain a 0 per cent rate on qualifying income as a Qualifying Free Zone Person, provided substance requirements and activity rules are met. And Small Business Relief takes businesses with revenue up to AED 3 million out of tax altogether; it is currently available for tax periods ending on or before 31 December 2029.

For very large groups, a domestic minimum top-up tax of 15 per cent has applied since 1 January 2025 where consolidated group revenue reached EUR 750 million in at least two of the four preceding years. This has no bearing on owner-managed structures.

Whatever the amount of tax, one point holds: registration and filing are mandatory for every business, even where the tax is nil. The return is due nine months after the end of the tax period.

VAT

The standard rate is 5 per cent. Registration is mandatory above AED 375,000 of taxable supplies and imports in twelve months, and voluntary from AED 187,500. Exports to customers outside the Gulf region are generally invoiced at the zero rate. Returns and payment are due 28 days after the end of the quarter.

The two taxes have separate registrations, separate thresholds and different deadlines. Relief under one says nothing about the other.

3. How individuals are taxed

The UAE levies no income tax on natural persons. This holds regardless of the amount or source of the income and is not time-limited.

Also absent: payroll tax, capital gains tax, wealth tax, inheritance and gift tax, and withholding tax on distributions abroad.

There is no personal tax return. Someone who is purely an employee and invests privately alongside has no filing obligations towards the Federal Tax Authority at all.

Employment costs instead of payroll tax

Nothing is deducted from salary. In place of taxes and social contributions there are two items:

• End of service gratuity. The employer owes it on a scale based on years of service; it is an entitlement of the employee, not a levy.
• Unemployment insurance (ILOE). A mandatory contribution of a double-digit dirham amount per month, banded by salary level.

UAE and GCC nationals additionally contribute to the state pension scheme. This does not apply to expats.

4. The decisive line: private wealth or business activity

This section is the key to everything that follows. Corporate tax reaches not only companies but also natural persons conducting a business in the UAE.

A revenue threshold governs: where revenue from business activity exceeds AED 1,000,000 in a Gregorian calendar year, registration and filing obligations arise, and tax may be payable under the ordinary rules.

Three categories of income are, by statute, entirely outside this — and do not count towards the million either:

• Employment income from a contract of employment
• Personal investment income
• Real estate investment income

A pair of examples shows the effect. Someone earning AED 5 million a year in rent from a privately held property portfolio stays outside corporate tax. Someone earning AED 200,000 from a licensable commercial activity is running a business — and becomes taxable once the million threshold is crossed together with any other business income.

Natural persons above the threshold can themselves elect Small Business Relief, as long as their revenue does not exceed AED 3 million.

5. Investment income, shares and trading

Dividends and disposal gains held privately

Tax-free. Dividends from domestic and foreign shares, gains on share sales, interest and fund income all fall under personal investment and are therefore outside corporate tax.

Watch the withholding tax in the country where the share is issued. A dividend from a US or European company remains subject to withholding tax there; whether and how much can be reclaimed depends on the relevant double tax treaty. Being tax-free in the UAE does not mean being tax-free at source.

Trading

Here the line drawn in section 4 runs straight through what looks like a single topic. A private investor managing their own capital through a brokerage account is making a personal investment — regardless of trading frequency or volume.

Someone trading for third parties, managing other people’s money, selling signals or training for a fee, or operating through a licensed entity, is running a business. The ordinary rules then apply: corporate tax above AED 375,000 of profit, and VAT on service fees where relevant.

Distributions and drawings

Distributions by a UAE company to its shareholders attract no tax in the UAE — neither at company level nor in the recipient’s hands, and no withholding tax on distributions abroad. The profit has already borne corporate tax at company level.

Between companies, a participation exemption applies: dividends from UAE-resident companies are exempt, as are dividends and disposal gains from qualifying holdings in foreign companies where the statutory conditions are met.

What matters ultimately is the treatment in the recipient’s country of residence. If you remain taxable elsewhere, that is where the distribution is taxed.

6. Real estate

There is no annual property tax of the kind levied in most other countries. Instead there are one-off fees on acquisition and ongoing municipal charges. These are set at the level of the individual emirate; the figures below relate to Dubai.

Acquisition

On purchase, the Dubai Land Department charges a transfer fee of 4 per cent of the purchase price, plus administrative fees. Formally it is split between buyer and seller; in practice the buyer bears most of it. Agency commission and registration costs come on top.

Ongoing charges

Residential property attracts a housing fee of 5 per cent of the annual rent, collected in monthly instalments through the DEWA bill. For owner-occupied property it is based on an assessed rental value. Service charges for the building come on top — a contractual payment to the management company, not a levy.

Rental income

For privately held property with no licensing requirement, rental income stays outside corporate tax, however large. Long-term residential letting is also exempt from VAT.

Commercial property is different: letting it is subject to VAT at 5 per cent, where the landlord is registered or becomes liable to register.

Short-term letting

This is the most consequential distinction in practice. Letting a property as a holiday home in Dubai requires a holiday home permit from the tourism authority. That makes it a licensed business activity — and takes it outside tax-free personal real estate investment.

The consequences:

• The income counts towards the AED 1 million threshold for natural persons.
• Above the threshold, corporate tax registration, bookkeeping and filing obligations arise.
• Short-term accommodation is subject to VAT; the revenue counts towards the AED 375,000 threshold.
• Tourism charges per night and municipal fees on accommodation revenue apply on top.

The same apartment can therefore be entirely tax-free or entirely taxable depending on how it is let. That decision belongs before the purchase, not after it.

Disposal proceeds

For individuals the gain on sale is tax-free, regardless of holding period or amount. There is no speculation period. The transfer fee applies again on sale.

The sale of commercial property is subject to VAT at 5 per cent. The resale of residential property is exempt; the first supply of newly constructed residential property within three years of completion is zero-rated.

7. Cryptocurrencies

Gains held privately are tax-free. Buying, holding and selling digital assets as a private individual counts as personal investment. There is no holding period of the kind some countries apply, because there is no tax for one to attach to.

For VAT, the treatment was settled by Cabinet Decision No. 100 of 2024: transfers and conversions of virtual assets are exempt from VAT, retroactively to 1 January 2018. Mining is excluded from that exemption and is treated by the tax authority as a taxable supply.

It becomes a business as soon as an activity requiring a licence is added — operating a trading platform, custody for third parties, asset management, or mining at commercial scale. In Dubai this generally requires authorisation from the Virtual Assets Regulatory Authority. Corporate tax and, where relevant, VAT then apply as they would to any other business.

8. Other charges

Excise tax. 100 per cent on tobacco products, energy drinks and electronic smoking products; 50 per cent on carbonated and sweetened drinks. It is levied on the producer or importer and is built into the retail price.

Customs duty. Generally 5 per cent of the value of the goods, with numerous exemptions and different rates for particular categories. Goods in designated zones have their own rules.

Tourism charges. Hotel and holiday home stays attract municipal fees, a service charge and a fixed amount per room per night. These fall on the guest but are remitted by the operator.

Fees rather than taxes. Licence renewal, visas, Emirates ID, attestations and government services all carry charges. In the overall budget of a small business, these items usually exceed the tax burden.

9. The most important caveat: your home country

Everything above concerns UAE law alone. Whether no tax is actually payable is frequently decided elsewhere.

Moving to Dubai does not automatically end tax liability in the country you came from. Among the things that continue to matter: where your centre of vital interests genuinely lies and whether you have given up your former residence, where a company is effectively managed, exit taxation on shareholdings, controlled foreign company rules, and extended or trailing tax liability in some jurisdictions.

These questions are governed by the law of your home country and have to be resolved there with appropriately qualified advice. Skipping that step risks discovering later that the tax freedom was never real.

10. Frequently asked questions