The United Arab Emirates (UAE) has become a top destination for investors, expatriates, and retirees thanks to its tax-friendly environment and business-friendly regulations. With no personal income, capital gains, or inheritance taxes, the UAE offers a unique opportunity to retain more of your earnings.
Understanding how taxes in UAE work, including corporate tax, VAT, excise duties, and property-related fees, is essential for anyone planning to live, work, or invest in Dubai and other Emirates. This guide breaks down everything you need to know about UAE taxes for residents and expats, including key thresholds, obligations, and benefits.
UAE Taxes: Key Takeaways
- Dubai and UAE are largely tax-free for individuals: No personal income, capital gains, or inheritance tax for residents and expats.
- UAE corporate tax: 9% on profits above AED 375,000; qualifying free zone businesses can pay 0%.
- VAT and excise in UAE: 5% VAT on most goods/services; excise 50%-100% on tobacco, sugary drinks, energy drinks.
- UAE property and municipal fees: 4% real estate transfer fee; 5% annual housing/municipal tax in Dubai.
- Inheritance and crypto taxes UAE: No inheritance tax; crypto income is usually tax-free unless earned via business profits.
- Expat tax obligations UAE: U.S. citizens must file Form 1040; DTAs protect other expats from double taxation.
- Lifestyle and investment appeal UAE: Low-tax environment, UAE Golden Visa, and business-friendly regulations attract investors, retirees, and digital nomads.
Overview of UAE Taxes
| Category | Details |
|---|---|
| Tax Year | 1 January – 31 December |
| Currency | United Arab Emirates Dirham (AED) |
| Personal Income Tax | 0% (No personal income tax) |
| Corporate Tax | 9% (for profits above AED 375,000) |
| VAT | 5% |
| Excise Tax | 50%-100% on certain goods |
| Real Estate Transfer Tax | 2%-4% (varies by emirate) |
| Social Security Contributions | 17.5% (for UAE nationals only, employers contribute 12.5%) |
| Tax Authority | Federal Tax Authority (FTA) |
| Tax Return Deadline | Corporate tax: Typically, 9 months after financial year-end |
| Tax Form for US Residents | Form 1040 (for US tax reporting, as UAE has no personal income tax) |
The Tax System in the UAE
The United Arab Emirates (UAE) is notable for having no personal income, capital gains, gift, or inheritance taxes. Instead, government revenue comes from corporate tax (introduced in 2023), Value Added Tax (VAT), excise taxes, and local municipality fees. The Federal Tax Authority (FTA) is the official body tasked with overseeing the implementation and enforcement of federal taxes across the country.
Benefits of the UAE Tax System
Benefits of the UAE tax system include:
- No Personal Income Tax: The UAE does not levy personal income taxes on individuals, allowing tax residents to retain more of their earnings.
- No capital gains tax: There is no capital gains tax on investments, making it attractive for investors and entrepreneurs.
- Corporate tax advantages: While a corporate tax of 9% was introduced for companies earning above AED 375,000, this rate is still lower than in many developed countries. Free zone businesses may benefit from a zero-tax rate on qualifying income.
- Tax Residency Certificate (TRC): Tax residents can obtain a TRC from the UAE Federal Tax Authority, which helps in claiming benefits under double taxation avoidance agreements with other countries, preventing double taxation on income.
- Legal recognition of tax residence: A TRC serves as legal proof of tax residency, which can be essential for various financial and legal transactions.
- Simplified regulatory environment: The UAE’s business-friendly regulations make it easier for tax residents to operate and manage businesses without excessive bureaucratic hurdles.
- No reporting obligations for residents: Unlike many countries, the UAE does not require tax residents to report their bank account balances or income earned outside the UAE.
Who pays tax in the UAE?
The UAE has a residency-based tax system. This means that citizens and residents are not taxed in the UAE based on immigration status.
For individuals
An individual is considered a tax resident if they meet one of the following conditions:
- They spend 183 days or more in the UAE within a 12-month period.
- They have a primary permanent place of residence in the UAE and spend at least 90 days in the country during the same period.
For companies
A company is generally considered a UAE tax resident if it:
- Is incorporated or recognized under UAE law, or
- Is effectively managed and controlled from the UAE.
How does tax work for expats in the UAE?
Expats in the UAE enjoy a tax-free environment on personal income, including salaries, dividends, and capital gains. However, they may still encounter other taxes and should consider obligations in their home countries.
Key points for expats:
- No personal income tax: Wages, personal investments, and real estate income are not taxed in the UAE.
- VAT: A 5% Value Added Tax applies to most goods and services.
- Corporate tax: Businesses with profits over AED 375,000 pay 9% corporate tax.
- Excise tax: Applied to specific products like tobacco, sugary drinks, and energy drinks.
- Property-related fees: Vary by emirate; for example, Dubai charges a 5% municipal tax on annual rent.
- Social security: Non-GCC expats are exempt.
International considerations
Expats should check their home country tax obligations, as some countries (like the US) tax worldwide income. The UAE’s Double Taxation Agreements (DTAs) help prevent being taxed twice. Expats can also obtain a Tax Residency Certificate (TRC) from the FTA to access DTA benefits.
Do I need a tax ID number in the UAE?
In the UAE, a Tax Registration Number (TRN) is only required for businesses or individuals conducting business activities that meet certain revenue thresholds for VAT or corporate tax. For example, if you plan to obtain the UAE Golden Visa, there is an option to invest in a UAE business. Here, you will need to ensure that the company has a Tax Registration Number (TRN) to submit tax returns.
Types of Taxes in the UAE
| Type of Tax | Rate | Applicable To |
|---|---|---|
| Corporate Tax | 9% | Businesses with profits over AED 375,000 |
| Value Added Tax (VAT) | 5% | Most goods and services |
| Excise Tax | 50%-100% | Products harmful to health or environment, e.g., tobacco, energy drinks, sugary drinks, e-cigarettes |
| Real Estate Transfer Fee | 2%-4% | Property transactions (varies by emirate) |
| Municipal Tax | 5% | Annual rental value (e.g., Dubai) |
| Social Security Contributions | 17.50% | UAE nationals only (employers contribute 12.5%) |
| Personal Income Tax | 0% | Salaries, wages, investment income for all residents and expats |
| Inheritance Tax | 0% | Estates upon death |
UAE income tax
There is no personal income tax in the UAE. Individuals do not pay taxes on salary in the UAE. This is one of the main benefits of investing in the UAE and why UAE citizenship is quickly becoming one of the most popular options for foreign investors.
Additionally, the UAE is a top option for those looking to retire overseas. Since the UAE does not impose personal income tax, pension income and other earnings are not taxed. This allows retirees to retain more of their income and savings, enhancing their financial security during retirement.
Retirees also benefit from a robust healthcare system in the UAE, ensuring access to high-quality medical services. Plus, with the absence of inheritance tax in the UAE, retirees can pass on their wealth without additional tax burdens, making estate planning simpler.
UAE municipal taxes
Municipal taxes in the UAE vary by emirate but are usually based on property value. For example, in the ever-popular Dubai, municipal taxes are set at 5% of the property’s value. Taxes applicable in UAE are for both commercial and residential properties in Dubai.
UAE property taxes
There are currently no property taxes in the UAE. However, if you want to make a UAE real estate investment, there is a 4% transfer fee that is usually split between the owner and the seller.
UAE corporate tax
A 9% corporate income tax was introduced in the UAE, effective June 1, 2023, forming part of indirect taxes. The UAE corporate tax rate is applicable to businesses with profits exceeding AED 375,000 from annual taxable supplies. This rate is relatively low compared to many other countries.
It’s important to understand the UAE taxes for businesses, as investigations are becoming much more common for businesses operating in the UAE. Seeking tax advice for the first corporate tax return is highly recommended.
UAE Value-added tax (VAT)
Value-added tax is basically the only tax to be aware of in the UAE as an individual. The UAE VAT rate stands at 5%, which is relatively low compared to many other countries, particularly in Western Europe.
However, there are certain products and services that are exempt from VAT in the UAE, including:
- International transportation: Cross-border movement of goods and passengers.
- Investment-grade precious metals: Trading in high-purity precious metals, such as gold and silver.
- Newly built residential properties: Sales of recently constructed homes.
- Education and healthcare services: Specific categories of educational and medical services.
Whether you are a resident or a tourist, you are liable for VAT when making purchases in the UAE, as it forms part of government revenue. Luckily, for tourists, you may request VAT refunds when you leave the UAE if you still have the goods that are from a recognized retailer.
UAE excise tax
While there is VAT in the UAE, there is also excise tax. This is a tax on goods that the UAE Federal Government deems harmful to the environment or human health. Here are some examples:
| Product | Tax rate |
|---|---|
| Energy drinks | 100% |
| Tobacco products | 100% |
| Electronic smoking devices | 100% |
| E-cigarette liquids | 100% |
| Carbonated drinks | 50% |
| Products with added sugar and sweeteners | 50% |
UAE Inheritance tax
The UAE does not impose an inheritance tax. This means that estates are not taxed upon death, making it favorable for estate planning.
Crypto taxes in UAE
The UAE does not have specific regulations imposing taxes on cryptocurrency transactions. As of November 2024, income from cryptocurrency trading is generally not taxed. However, crypto earned through a business may be subject to corporate taxes in the UAE if it exceeds the profit threshold.
This is important to note as the UAE ranks third most crypto-friendly nation in the world.
UAE Payroll tax
Payroll tax in the UAE is mandatory for employees who are nationals of the Gulf Cooperation Council (GCC). There is a 17.5% payroll tax for the social security regime. For UAE nationals, there is a 5% tax, while employers pay an additional 1.5% towards the regime.
Residents from other GCC countries may have different social security contribution requirements based on the rules of their home country. However, non-GCC nationals are exempt from social security in the United Arab Emirates.
It is always best to understand what you are liable for. For example, those with a UAE passport may be liable for different taxes compared with expats. It all depends on your employment and citizenship status.
UAE Taxes for US Citizens
Even though the UAE does not impose personal income tax, U.S. citizens must still comply with IRS rules and report their worldwide income.
Key Points:
- Filing Requirements: File a U.S. tax return (Form 1040) if your income exceeds the IRS minimum for your filing status.
- Deadlines: U.S. citizens abroad get an automatic extension to June 15, with the option to extend to October 15.
- Foreign Earned Income Exclusion (FEIE): You can exclude over $120,000 (2024) of foreign-earned wages from U.S. taxation by meeting either the bona fide residence test or physical presence test.
- Foreign Account Reporting:
- FBAR (FinCEN Form 114): Report if total foreign accounts exceed $10,000 at any time during the year.
- FATCA (Form 8938): Report if specified foreign assets exceed $200,000 (single) or $400,000 (married filing jointly).
As the UAE becomes more popular, it’s important to know where you stand in terms of taxes. As our 2025 Global Digital Nomad report points out, the UAE is becoming one of the most desirable countries, ranking 8th, with an overall score of 90.04.
Is there a tax treaty between the US and UAE?
No, there is currently no tax treaty between the US and UAE. So, while the zero personal income tax advantage of the UAE remains in place for those with a UAE visa for US citizens, it is up to US citizens to ensure they remain compliant with US tax regulations.
How Can Global Citizen Solutions Help You?
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