Taxation in the UAE Insights for New Business Owners

Taxation in the UAE

Starting a business in the United Arab Emirates (UAE) is an exciting and potentially lucrative endeavor. The country offers a stable and business-friendly environment, making it a top choice for entrepreneurs and investors from around the world. However, like any other country, understanding the taxation system in the UAE is critical for the success of your business. In this blog post, we will provide insights and information on taxation in the UAE for new business owners.

Overview of Taxation in the UAE:

The UAE is often known as a tax haven because it has no corporate or personal income tax. This has been a significant attraction for businesses considering setting up in the country. However, this does not mean that businesses are completely exempt from taxes in the UAE. There are still various taxes and fees that businesses need to be aware of and plan for.

The UAE follows a federal system of taxation, where each emirate has its own authority to levy taxes. This means that the taxation laws and regulations may differ slightly between the seven emirates. However, the overall tax framework remains the same throughout the country.

Types of Taxes in the UAE:

Value-Added Tax (VAT):

Since 2018, the UAE has implemented a value-added tax (VAT) of 5% on most goods and services. VAT is a consumption tax that is paid by the end consumer. This means that businesses are responsible for collecting and remitting VAT to the government on behalf of their customers. VAT registration is mandatory for businesses with an annual turnover of AED 375,000 or more, and voluntary for businesses with an annual turnover between AED 187,500 and AED 375,000.

Corporate Tax:

As mentioned earlier, the UAE does not have a federal corporate tax. However, some industries may be subject to specific taxes or fees. For example, companies involved in oil and gas exploration, hydrocarbons production, and foreign banks operating in the UAE are subject to a 55% tax on their annual net profits.

Customs Duties:

Imported goods into the UAE are subject to customs duties, which vary depending on the type of product and the country of origin. These duties are typically paid at the point of entry into the UAE. However, certain goods may be exempt from customs duties, such as medical equipment and humanitarian aid.

Withholding Tax:

The UAE does not have a withholding tax system. This means that there is no tax on the dividends paid to shareholders or the interest paid to lenders. However, this may change in the future as the UAE aims to align its tax system with international standards.

Excise Tax:

In 2017, the UAE introduced an excise tax on certain goods deemed harmful to human health or the environment. This includes tobacco products, sugary drinks, and energy drinks. The tax rate on these goods ranges from 50% to 100%, and it is paid by the manufacturer or importer.

Real Estate Tax:

The UAE does not have a federal property or real estate tax. However, some of the emirates have implemented their own property tax laws. In Dubai, for example, there is a 4% transfer fee for the purchase of properties, and an annual municipal tax of 5% on the rental value of commercial properties.

Tax Residency and Double Taxation Agreements:

The UAE does not have a specific tax residency system. Instead, individuals and businesses are subject to residency rules set by each emirate. However, the UAE has entered into double taxation agreements with over 100 countries to prevent businesses and individuals from being taxed twice on the same income. These agreements also outline the process for claiming tax credits and exemptions.


In conclusion, although the UAE is known for its tax-free environment, businesses still need to be aware of the various taxes and fees that may apply to them. Understanding the taxation system and planning for it is crucial for the success and sustainability of your business in the UAE. We hope this blog post has provided valuable insights for new business owners looking to set up in the UAE.

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