Taxes in the UAE

The tax system in the UAE is quite flexible and adaptable to changing economic conditions, allowing the government of the country to make it even more attractive to businesses and investors. The complete absence of some taxes, as well as a variety of benefits, stimulate many entrepreneurs to open their own business here.

In this article, let's understand who should pay taxes in the UAE and when, as well as consider the latest innovations.

UAE Taxation: Basic Principles

There is no single tax code in the UAE, so tax rates may vary from emirate to emirate.

All taxes can be divided into two broad categories:

1. Federal - these are the taxes set by the state. They go to the Emirate's budget and are controlled by the Federal Tax Authority.
2. Regional - these are set by the government of the cities. May have different rates depending on the region.

It should also be noted that individuals who have the status of UAE resident are not subject to any taxes.

What are the current corporate taxes in the UAE?

Value Added Tax

A state (federal) tax included in the final cost of a good or service. It was introduced in 2018 and is currently mandatory for all companies with an annual turnover of more than AED 375,000. The tax is payable quarterly within 28 days of the end of the tax period and the rate is 5%. It should be noted that certain services and goods may be exempt from VAT or subject to a different rate.

Excise Duty

In order to reduce the consumption of goods that are harmful to the human body and the environment, the Emirati government introduced an excise duty (consumption tax) in 2017. The goods subject to the tax and their tax rates include

• Tobacco and tobacco products: 100%;
• Refill liquids for e-cigarettes and devices: 100%;
• Electronic cigarettes and devices: 100%;
• Energy drinks: 100%;
• Carbonated beverages: 50%;
• Sugary drinks: 50%.

The tax must be paid quarterly. Payers are not only producers, but also exporters and warehousing companies.

Corporate Tax

Refers to the annual direct tax paid on the net income or profits of companies and other organizations as a result of their business activities. Introduced in 2023. Mainland companies will pay this tax at the rate of 9% if their annual profit is more than AED 375,000.

There are some categories of companies that are exempt from corporate tax: companies that extract oil and other resources, public sector companies, free zones, relevant investment and charitable foundations, and others. If your company falls under any of these categories, contact professional advisors for reliable information and they will help you develop an appropriate tax strategy.

Tax on the transfer of real estate

There is no single nationwide real estate tax in the Emirates. The tax is levied only on the transfer of ownership from one person to another at a rate of 4%. In this case, the tax amount may be split in half between the former and the new owner of the property, or it may be paid in full by one person.

Social Security Tax

Emirati employees are subject to mandatory social security contributions, which are split between the employee and the employer as follows: employer - 12.5% of the employee's gross salary, employee - 5%.

GCC nationals working in the UAE pay social security taxes according to the regulations of their home country. The employer is also obliged to withhold and pay these contributions.

Customs Duties

Goods imported into the Emirates are subject to customs duties of 5% of their value, freight and insurance costs. The duty rate may be different for some goods. Goods imported into FEZs (free economic zones) are exempt from customs duties. The exception is goods exported from FEZ to GCC countries. In this case, customs duties are paid only at the first point of entry into the GCC region, including the Emirates.

Taxes and Business in UAE with StableGrowz

If you want to start a business in the UAE and need more information about taxes, our team can provide you with professional assistance at any time. We will provide you with up-to-date information on the UAE tax system, help you develop a tax strategy and obtain a tax residency certificate.

With us, you can avoid mistakes due to ignorance of UAE tax legislation and enjoy all the tax benefits of this amazing country in the shortest possible time.

Contacts

United Arab Emirates, Dubai, Barsha Heights, I-Rise Tower, 29th Floor, Office 5