In the UAE, the personal income tax rate is 0%. This means that no matter whether it is salary income, dividends or interest income, there is no need to pay personal income tax. This policy has greatly enhanced the ability of individuals to accumulate wealth and is also one of the important factors that make the UAE a good place to live and do business.

Table of Contents

1. Main taxes and regulations 2. Tax incentives 3. International tax cooperation

1. Main taxes and regulations

1. Personal income tax

In the UAE, the personal income tax rate is 0%. This means that no personal income tax is required, whether it is salary income, dividends or interest income. This policy has greatly enhanced the ability of individuals to accumulate wealth and is one of the important factors that make the UAE a good place to live and do business.

2. Local taxes

Local taxes, such as property taxes, sales taxes and other local service fees (such as garbage collection and public facilities maintenance fees), are levied by local regulators on residents (including tenants and owners) living in specific areas. The specific standards and collection methods of these taxes may vary from region to region.

3. Value Added Tax (VAT)

VAT is levied based on the use of goods and services in the supply chain and is ultimately borne by consumers. The VAT rate in the UAE is 5%. Businesses with annual revenues exceeding Dh375,000 must register for VAT with the Federal Tax Authority (FTA) and submit VAT returns regularly to ensure compliance with tax laws and maintain transparency in financial transactions.

4. Corporate tax

The UAE imposes corporate tax on net profits earned by companies at a standard rate of 9%. Companies with annual profits exceeding Dh375,000 are subject to this tax. This tax system aims to support the national economy while ensuring that businesses contribute fairly.

5. Excise Duty

Excise duty is an indirect tax that applies only to specific goods and services, such as tobacco products, carbonated drinks, and energy drinks. By imposing excise duty, the government aims to promote healthier lifestyles and reduce the consumption of harmful products. The tax rate varies depending on the product, for example, tobacco products are taxed at 100% and carbonated drinks are taxed at 50%.

6. Inheritance Tax

The UAE does not levy inheritance tax, which makes the country ideal for estate planning and wealth transfer. Individuals who inherit the estate of a deceased person do not have to pay any taxes on the inherited property or assets.

7. Social Security

Social security contributions are only applicable to employees of UAE and Gulf Cooperation Council (GCC) nationality and are paid by the employer. Expatriates do not have to pay social security contributions.

8. Customs Duty

Customs duty is an import tax imposed on goods brought into the UAE from abroad. The standard rate is 5%, but the rates may vary for certain goods depending on the product type and trade agreements. For example, cigarettes and alcohol have a 100% and 50% tariff respectively.

2. Tax incentives

• Free Zone Incentives: Businesses registered in free zones generally enjoy tax exemptions, which continue to encourage businesses to operate in free zones.
• • R&D Tax Incentive: From January 1, 2026, a 30%-50% tax credit will be provided to companies engaged in R&D activities, and the credit will be refundable depending on the company's revenue and number of employees.
• • High-value employment activity credit: From January 2, 2025, a tax credit will be given to companies engaged in high-value employment activities as a percentage of eligible payroll costs.

3. International tax cooperation

• Information exchange: The UAE has joined the OECD's Common Reporting Standard (CRS) and the US's Foreign Account Tax Compliance Act (FATCA), and actively exchanges tax information with other countries to improve international tax compliance and combat cross-border tax evasion.
• •BEPS Project 33: The UAE joined the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) on May 16, 2018, becoming the 116th jurisdiction, and implemented economic substance regulations and country-to-country reporting legislation in 2019.
• •Bilateral tax treaties: The UAE has signed double taxation agreements (DTAs) and bilateral investment treaties (BITs) with many countries to eliminate or alleviate double taxation issues for multinational companies and individuals and promote international investment and economic cooperation.