💼 Complete Tax Guide for Expats

UAE Taxation Guide

Understanding corporate tax, VAT, personal income tax, and financial planning in the UAE

0%
Personal Income Tax
9%
Corporate Tax (2023+)
5%
VAT Rate
AED 375K
CT Exemption Threshold

Table of Contents

Last Updated: January 27, 2025
Personal Income Tax
0% Tax Rate
Corporate Tax
9% on Profits
VAT
5% Sales Tax
Tax Residency
Certificate
Double Taxation
Treaties
Tax Tips
Important Info

Personal Income Tax

ZERO Personal Income Tax

The UAE does not impose any personal income tax on individuals' salaries, wages, or other employment income.

Salary
100% tax-free
Savings
No tax on interest
Capital Gains
No capital gains tax

Important: Home Country Tax Obligations

Even though UAE has zero personal income tax, you may still have tax obligations in your home country:

  • US Citizens: Must file US tax returns regardless of residence (FATCA compliance)
  • Most other countries: Check tax residency rules and double-taxation treaties
  • Tax residency certificate: Available from UAE Federal Tax Authority if needed for home country

Corporate Tax (CT) - Introduced June 2023

9% Corporate Tax on Business Profits

Effective from June 1, 2023, UAE introduced a federal corporate tax on business profits. This is a major change but still keeps UAE highly competitive globally.

Tax Rates

Taxable Income Up to AED 375,000 0%

Small businesses exemption threshold

Taxable Income Above AED 375,000 9%

Standard corporate tax rate

Multinational Enterprises (Large) 15%

For qualifying multinationals under OECD rules

Who Must Pay Corporate Tax?

✅ Subject to CT (9%):

  • UAE mainland companies
  • Free zone businesses (if dealing with UAE mainland)
  • Branches of foreign companies
  • LLCs, partnerships conducting business

❌ Exempt from CT:

  • Individuals' employment income
  • Personal investments (real estate, stocks)
  • Government entities
  • Oil & gas (separate regime)
  • Qualifying free zone businesses (0% if criteria met)

Free Zone Benefits (0% CT Available)

Free zone businesses can maintain 0% corporate tax rate if they meet "Qualifying Free Zone Person" criteria:

Requirements for 0% CT:

  • Maintain adequate substance in UAE
  • Derive qualifying income (e.g., transactions with other free zones or foreign entities)
  • Do NOT earn "excluded income" (mainland UAE transactions, certain non-qualifying activities)
  • Comply with all regulatory and transfer pricing requirements

Popular Free Zones:

  • • DMCC (Dubai Multi Commodities Centre)
  • • JAFZA (Jebel Ali Free Zone)
  • • DIFC (Dubai International Financial Centre)
  • • ADGM (Abu Dhabi Global Market)
  • • Dubai Silicon Oasis
  • • Sharjah Publishing City
  • • Ras Al Khaimah Economic Zone (RAKEZ)

Value Added Tax (VAT)

5%

Standard VAT Rate

UAE introduced 5% VAT on January 1, 2018. It applies to most goods and services.

5%

Standard Rated

  • • Food & beverages (restaurants)
  • • Electronics
  • • Clothing
  • • Hotel accommodation
  • • Professional services
  • • Telecom services
0%

Zero Rated

  • • Exports outside GCC
  • • International transport
  • • New residential properties (first supply)
  • • Investment-grade precious metals
  • • Some healthcare supplies
Exempt

VAT Exempt

  • • Residential property rentals
  • • Financial services
  • • Bare land
  • • Local passenger transport
  • • Certain healthcare & education

VAT Registration Requirements

Mandatory Registration:

  • Annual taxable supplies exceed AED 375,000
  • Must register within 30 days of exceeding threshold

Voluntary Registration:

  • Annual taxable supplies between AED 187,500-375,000
  • Can choose to register (benefits include input tax recovery)

Key Takeaways for Expats

💰 For Employees:

  • Your salary is 100% tax-free (no income tax)
  • You pay 5% VAT on most purchases (already in prices)
  • Check home country tax obligations (especially US citizens)
  • Keep receipts for major purchases if claiming back in home country

🏢 For Business Owners:

  • Corporate tax is 9% on profits above AED 375,000
  • Free zones can still get 0% if they meet criteria
  • Register for VAT if revenue exceeds AED 375,000/year
  • Consult tax advisor for compliance and planning

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