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UAE corporate tax law

One of the most significant advantages of the United Arab Emirates (UAE) for businesses is the low taxation rates. The typical global taxes are either not present in the UAE, or, if necessary, are set at very low rates. Why are taxes in the UAE so low? Is the UAE a tax haven? Let's have a closer look at the UAE corporate tax law.

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UAE corporate tax law

Posted 3 May 2024

General Information about the UAE

The UAE has earned a global reputation for being one of the best places in the world for business. Its strategic geographic location, fast-growing economy, lack of currency controls, the ability to register a company with 100% foreign ownership, the UAE corporate tax law and more make the UAE a perfect place for both starting and growing a business. It’s also a great choice for those looking for a comfortable country to live in.

Taxation plays a crucial role in the UAE’s appeal. As taxes increase globally, the UAE has significantly fewer taxes. To understand why taxes are almost non-existent in the UAE, let’s take a look at the legal framework in the Emirates.

The UAE legal system lacks a single document that clearly defines taxes, their principles, and their payment. Instead, each emirate has separate regulations governing these matters. Since the UAE is an Islamic country, Sharia law applies. As a result, the UAE does not have the usual types of taxes we are familiar with. Taxes in the UAE are not the same as in other countries, and many are simply absent.

Let’s consider some of the tax categories individually.

Income Taxes in the UAE for Individuals

The tax system in the UAE does not include the standard income tax everyone is used to. In other words, income tax does not exist in the UAE. Instead, there are fees:

  1. For those who own property, the rate is between 2% and 15%, depending directly on the property’s value in each emirate;
  2. Taxes for using restaurant or hotel services also vary by emirate—in Dubai, for example, the rate is around 10% of the service cost, while in Abu Dhabi, it is 16%;
  3. Real estate tax (transactions related to buying or selling property) consists of no more than 2% of the property’s value, with the buyer paying 1.5% and the seller paying 0.5%.

UAE corporate tax law applies equally to residents and non-residents of the country. So when you come to the UAE, be prepared to pay taxes like the locals.

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Diane

Diane, partner of GFLO Consultancy

Corporate Income Tax in the UAE

Starting in 2023, the UAE introduced a corporate income tax. As a result, many companies will pay their first corporate tax on profits from now on. The tax rate ranges from 0% to 9% depending on various factors.

Companies registered in free zones can also be subject to taxation, but there are exceptions. For more detailed information, please reach out to our experts. Leave a detailed request so we can advise you on the taxes in your specific case.

Companies in the oil and gas industry, banking institutions, and the hospitality sector must pay corporate income tax. Therefore, if you plan doing business in these areas, you need to study the specific emirate’s legislation carefully, as tax rates on profits vary from emirate to emirate.

Value Added Tax (VAT)

Finally, it’s important to mention that the UAE has a 5% VAT rate, which only applies if the activity takes place within the UAE.

Conclusion

Despite the changes in the UAE corporate tax law introduced in 2023, the UAE remains an attractive jurisdiction in terms of taxation. The newly implemented corporate income tax is levied at rates of 0-9%, still one of the lowest rates in the world. There is no personal income tax in the UAE, and VAT is charged at a rate of only 5%.

Each company in the UAE must pay the cost of a license annually.

Before choosing the ideal jurisdiction for your purposes, we recommend consulting with our experts.

How Can We Assist?

  • Provide answers to all questions about the UAE and its business advantages;
  • Help you understand the tax system in detail;
  • Advise you on your specific tax burden situation;
  • Recommend the most advantageous emirate for your business goals;
  • Discuss the most popular free zones in the UAE;
  • Register a company in the UAE;
  • Open a bank account;
  • Assist with obtaining a resident visa.

GFLO Consultancy experts are pleased to assist and help you with any inquiries, just get in touch or leave a request through the form right below.

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