Dubai, as part of the United Arab Emirates (UAE), attracts investors and professionals from around the world thanks to its favourable tax system. Although it was long regarded as a tax haven, some changes have been introduced in recent years. Below we present up-to-date information on the taxes in force in Dubai:
1. Personal income tax
The UAE does not levy personal income tax. This means that both residents and employees are not required to pay tax on their personal income. The absence of this tax makes Dubai an attractive location for professionals seeking favourable financial conditions.
2. Corporate income tax (CIT)
A federal corporate income tax was introduced in the UAE on 1 June 2023. The rate is 9% and applies to businesses whose annual profits exceed AED 375,000. Profits below this threshold are exempt from tax. Companies operating in free economic zones may benefit from preferential conditions, provided they meet certain criteria.
3. Value added tax (VAT)
VAT at a rate of 5% was introduced in the UAE in 2018. It applies to most goods and services. Some sectors, such as education, healthcare and public transport, are exempt from VAT or subject to a 0% rate. Businesses whose annual turnover exceeds AED 375,000 are required to register for VAT.
4. Excise tax
The UAE has introduced an excise tax on products considered harmful to health. The excise rates are:
- 100% on tobacco products, energy drinks and electronic cigarettes,
- 50% on carbonated and sweetened drinks.
The aim of this tax is to reduce the consumption of unhealthy products and promote a healthy lifestyle.
5. Customs duties and import charges
The standard import duty rate in the UAE is 5%. However, some goods, such as books, medical equipment and raw materials, may be exempt from duty. Low duties support the development of trade and attract international importers.
6. Sector-specific taxes
Some sectors in the UAE are subject to special tax rules. For example:
- Companies in the oil and gas sector may be subject to income tax of up to 55%,
- Branches of foreign banks may be subject to income tax of 20%.
These rules are intended to ensure that these sectors make a fair contribution to funding the state budget.
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