A Guide on Taxes in the UAE

The tax regulations in the United Arab Emirates (UAE) are much simpler than in other parts of the world. The concerned authorities have designed a friendly business tax strategy that makes the country a popular destination for investments.

Whether you are a business owner or looking to understand the tax environment in UAE, this guide will help you navigate the essentials with ease. From corporate taxes to value added tax, learn how the UAE’s tax framework supports economic growth and accurate financial planning. Let us get into the details of taxes in the UAE.

Types of Taxes in the UAE

Check out the various types of taxation in the United Arab Emirates:

1. Income tax

This is a type of tax levied by the government on earnings made in the jurisdiction by individuals. However, the income tax in UAE is 0 per cent for individuals, making it a great place for working professionals.

2. Municipal tax

Municipal tax in UAE  is imposed by the local regulatory body on residents, including tenants and property owners, living in a particular area. There are various forms of municipal taxes, such as property, sales, and fees for other local services, such as waste collection and public facility maintenance.

3. Value Added Tax (VAT)

VAT is imposed on the basis of the usage of goods and services at every stage in a supply chain, from production to the final sale of a product. This tax is ultimately paid by the consumers. VAT in UAE is charged at a rate of 5 per cent. Every business setup in UAE with an annual earning above AED 375,000 must register itself with the Federal Tax Authority (FTA). Every registered business or individual must file a VAT return in UAE to report taxable income and pay any VAT owed. This ensures compliance with UAE tax laws and helps maintain transparency in financial transactions.

Click here to learn more about VAT Registration in UAE.

4. Corporate Tax

This type of tax is imposed on the net profit earned by businesses in the UAE. The corporate tax in UAE is set at a standard rate of 9 per cent. It aims to support the country’s economy while ensuring businesses contribute fairly. Businesses with annual profits above AED 375,000 are required to pay this tax.

Click here to learn more about the new corporate tax law in UAE.

5. Excise Tax

Excise tax is an indirect tax applicable only on certain goods and services, such as tobacco products, carbonated drinks, and energy drinks. By introducing excise tax in UAE, the government aims to promote healthier lifestyles and reduce the consumption of harmful products. The rate of excise tax imposed varies from product to product. For instance, tobacco products are taxed at 100 per cent, while carbonated drinks and other products with sweeteners are taxed at 50 per cent. Businesses that supply these products must register for excise tax with the FTA and submit regular excise tax returns.

6. Inheritance Tax

Inheritance tax is implied on those who inherit assets from the estate of a deceased person. However, there is no inheritance tax for beneficiaries in the UAE. This means that individuals inheriting property or assets in the UAE are not required to pay any taxes on their inheritance, making it an ideal destination for estate planning and wealth transfer.

7. Payroll Tax

Payroll tax is a tax on an employee's salary, usually paid by the employer. It helps fund social security and healthcare, ensuring everyone gets the support they need. However, the social security regime in UAE is applicable only to UAE and Gulf Cooperation Council (GCC) national employees.

8. Customs Duty

Customs duty or import duty is levied on goods brought into a country from abroad. In the UAE, customs duty is charged at a standard rate of 5 per cent. However, certain goods may have higher or lower rates depending on the product type and trade agreements. For example, products like cigarettes and alcohol are charged a customs duty of 100 per cent and 50 per cent, respectively.

How Can Commitbiz Help?

Understanding the details of taxes in the UAE can be slightly complex, but with the right guidance, the process can be seamless. Commitbiz, a leading corporate service provider in the UAE, offers expert advice to help you manage business tax matters and file business taxes online efficiently. From compliance to tax planning, our team ensures your business stays on track. Contact us to learn more about taxes in the UAE!