Corporate Tax in Dubai

Updated on Thursday 07th July 2016

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Dubai is now among the most popular destinations and it has become an attractive place for foreign investors because, along the luxurious lifestyle that it offers, it is considered to be a tax-free city. But what does that mean, exactly? Now, we’ll try to answer some of the questions that we, as one of the accounting firms in Dubai, might be asked. 
 

Measures taken by Dubai authorities



On some level, Dubai is a tax-free city, but there are a few circumstances in which taxation will be applied, in one form or another. The UAE wanted to introduce the income tax for a while, in 2010, when headlines spoke of taxes that Dubai residents would have to pay. Instead, the rumor turned out to be imposed measures to collect fees regarding ID cards (Emirates) and car registration.  

The UAE (United Arab Emirates) Government does not impose income taxes to companies and individuals living in the country. But if the citizen is registered in other countries, for taxation purposes, and is also making profits in Dubai, he or she may be required to pay a few taxes. For more information about this system, make sure to contact us – regarding any accounting services in Dubai.
 

The tax system



Beside the United Arab Emirates taxation system, each emirate has its own system in place. Dubai has a corporate tax legislation which requests certain taxes from the companies that are operating within the city. But, the taxes apply only to a few companies and they are:

-    companies, within Dubai, which are operating in the oil and gas industry,
-    the branches of all foreign banks that are operating in Dubai.

The branches of the foreign banks are imposed to pay a 20% corporate tax rate, although the Dubai oil and gas companies have a 55% tax rate that is applied to the profits of the company. 
 

Levied taxes in Dubai


In Dubai, there is no levied value added tax (VAT), but there are indirect taxes which are applied to individuals. Here are the taxes imposed by the Dubai authorities:

-    a municipal tax of 5% is required on the rental of any residential property within Dubai;
-    10% municipal tax is applied on the rental of the commercial real estate;
-    another municipal tax of 10% applies to the earning of the hotels (including all entertainment facilities).    

Also good to know for all foreign investors is that, within the Emirate, bringing or buying alcohol in the country has different other tax rates applied. 

In case you are looking for accountants in Dubai or audit firms in the city and for any other details regarding the taxes applied within the UAE, do not hesitate to contact us

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