Income Tax in Dubai

Updated on November 3,2020
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Dubai offers a wide range of business possibilities that can be developed in an excellent climate with plenty of advantages. The Dubai tax rate is extremely advantageous, as Dubai is tax-free. This is also available to the income tax rate which is not imposed in Dubai. Our company formation agents in Dubai can help international entrepreneurs establish the business presence in the UAE, respecting the applicable legislation. Below, we present you information about the tax advantages in Dubai.

 

What is the income tax in Dubai?

 

The Dubai taxation system is extremely appealing to both local and international entrepreneurs, as there is no income tax imposed. Plus, there are no chances for the Dubai government to introduce this kind of tax any time soon. This is a great tax advantage for natural and juridical persons living in Dubai. Taxation in the UAE is extremely favorable and allows foreign entrepreneurs to decide on varied investments in companies instead of thinking of the taxation on profits. Plus, the double taxation agreements signed by UAE with countries worldwide present other advantages but make sure to discuss all the aspects of Dubai income tax with one of our specialists in company formation in Dubai.

 

Is there an income tax for individuals in Dubai?

 

No, there is no income tax imposed on salaries or an individual’s income registered in Dubai. Plus, residents in Dubai do not have to pay taxes on rental incomes, capital gains, or stamp duty. However, if you are a tax resident elsewhere, your income in Dubai can be subject to taxation. Feel free to talk to our team if you would like to open a company in Dubai and if you need to know more about taxation, if applicable.

 

Taxation of specific types of companies in Dubai

 

Even though Dubai is tax-free, there are certain areas in which taxation is imposed. Companies activating in the banking system or those operating in the gas and oil industry must pay taxes in Dubai. As such, 55% is the tax rate for oil and gas companies in Dubai, while banks in Dubai are subject to a 20% tax rate applicable to the taxable income. Yet, there are tax exemptions too for these kinds of companies, as there is no withholding tax for dividends, interests, and royalties remitted abroad. More details in this matter can be obtained from one of our specialists.

 

Income tax for Dubai’s free trade zones

 

Dubai’s free trade zones host a large number of companies from overseas who benefit from a wide range of tax advantages and other encouragements. There is no Dubai income tax imposed on companies with operation in the free trade zones in Dubai. Also, there is no corporate tax for periods of up to 50 years if the business remains in one of the special business zones. Withholding taxes and capital gains taxes are not applicable to companies with activities in Dubai’s free trade zone. Our local consultants in Dubai can explain more about the business conditions in the free trade zones in the city, and also about Dubai tax rates. These remain the most preferred business areas for international entrepreneurs who want to relocate or start a company in UAE

 

VAT in Dubai

 

Even though the tax regime in Dubai is extremely appealing, the VAT was introduced in January 2018. This kind of tax is imposed on the final consumer and it is collected by companies with sale activities in Dubai. However, companies in Dubai can claim refunds if they are subject to VAT. The registration for VAT is mandatory for companies in Dubai, and complete assistance and guidance can be offered by our team of company incorporation specialists in Dubai. You can discuss all the formalities involved in company registration in Dubai. Also, if interested in Dubai tax rates, feel free to talk to us.

 

Making investments in Dubai

 

Because there is no Dubai income tax and other benefits too, the business environment is extremely appealing to domestic and international entrepreneurs. Besides the Dubai tax rate, the city provides a wide range of business opportunities in numerous fields. There are many investment options in fields like tourism, manufacturing, IT, communication, engineering, research and development, medicine, education, transportation, and many more. Here are some facts and figures that highlight the business direction of the UAE:

 

1. Approximately USD 154 billion was the total FDI stock for UAE in 2019.

2. The 2020 Doing Business report ranks the UAE 16th out of 190 economies in the world.

3. Around USD 13 billion was the total value of greenfield investments in UAE in 2019.

 

Feel free to contact our team of specialists for more details about the Dubai tax rate.

 

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