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Taxation in Dubai Free Zones

Updated on Friday 29th July 2016

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Taxation-in-Dubai-free-zonesOne of the most important reasons foreign investors choose to set up companies in the UAE is the country’s taxation system which provides mainly for the taxation of companies operating in the oil and financial industries. It must also be noted that each Emirate has its own tax laws. Among them, Dubai has one of the most advantageous tax systems. Dubai also has an important number of free zones which govern themselves and have their own taxation systems.

Our company formation agents in Dubai can offer detailed information about the Emirate’s free zones.

Applying taxes in Dubai free zones

Each free zone in Dubai has its own authorities which issues and enforces the applicable legislation, including tax decrees. The most popular free zone in the Emirate is the Dubai International Financial Centre, however, there are also other free zones offering advantageous tax conditions. A company is considered tax resident in a Dubai free zone once it is incorporated with the relevant authority and if the management of the company is exercised in Dubai.

Considering free zone authorities in Dubai do not impose a corporate tax, companies are not required to pay this tax in the Emirate or to follow other procedures related to taxation; therefore, companies are not required to file annual tax returns. There are no taxable periods or tax assessments imposed to free zone companies in Dubai.

Types of taxes in Dubai free zones

Dubai free zone authorities do not impose any income tax on companies or individuals, which is why no dividend or corporate taxes are levied in any of them. However, the local authorities impose a municipal tax on properties held in this country. If the property is a rental, the tenant is usually required to pay this tax. 

Dubai free zone authorities usually offer tax exemptions for up to 50 years to foreign companies operating here. However, foreign shareholders of Dubai free zone companies must pay attention to the taxes they are subject to in their home country and if any double tax treaty applies in their case.

Our company registration agents can offer details about the UAE’s network of double tax agreements. You can also contact us if you want to open a free zone company in Dubai.

 

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