Our company has prepared a comprehensive overview of the UAE tax system, providing detailed information on the taxation of individuals and companies in the United Arab Emirates, taxes related to gifts and inheritance, double taxation treaties, and other relevant and practical data.
Taxation of individuals
There is no personal income tax in the UAE. Income received in the form of salaries, remuneration, dividends, interest, royalties, and investment income is not subject to taxation, regardless of the amount of income or its source.
In addition, the UAE does not levy:
- a wealth tax;
- capital gains tax (with the exception of certain corporate cases);
- federal inheritance or gift tax.
Tax residency of individuals is determined based on factual presence in the country, possession of a residency visa, the center of vital interests, and other criteria established by UAE regulations.
Taxation of legal entities and corporate tax
A federal corporate tax was introduced in the UAE on 1 June 2023, marking a key stage in the reform of the national tax system.
Key provisions include:
- the standard corporate tax rate is 9%;
- profits up to the established threshold of AED 375,000 are taxed at a 0% rate;
- the tax applies to resident companies as well as non-residents deriving income from UAE sources.
Companies registered in free economic zones may apply a preferential tax regime provided they meet the requirements for qualifying activities and economic substance. If these conditions are not met, profits are taxed at the standard rate.
Value Added Tax (VAT)
VAT is applied in the UAE at a standard rate of 5%.
VAT applies to:
- the sale of goods and provision of services within the UAE;
- the import of goods;
- certain cross-border transactions.
Zero-rated and VAT-exempt supplies are предусмотрены, including specific financial services, healthcare and educational services, and international transportation.
Companies are required to register for VAT once the applicable turnover threshold is reached and must comply with VAT return filing and record-keeping requirements.
Excise tax
Excise tax is imposed on goods considered harmful to human health or the environment, including:
- tobacco products;
- electronic cigarettes and vaping liquids;
- sweetened beverages;
- energy drinks.
Excise tax rates may reach 50% or 100% of the product value.
Taxes on gifts and inheritance
There is no federal inheritance or gift tax in the UAE. However, the transfer of assets is governed by civil and inheritance laws, including:
- the default application of Sharia principles;
- the possibility for non-residents to register wills;
- specific rules for the transfer of real estate, company shares, and bank assets.
Proper inheritance and asset planning are essential to ensure effective asset protection.
Double taxation treaties
The UAE has an extensive network of double taxation avoidance agreements with dozens of countries.
These treaties allow taxpayers to:
- reduce or eliminate double taxation of income;
- optimize taxation of dividends, interest, and royalties;
- confirm tax residency for international corporate structures.
Application of these treaties requires compliance with substance, business purpose, and effective control principles.
International standards and compliance
The UAE actively implements international tax transparency standards, including:
- economic substance requirements (ESR);
- disclosure of ultimate beneficial owners (UBO);
- automatic exchange of tax information (CRS).
Failure to comply with these requirements may result in penalties, denial of tax benefits, and other regulatory sanctions.
Overall assessment of the UAE tax system
The UAE tax system combines relatively low tax rates with increased reporting and regulatory compliance requirements. It remains attractive for international businesses and private individuals, but requires careful tax planning and professional advisory support.
