Tax-Free Environment in Dubai UAE
One of the most attractive reasons to set up your business and live in UAE is that the government does not levy a tax on personal income or corporate profits. The only service charges that one has to pay in UAE is collected by government agencies for car registration, road toll and official documentation like Emirates ID card. So come, set up your UAE business and enjoy the most of your earnings in this tax-free and economically advanced country.
Income Tax
UAE government does not impose taxes on salaries earned by individuals or wealth earned by companies. If you earn in Dubai, and are a tax resident in another country, you will have to declare your income and pay taxes, depending on your home country’s rules.
Double Taxation Avoidance Agreements
In order to relieve expats from being doubly taxed on their income earned in UAE, the Emirates government has signed Double Taxation Avoidance Agreements with a lot of countries.
Corporate Tax
Most companies are exempted from paying taxes and are not even subjected to withholding taxes for sending their income outside the UAE. Only oil, gas and hydrocarbon-producing companies as well as some banks are expected to pay taxes. Foreign banks in Dubai, Fujairah, Abu Dhabi and Sharjah are subjected to this tax.
Indirect Taxes
United Arab Emirates does, however, impose municipal taxes on residents. These are mainly levied on housing and commercial rentals, entertainment, alcohol, water, electricity and road usage. Dubai levies a 10% municipal tax on revenues earned by hotel and through entertainment. Alcohol imports are heavily taxed, and you end up paying around 50% to bring alcohol into UAE and 30% to purchase alcohol for consumption at home. There is a 10% tax levied on rentals earned from residential and commercial units, while the Dubai Electricity and Water Authority also collects tax on their utility services. The biggest tax paid by Dubai residents is the road toll or Salik, which is levied on commuters using all major roads in the emirate.