What you need to know about taxation in the UAE?

15 / 07 / 2020

Many entrepreneurs, businessmen and investors call the UAE a “tax haven”, and in this article we will describe why.

The United Arab Emirates has no income tax and capital gains, this applies to both individuals and legal entities. Corporate tax will only affect you if your business is in the oil or banking sectors. In other cases, you can completely forget about corporate tax.

There are special fees in the UAE, but they apply only to certain zones. These fees can be municipal fees for staying in hotel complexes, fees for knowledge and innovations in transactions with the government or bills in restaurants. Also, there may be fees for diverse services or procedures for conducting commercial and private transactions.

When working with real estate, remember that all transactions are subject to “registration fees”. For example, if there is a change in shares in the company or transfer of ownership. The amount of the fee depends on the location of the property and the Emirate in which the property is located.

A tax of 30% on alcoholic beverages is in many Emirates. Since 2017 federal excise taxes began to operate on tobacco products, energy and soda.

The value added tax appeared in the UAE since 2018, when the Federal Tax Authority decided to introduce it in the amount of 5%. Absolutely all services and goods are subject to VAT, but knowledge of the nuances helps officially not to pay VAT.

Over the past 20 years, the UAE has entered into agreements with more than 100 countries around the world. These agreements are created to avoid double taxation. The agreements provide an impetus for new investments, large-scale exchange of services and goods, and also eliminate difficulties in cross-border trade, which contributes to the influx of significant capital.

Avoiding double taxation gives you the right not to pay tax in the country of permanent residence, which positively affects the company's profit.

The UAE does not stop there and is constantly improving its system for a comfortable life and business. In the UAE, you will find a favorable environment for business growth with one of the best investment climates in the world.