What Are the Taxes in Dubai for Expats and Businesses?

Taxes in Dubai for expats and businesses come down to a short list: no personal income tax at all, a 9% federal corporate tax on business profits above AED 375,000, a 5% value added tax on most goods and services, and various transaction fees on property, imports, and specific products. Individuals keep their full gross salary. Businesses have real filing obligations and deadlines. And American residents still owe the IRS regardless of where they live.

What Expats Pay on Personal Income

There is no personal income tax in Dubai or anywhere else in the UAE. Employees receive their gross salary with zero deductions for federal or local income taxes. The same treatment extends to passive income: interest on bank deposits, dividends, and capital gains from selling assets or securities are all untaxed at the individual level.

The UAE also imposes no wealth tax, no gift tax, and no inheritance tax. Assets can pass to heirs without a government assessment or a transfer tax return. For high-earning professionals and investors this is the genuine draw, but it does not mean every resident is free of tax obligations. Citizens of countries that tax worldwide income, most notably the United States, still owe tax at home.

Getting a UAE Tax Residency Certificate

If your home country taxes personal income, proving that the UAE is your tax home matters. The Federal Tax Authority issues a Tax Residency Certificate under two tracks. Under international tax treaty standards, you need physical presence in the UAE for more than 183 days in a consecutive 12-month period. Under domestic law you can qualify with as few as 90 days of presence if you also hold a valid UAE employment contract or business license, keep a permanent residence in the country, and can show that your financial and personal interests are centered here.1Federal Tax Authority. Issuance of Tax Certificates for Tax Residency

Corporate Tax for Businesses

Federal Decree-Law No. 47 of 2022 introduced the UAE’s first broad-based corporate tax, effective for financial years beginning on or after June 1, 2023.2Ministry of Finance (UAE). Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses The structure is simple:

Natural resource extraction stays taxed at the emirate level under existing local arrangements and falls outside this federal framework. Almost every other commercial activity is in scope, whether run as a mainland company, a sole proprietorship, or a foreign entity with a permanent establishment in the UAE.

Small Business Relief

Businesses with revenue of AED 3 million or less in a tax period can elect Small Business Relief, which treats taxable income as zero for that period and effectively eliminates the corporate tax bill. The relief is available for tax periods beginning on or after June 1, 2023 and ending on or before December 31, 2026, so it has a built-in expiration.4Federal Tax Authority. Small Business Relief Guide You still need to register and file a return even when you claim it.

Free Zone Companies

Companies in designated Free Zones can qualify for 0% on what the law calls “qualifying income.” In practice that covers transactions between Free Zone entities and revenue earned from customers outside the UAE. Income from mainland UAE clients generally does not qualify and is taxed at the standard 9% rate.2Ministry of Finance (UAE). Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses

Keeping the 0% rate requires genuine economic substance in the UAE, audited financial statements, and non-qualifying income below a de minimis threshold (either less than 5% of total revenue or under AED 5 million). Miss those boundaries and the 9% rate applies to everything. A Free Zone license without real operations will not deliver the benefit.

Registration, Filing, and Penalties

Every taxable business must register with the Federal Tax Authority and obtain a Tax Registration Number. Corporate tax returns are due within nine months of the end of the relevant tax period. For a company on a January to December financial year, that means a September 30 filing deadline the following year.5Federal Tax Authority. Federal Tax Authority Urges Submission of Corporate Tax Returns and Settlement of Corporate Tax Liabilities Within Nine Months From the End of the Tax Period Late registration triggers a penalty of AED 10,000, and further penalties apply for late filing and late payment. The FTA has been enforcing these deadlines actively since the first filings came due.

Value Added Tax

The UAE implemented VAT on January 1, 2018 under Federal Decree-Law No. 8 of 2017. The standard rate is 5%, charged at each stage of the supply chain from manufacturer to final consumer.6UAE Legislation Portal. Federal Decree-Law No. 8 of 2017 on Value-Added Tax It covers most retail purchases, dining, professional services, and commercial transactions.

Any business whose taxable supplies exceed AED 375,000 over a rolling 12-month period must register for VAT, charge it on sales, and remit it to the FTA. Businesses with supplies between AED 187,500 and AED 375,000 can register voluntarily. Poor records, missing tax invoices, or late VAT returns can all draw significant fines.

Zero-Rated and Exempt Categories

Not everything is taxed at 5%. Some categories carry a 0% rate, which means VAT technically applies but at zero, letting suppliers in those sectors reclaim input VAT on their costs. The main zero-rated categories:

  • Healthcare: preventive and curative medical services from licensed professionals, along with approved medications. Elective cosmetic procedures and health insurance are taxed at 5%.
  • Education: tuition at licensed schools and universities, and curriculum textbooks. Extracurriculars, private tutoring outside formal institutions, and separately sold supplies are at 5%.
  • Exports of goods and services outside the GCC.
  • International passenger and cargo transportation and related supplies.

Certain financial services and residential property transactions are VAT-exempt, which is different: no VAT is charged, but the supplier also cannot reclaim input VAT on related costs.

Tourist Refunds

Visitors can reclaim VAT on purchases they take out of the country when goods are bought from a retailer in the “Tax Refund for Tourists” scheme and the purchase totals at least AED 250. At the departure port you present the tax invoices, the tax-free tags, your passport, and the goods at a designated kiosk. Refunds are paid in cash or credited to a card at 85% of the VAT paid, less a processing fee of AED 4.80 per tag.7The Official Platform of the UAE Government. VAT Refund for Tourists

Excise Tax on Specific Products

Certain products deemed harmful to health or the environment carry an excise tax that sits on top of VAT and materially inflates retail prices:8The Official Platform of the UAE Government. Excise Tax

  • 100% on tobacco products, energy drinks, electronic smoking devices, and the liquids used in those devices
  • 50% on carbonated drinks and any product with added sugar or other sweeteners

The 50% rate is broader than it looks. It applies to any packaged drink or product marketed with added sweeteners, not just sodas. Businesses that import, produce, or stockpile excise goods must register separately with the FTA and report inventories accurately.

Property and Municipal Fees

Property transactions in Dubai involve one-time transfer costs and ongoing municipal charges. When you buy or transfer real property, the Dubai Land Department charges a registration fee of 4% of the sale value. The law contemplates a split between buyer and seller, but in practice the buyer nearly always pays the full amount. Financing adds a mortgage registration fee of 0.25% of the loan amount plus a small administrative charge.

Once you occupy a property you also pay a municipal housing fee, which appears on your monthly DEWA bill. Tenants pay 5% of the annual rent stated in the Ejari tenancy contract, spread over 12 monthly installments. Owners pay a similar fee pegged to the property’s assessed rental value. Unpaid balances can create problems when renewing tenancy contracts or residency visas.

Customs Duties on Imports

Goods imported from outside the UAE are subject to customs duties under the GCC Common Customs Law. The standard rate is 5% of the cost, insurance, and freight (CIF) value of the goods, uniform across all Gulf Cooperation Council member states.9The Official Platform of the UAE Government. Customs Clearance Two categories face much higher rates: alcohol imports at 50% and cigarettes at 100%. Basic food staples and pharmaceutical products are often exempt. Importers must use electronic declaration systems and provide proper documentation, including a commercial invoice and certificate of origin. Under-reporting value risks seizure and penalties from Dubai Customs.

End-of-Service Gratuity for Expat Workers

Expatriates are not part of the UAE social security system, which covers Emirati nationals only. Instead, they are entitled to a lump-sum end-of-service gratuity when they leave their employer, provided they have completed at least one year of continuous service. The calculation is based on basic salary only, excluding allowances for housing, transportation, or utilities:10The Official Platform of the UAE Government. End of Service Benefits for Workers in the Private Sector

  • First five years: 21 calendar days’ basic salary for each year of service
  • After five years: 30 calendar days’ basic salary for each additional year beyond the fifth

The total is capped at two years’ wages regardless of tenure. Workers who leave before completing a full year receive nothing. This is a severance payment, not a pension, so there is no ongoing retirement benefit for expatriates after they leave.

What U.S. Citizens in Dubai Still Owe

The United States taxes its citizens and permanent residents on worldwide income regardless of where they live. Moving to a zero-tax jurisdiction does not eliminate U.S. filing obligations. It only changes which tools reduce the bill.

Foreign Earned Income Exclusion

The main relief is the Foreign Earned Income Exclusion under IRC Section 911. For the 2026 tax year you can exclude up to $132,900 of foreign earned income from U.S. federal tax if you qualify under the bona fide residence test or the physical presence test (330 full days outside the U.S. in a 12-month period).11Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Certain housing costs above a base amount can also be excluded or deducted. Earned income above the exclusion is taxed at your regular U.S. rate.

No U.S.-UAE Tax Treaty

The United States and the UAE do not have a bilateral income tax treaty.12Internal Revenue Service. United States Income Tax Treaties – A to Z There is no treaty mechanism to reduce U.S. tax on investment income earned in Dubai such as dividends, interest, or capital gains. Foreign tax credits for UAE taxes are also unavailable, though that is largely moot given there is no UAE personal income tax to credit. Americans with significant investment income above the FEIE threshold will owe U.S. tax on it with limited relief.

FBAR and Form 8938

Two separate reporting obligations sit on top of income taxes, and both carry steep penalties. The FBAR must be filed if the combined value of your foreign accounts exceeds $10,000 at any point during the year. It goes to FinCEN, not the IRS, with an April 15 deadline and an automatic extension to October 15.13Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR)

Form 8938, the FATCA filing, has higher thresholds for Americans abroad: $200,000 on the last day of the tax year or $300,000 at any time during the year for single filers, and $400,000 or $600,000 respectively for married couples filing jointly.14Internal Revenue Service. Instructions for Form 8938 The two filings cover overlapping but not identical categories of assets, so both may be required. Willful failure to file an FBAR can bring penalties up to $100,000 or 50% of the account balance per violation.