Taxes in Dubai and UAE

Taxes in Dubai and UAE

UAE have based their foundations, on being one of the famous ‘tax havens’. Like many other Middle East countries, Dubai and UAE in general earn its revenue mainly through the oil industry and offers tax-free living to attract global companies and talent to diversify and enrich their economy further. Therefore, everyone thinks that in Dubai you do not pay taxes; but is it really like that? Is it really tax-free in the UAE? Yes, it is but only in certain circumstances!

However, in order to have a business in the UAE you need to pay an annual license fee (whose value depends on the type of business); and there are a number of other fees: the company may need resident visas for the entrepreneur, his or her family and their employees.

Most customs duties are very low and may even be excluded for certain categories of products like in the case of materials to be used for the production of goods to be re-exported. But in other cases they reach 100% of the value of the product (alcoholic beverages, energy drinks, tobacco).

Starting from 1st January 2018 the United Arab Emirates introduced VAT for the possible economic impact due to a depletion of oil resources: a true revolution in the economic and financial landscape. The VAT is set at 5%. Basic foodstuffs, education and health are exempted.

At present, companies with an annual turnover of between AED 187,500 and AED 375,000 can choose whether to register or not, while those with less than AED 187,500 will remain exempt for now. The change has far-reaching implications for companies that will need to make use of professional figures or service companies for their management. This will be also the occasion for whom want to open his own accountancy firm in Dubai and in UAE.

Taking a look at neighboring countries (in particular Qatar and Saudi Arabia), you can see that businessmen opening activities there need to consider the cost of setting up the companies, the possible share capital to be paid, the mandatory office that will pay 10% and 20% of taxes respectively on all that is generated with foreign countries. And even if all the generated income is foreign, a certified auditor needs to be accounted for.

So today opening a business in a Free Zone is still your best bet (not requiring the visa requirement, physical office, accounting records, share capital to be paid). Contact us for more information about best solution for you.