🇦🇪United Arab Emirates · Taxes
United Arab Emirates — Taxes
UAE taxes in 2026: 0 % personal income tax, 9 % federal corporate tax above AED 375 000, free-zone qualifying income still at 0 %, 5 % VAT, no withholding tax, 140+ DTTs. Filing on the EmaraTax portal.
The UAE used to be the easy answer to "where do I pay zero tax". That answer is now half true. Personal income tax is still 0 %. Mainland and non-qualifying businesses pay 9 % on profit above AED 375 000 since June 2023. VAT is 5 %. This chapter is the post-reform map and the honest effective-rate arithmetic.
The 0 % headline and the 2023 corporate-tax shift
For five decades the UAE relied on a clean line: no federal income tax, no federal corporate tax outside oil and banking, low indirect tax. That line broke in two places. VAT arrived at 5 % on 1 January 2018. Federal arrived at 9 % on 1 June 2023, with a profit floor at 375000 AED below which the rate is 0 %.
For a salaried employee or remote worker, almost nothing changed. Personal income tax stayed at 0 %. There is no payroll tax, no national insurance, no inheritance tax, no wealth tax. A monthly AED 30 000 salary still lands in the bank as AED 30 000.
For a founder running an active business, the calculus shifted. A mainland LLC clearing AED 1 000 000 of profit now pays AED 56 250 of corporate tax (9 % on the AED 625 000 above the floor). A free-zone entity can still hit 0 % if it qualifies as a , but qualifying requires substance, audited financials, and a narrow definition of "qualifying income". The structuring decision is no longer cosmetic.
- Personal income taxno federal or Emirate-level PIT
- 0 %verif. · 2026-05-27
- Corporate taxabove AED 375 000 profit; below = 0
- 9 %verif. · 2026-05-27
- Corporate tax floorAED; 0 % below this profit threshold
- 375000verif. · 2026-05-27
- VATfederal; standard rate since Jan 2018
- 5 %verif. · 2026-05-27
- Withholding taxno domestic WHT on outbound payments
- 0 %verif. · 2026-05-27
- DTT partnersin-force treaties; among the broadest
- 140verif. · 2026-05-27
- Excise on tobacco / energy drinkssugar drinks: 50 %
- 100 %verif. · 2026-05-27
0 % personal income tax: what it actually covers
The UAE charges no federal or Emirate-level tax on the income of natural persons. The exemption is broad and structural, not a relief that has to be claimed.
- Employment income (salary, bonus, end-of-service gratuity): 0 %.
- Dividends received by a resident individual from UAE or foreign companies: 0 %.
- Capital gains on shares, funds, and other securities held in a personal account: 0 %.
- Rental income from UAE residential property held as a personal investment: 0 %.
- Inheritance, estates, and lifetime gifts: no tax (Sharia-based succession rules apply to estates of Muslims dying intestate; expats can register a DIFC or ADGM will to override).
- Wealth tax, net-worth tax, exit tax: none.
What is not exempt at the personal level. If a resident individual runs an unincorporated business (sole proprietor, partner in an unlimited partnership) with revenue above AED 1 000 000, the profit feeds into as if it were a corporate taxpayer. The 9 % rate then applies above the AED 375 000 profit floor. A freelancer invoicing AED 600 000 a year as an unincorporated trader is in scope; the same freelancer salaried inside their own free-zone entity is not.
Residency for tax. Cabinet Decision 85/2022 set the modern definition in 2023. A natural person is a UAE tax resident if any one of three tests holds: the UAE is the centre of financial and personal interests with a primary place of residence here; OR they spend at least 183 days days in the UAE over any 12-month period; OR they spend at least 90 days days with UAE national or resident status plus a permanent address and either employment or business activity here. The from the confirms the status for a specific tax year and underpins any treaty claim.
The 9 % corporate tax, mainland vs free zone
Federal Corporate Tax applies to every taxable person carrying on business in the UAE. The structure is two-tier on rate, but every business has to register and file regardless of whether tax is owed.
Mainland and non-qualifying entities
- Profit up to 375000 AED: 0 %.
- Profit above 375000 AED: 9 % on the excess.
- A mainland LLC clearing AED 2 000 000 of profit pays AED 146 250 of corporate tax (9 % on the AED 1 625 000 above the floor): an effective rate of 7.3 %.
- A mainland LLC clearing AED 10 000 000 of profit pays AED 866 250: an effective rate of 8.7 %.
There is no graduated bracket above the floor. The 9 % is flat on every dirham of profit beyond the threshold; the effective rate approaches the headline as profit scales.
Free-zone QFZP route
A free-zone entity can keep the 0 % rate on its income by passing four tests in every tax period: adequate substance in the zone (employees, offices, expenses), audited financial statements, "qualifying income" rules met, and a non-elective stance against ordinary corporate rates. The qualifying income categories are narrow: intra-zone trade with other free-zone entities, certain export of services to foreign clients, manufacturing and processing inside the zone, fund management for foreign-invested vehicles, holding shares in foreign subsidiaries. Income from mainland UAE customers, retail sales, and most consultancy to mainland clients is non-qualifying.
Non-qualifying income is taxed at the standard 9 %, without the AED 375 000 floor. If a free-zone entity earns AED 800 000 of qualifying export-service income and AED 200 000 of mainland-consultancy income in a year, the AED 200 000 is taxed at 9 % from the first dirham. There is also a "de minimis" rule: if non-qualifying income exceeds 5 % of total revenue or AED 5 million in a period, QFZP status is lost for that period and for the following four tax periods.
Small Business Relief
Businesses with revenue at or below 3000000 AED in the current and all prior tax periods can elect Small Business Relief. The election treats the business as having no taxable income for that period: no corporate tax owed, simplified return filed, no transfer-pricing documentation. The relief is available through tax periods ending on or before 31 December 2026; renewal beyond that date is not yet confirmed.
Pillar Two for very large groups
The UAE adopted a Domestic Minimum Top-up Tax (DMTT) at 15 % effective 1 January 2025, in line with OECD . The DMTT applies to multinational enterprise groups with consolidated revenue at or above EUR 750 million in two of the last four years. For a qualifying group, UAE entities effectively pay 15 % rather than 9 % on the qualifying profit slice. This affects perhaps a few hundred groups; for the typical owner-managed business it is not in scope.
VAT, excise, and the cost-of-living tax
VAT (Value Added Tax) is the only broad-based consumption tax. The standard rate is 5 % on most goods and services, in force since 1 January 2018. The list of zero-rated supplies is unusually wide for a 5 % VAT system.
- Zero-rated (input VAT recoverable): exports of goods and services outside the GCC, international transport, the first supply of newly built residential property (within three years of completion), certain education, public healthcare, investment-grade precious metals.
- Exempt (no VAT, no input recovery): financial services without fee disclosure, life insurance, residential property resale and rent (second and subsequent supplies), bare land, local passenger transport.
- Standard 5 %: everything else, including most retail, restaurants, professional services, electronics, fuel, hotels, commercial property rent.
Registration. Mandatory once annual taxable supply exceeds 375000 AED. Voluntary from 187500 AED in either taxable supply or taxable expenses; useful for a startup that wants to recover input VAT before it has paying customers. Returns are quarterly for most businesses, monthly for large ones; filed on .
Tourist refund. Visitors can reclaim VAT on goods exported in their luggage through the Planet refund scheme at airport kiosks. Useful trivia for residents hosting foreign guests; not a personal planning tool.
Excise tax sits separately. 50 % on sugar-sweetened beverages (since December 2019), 100 % on tobacco, electronic smoking devices, and energy drinks. The excise is built into retail prices; a pack of cigarettes that would cost AED 10 untaxed retails near AED 25. Alcohol is taxed separately by Emirate authorities through licence fees rather than federal excise, and the rate has moved in recent years (Dubai removed its 30 % municipality fee on alcohol sales in January 2023).
DTT network and the Tax Residency Certificate
The UAE runs one of the broadest double tax treaty networks in the world: around 140 in-force partners, including the EU members, the UK, Singapore, India, China, Japan, Switzerland, Turkey, and most of the GCC. The UAE is not a signatory to the OECD Multilateral Instrument (MLI) in the same uniform way as EU states, so treaty terms differ partner by partner; the older treaties tend to have lower withholding caps than the MLI-aligned post-2018 generation.
No US treaty. The UAE has no DTT with the United States. For a US-passport holder living in the UAE, US worldwide taxation still applies; the foreign earned income exclusion (FEIE) and the foreign tax credit are the relief mechanisms, but with 0 % UAE tax there is little foreign tax to credit. US persons in the UAE typically still owe US federal tax on income above the FEIE threshold.
Treaty access requires a Tax Residency Certificate. The is issued by the through , free of charge, in around two to four weeks. It confirms UAE tax residency for a specified tax year and is what a foreign payer (a French employer, an Indian dividend custodian, a UK pension trustee) needs to apply reduced treaty withholding. Without a TRC, the foreign side typically defaults to the domestic rate.
Recent renegotiations. Several DTTs have been replaced or amended in the post-2023 wave, partly to align with and to introduce anti-abuse provisions absent from older treaties. The UAE-Russia treaty was renegotiated in February 2025: the old 2011 framework (a simplified sovereign-investor template, with effective 0 % on most cross-border flows) is replaced by a treaty with 10 % / 15 % withholding on dividends, 10 % on interest, and 10 % on royalties, plus a principal purpose test. The new treaty enters force only after both sides complete ratification; status as of mid-2026 is pending. Until ratification, the 2011 treaty rules still apply.
No domestic withholding. Whatever a treaty says about UAE-source dividends, interest, or royalties, the UAE side itself levies 0 % domestic withholding tax on outbound payments. A UAE company can pay a dividend to a foreign shareholder without any tax withheld in the UAE. This is unusual and is one of the structural reasons the UAE is used as a holding-company location.
EmaraTax, deadlines, and penalties
is the single portal for everything tax-related: corporate tax registration, VAT registration, excise registration, return filing, payments, refund requests, TRC applications. Run by the , it replaced earlier separate portals in late 2022. Login uses UAE Pass (the federal digital identity) for individuals and a tax registration number for entities.
Registration timing. Every business (mainland, free zone, freelancer with a commercial licence) must register for corporate tax with the FTA, regardless of whether profit clears the threshold. Registration windows ran in 2024 by licence-issue month; late registration carries an administrative penalty of AED 10 000 per entity. VAT registration follows the threshold rules above; failure to register within 30 days of crossing the threshold is also penalised.
Filing windows. Corporate tax returns are annual and due within 9 mo months of the financial year-end. For a January-December financial year, the return is due by 30 September of the following year. Quarterly advance payments are not required (unusual for a corporate tax regime). VAT returns are quarterly or monthly depending on volume. Excise returns are monthly.
Penalties. The administrative-penalty schedule is published by the FTA. Late filing: AED 500 for the first month, AED 1 000 per month thereafter, capped. Late payment: 2 % immediately, then 4 % monthly. Incorrect return that understates tax: 5 % to 50 % of the unpaid amount depending on intent. Standard fines run up to 50000 AED; deliberate tax evasion is a criminal matter with separate, far higher sanctions.
Audit posture. The FTA has expanded its audit team since 2024, with particular focus on free-zone substance, intra-group transfer pricing, and Small Business Relief eligibility. Transfer-pricing documentation (master file + local file) is required where group consolidated revenue exceeds AED 200 million or UAE entity revenue exceeds AED 200 million. Disclosure of related-party transactions is a return-level requirement for all corporate-tax-registered entities, not only the large ones.
Crypto and investment income for residents
The UAE has no separate personal capital gains regime, so an individual's gain on selling crypto, listed shares, or fund units is not taxed. A resident trading their own portfolio through a broker-dealer in Dubai or abroad keeps the gain. There is no annual reporting requirement on a personal account, no exit tax on emigration, no inheritance tax on a portfolio passed to heirs.
Where the line is crossed. If the activity has the character of a business, profit becomes corporate-tax income at 9 % above the AED 375 000 floor. The FTA looks at frequency of trades, scale, dedicated staff and infrastructure, and whether the activity is conducted through a licensed entity. A part-time investor with a few hundred trades a year is on the personal-investor side. A market-maker running a desk with full-time staff is on the business side. Mining and staking at industrial scale fall under the business side.
Crypto and VAT. Most crypto-related supplies (exchange services, custody, advisory) are taxable at 5 % for UAE-resident customers, zero-rated for foreign customers under the export-of-services rules. The supply of cryptoassets themselves is generally outside the scope of VAT for personal investors.
Where to read next
The Visa chapter walks through Golden, Green, Remote Work, Employment and Investor routes, including the substance link to corporate tax residency. The Property chapter covers freehold zones, transfer fees, and the residential VAT zero-rating rules. The Banking chapter covers account opening (personal and corporate), KYC, and the substance documents an FTA audit may ask for. For comparison against Singapore, Cyprus or Malta, the cross-country atlas is the entry point.
Frequently asked
Is the UAE still a zero-tax country?
Half. Personal income tax is still 0 % on salary, dividends, capital gains and UAE rental income; there is no inheritance, estate, or wealth tax. But since June 2023 a federal applies at 9 % on business profit above 375000 AED. VAT runs at 5 % on most consumption. For a salaried employee or remote worker the headline is intact; for an active business owner it is not.
Can a free-zone company still pay 0 % corporate tax?
Yes, if it qualifies as a : real substance in the zone (staff, office, expenses), audited financials, "qualifying income" that fits the listed categories (intra-zone trade, certain export of services, in-zone manufacturing, fund management for foreign vehicles), and de minimis non-qualifying income below 5 % of revenue (or AED 5 million). Non-qualifying income is taxed at 9 % from the first dirham, with no AED 375 000 floor.
What is Small Business Relief?
A relief for businesses with revenue at or below 3000000 AED in the current and all prior tax periods. The entity elects to be treated as having no taxable income for the period: no corporate tax owed, simplified return, no transfer-pricing master/local file. Available through tax periods ending on or before 31 December 2026. Election is annual.
How do I become a UAE tax resident?
Three routes under Cabinet Decision 85/2022. (1) The UAE is your primary place of residence and the centre of your financial and personal interests. (2) Physical presence of at least 183 days days in any 12-month period. (3) Physical presence of at least 90 days days plus UAE national or resident status with a permanent address and either employment or business activity in the UAE. Any one of the three is sufficient. The from the confirms the status for a tax year and unlocks treaty benefits abroad.
Does the UAE withhold tax on dividends or royalties paid abroad?
No. Domestic withholding tax on outbound payments is 0 %. A UAE company can pay a dividend, interest, royalty, or service fee to a foreign recipient without any UAE-side withholding. Treaty access for reduced withholding on the foreign side (where the foreign country does charge withholding on its outbound payments to the UAE) still requires a UAE .
How is cryptocurrency taxed for a UAE resident?
A personal investor pays nothing on the gain. There is no personal capital gains tax, no annual return obligation, no exit tax. If the activity is run as a business (a market-making desk, an industrial-scale mining operation, a licensed trading firm), the profit falls under at 9 % above the AED 375 000 threshold. VAT at 5 % applies to most crypto-related services supplied to UAE-resident customers.
When do I file my first UAE corporate tax return?
Within 9 mo months of the end of your financial year. First filings ran in 2024 for FY2023 (January-December financial years). The return and any tax due are submitted through . No quarterly advance payments. Late registration, filing, or payment attracts administrative penalties up to 50000 AED per category, with stiffer penalties (and criminal exposure) for deliberate evasion.
Verified · 2026-05-27