In this page: Corporate Taxes | Accounting Rules | Consumption Taxes | Individual Taxes | Double Taxation Treaties | Sources of Fiscal Information
Corporate tax (effective from the financial years beginning on or after 1 June 2023) |
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Tax on profits made by branches of foreign banks | Generally 20% |
Companies engaged in oil and gas and petrochemical activities | 55% + rates under their individual UAE concession agreements |
Tax applicable for all companies: the duty deducted by the municipality in each Emirate at the time of issuance or renewal of a trade licence | 10% of the annual amount of the rent of offices and warehouses and 5% of the annual amount paid by a company to accommodate its employees. |
Branches of foreign banks are taxed at 20% in most Emirates.
Deductions are determined based on accounting principles and the tax decrees of the various Emirates. Expenditures that are not of a capital nature and are incurred wholly and exclusively for the purposes of the business are generally deductible.
Companies can deduct up to 50% of the expenses incurred for entertaining customers, shareholders, suppliers, and other business partners, including costs for meals, accommodation, transportation, admission fees, entertainment facilities, and equipment, as well as any other expenses specified by a Cabinet decision.
The deduction of net interest expenses is limited to 30% of tax-adjusted EBITDA.
Non-deductible expenses include fines, penalties (excluding compensation for breach of contract), bribes or illicit payments, donations made to entities that are not Qualifying Public Benefit Entities, dividends/profit distribution, CT, recoverable VAT, taxes imposed outside the UAE, and any other expenses specified in a Cabinet decision.
A business is permitted to offset tax losses against the taxable income of future tax periods when computing the taxable income for that period. However, during any tax period, the set-off amount cannot exceed 75% of the taxable income for that specific period. Any remaining tax losses can be carried forward indefinitely to subsequent tax years.
There is a social security regime in the United Arab Emirates that applies to UAE and GCC national employees only. In most of the Emirates, and for UAE national employees, social security contributions are calculated at a rate of 20% of the employee's gross remuneration as stated in the employment contract. Out of the 20%, 5% is payable by the employee, 12.5% is payable by the employer and the remaining 2.5% is financed by the Government; in Abu Dhabi, the overall rate is 20%, of which 15% is paid by the employer.
From January 1st, 2023, the unemployment insurance scheme introduced through Federal Decree-Law No. 13 of 2022 is applicable to both Emirati and foreign workers. The scheme is designed to provide financial assistance to eligible individuals in the public and private sectors in the event of unemployment. Subscribers to the scheme are classified into two categories based on their basic monthly salary. The first category comprises individuals earning AED 16,000 or less per month, while the second category includes those earning more than AED 16,000 as their basic salary. Subscribers in the former category must pay a monthly subscription fee of AED 5, while those in the latter category must pay a monthly subscription fee of AED 10.
The different Emirates impose hotel levies (for instance, a fee of between AED 7 to 20 per room/night plus 7% on the total value of the invoice is levied in Dubai, whereas in Abu Dhabi it is equal to AED 15 per room/night plus 6% on the room price). Municipality fees on hotel sales are levied in Abu Dhabi (4%) and Dubai (7%). Hotels in all Emirates levy an additional service charge set at 10% of the hotel sale revenue.
United Arab Emirates | Middle East & North Africa | United States | Germany | |
---|---|---|---|---|
Number of Payments of Taxes per Year | 5.0 | 20.8 | 10.6 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 116.0 | 204.0 | 175.0 | 218.0 |
Total Share of Taxes (% of Profit) | 15.9 | 32.1 | 36.6 | 48.8 |
Source: The World Bank - Doing Business, Latest data available.
For UAE resident businesses, there is a mandatory VAT registration threshold of AED 375,000, with the voluntary registration threshold set at AED 187,500. No registration threshold applies to non-resident businesses making supplies on which the UAE VAT shall be charged. VAT returns generally are required on a monthly or quarterly basis depending on turnover. VAT grouping is allowed (conditions apply).
No personal tax is levied in the UAE. Individuals living and working in the country may be considered resident of the United Arab Emirates for purposes of a double tax treaty and obtain a UAE Tax Residency Certificate (under certain conditions).
Starting from March 2023, individuals can be considered a UAE tax resident if they satisfy any of the following conditions:
No personal tax is levied | N/A |
Most Emirates impose a rental tax | Residential tenants pay 5% of annual rent and commercial tenants pay 5% of annual rent in Dubai. Expat tenants pay 3% of annual rent whereas UAE citizens do not pay any rental tax in Abu Dhabi. All tenants pay 2% of annual rent as rental tax in Sharjah. |
Real property tax | A transfer charge is levied on the transfer of real estate in the UAE (4% in the Emirate of Dubai, borne equally by the buyer and the seller). |
Non-GCC national employees who completed at least one year of service are entitled to an end-of-service benefit calculated as 21 days per year of basic wages for the first five years of employment, plus 30 days per year of the basic wage for each additional year of service (capped at two years’ remuneration).
Capital gains are not subject to taxation.
Social security contributions only apply to GCC nationals, with rates varying according to the Emirate (5% is payable by the employee in both Dubai and Abu Dhabi).
From January 1st, 2023, the unemployment insurance scheme introduced through Federal Decree-Law No. 13 of 2022 is applicable to both Emirati and foreign workers. The scheme is designed to provide financial assistance to eligible individuals in the public and private sectors in the event of unemployment. Subscribers to the scheme are classified into two categories based on their basic monthly salary. The first category comprises individuals earning AED 16,000 or less per month, while the second category includes those earning more than AED 16,000 as their basic salary. Subscribers in the former category must pay a monthly subscription fee of AED 5, while those in the latter category must pay a monthly subscription fee of AED 10.
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Latest Update: September 2023