Dubai, the dazzling city of the United Arab Emirates, has always been a hot-spot for investors and budding entrepreneurs worldwide. Its popularity stems from various aspects, including its robust infrastructure, strategic location, and diversified economy. However, the icing on the cake is undoubtedly the tax benefits it provides. Being a tax haven, Dubai offers many tax concessions and privileges to business entities. Generally, most companies registered in the UAE aren’t obligated to pay Corporate Income Tax.

As a leading provider of tax services in Dubai and across the UAE, P.W caters to numerous tax-related requirements. By availing of our tax consultancy services in Dubai, you can prevent financial losses, seize more investment opportunities, maintain proper auditing, and enhance your profitability. Our team of expert tax consultants offers tailored tax advice for companies in Dubai, helping them address their tax-related issues in alignment with their corporate strategies.

Let’s delve into the details of taxation in the UAE. However, it is essential first to understand the concept of Resident and Non-resident companies in the UAE.

Resident and Non-Resident Companies in the UAE

Resident Companies

Resident companies in the UAE are those established within the country with a minimum of one local director. Managed from the Emirates, these companies can be owned by either UAE residents or non-residents. Their registered office is located in the country of incorporation.

Non-Resident Companies

Non-resident companies, also known as offshore companies, do not have their registered office in their country of incorporation. They are owned and managed by non-resident individuals and are prohibited from conducting any business transactions within the UAE. Nevertheless, these companies enjoy tax exemptions, including the Corporate tax.

Key Business Entities in UAE

The main business entities in the UAE include:

  • Limited Liability Company (LLC)
  • Branch & Representative Office
  • Joint Stock Company (Private/Public)

Foreign investors can own up to 49% of the company shares when incorporating a company in the UAE mainland. However, in Free Zone jurisdictions, they can own 100% of the shares.

Tax Regulations for Resident Companies

Dubai has simple and straightforward tax rules for resident companies.

Taxable Income

While resident companies in Dubai are typically exempted from taxable income, exceptions do exist. These include:

Overseas bank branches - taxed at a fixed rate of 20%
Companies dealing with production - taxed at a rate of 50-55%
Oil and Gas survey companies - taxed at a rate of 50-55%
The financial year is considered from January to December, with the company's first year after formation not considered. Dividends distributed by the companies are exempt from taxation.

Real Estate Tax

A transfer fee is charged when real estate property is reassigned to a new owner, with the fee amount based on the jurisdiction where the transfer occurs.

Social Security Tax

While expatriate employees are exempted from Social Security tax in the UAE, a 17.5% tax rate applies to the total salary of UAE national employees.

Excise Tax

The UAE introduced the Excise tax on October 1, 2017, imposing it on specific products like energy drinks, carbonated beverages, and tobacco goods.

Need Assistance?

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