The Truth About Taxes in Dubai: A Guide for Expats

When you hear the term “Dubai”, the first image that comes to mind is expensive cars, designer bags and the like, a city full of opportunities that attracts the entire world to come visit, one of the most attractive words you might have seen when looking at income opportunities or considering moving countries is “no tax”. That phrase alone makes your ears stand at attention, and it's true, residents that live in the UAE do not have the obligation of paying tax on personal income from their salaries. This is the main attractive feature that convinces so many foreigners to move to the Middle East for all kinds of professionals, entrepreneurs, and nomads. It's not all sparkles and glamor,though. No tax on income doesn't mean that you have no taxes in general.

Now, to get some things straight, the statement still stands that there's no personal income tax in Dubai, and it doesn't matter if you're employed or self-employed, any form of profit or income is not subject to taxation. This is one of the selling features of the city to high earners,because, of course,who doesn't want money? This doesn't mean that the government doesn't take your money in other forms, though.

Back in 2018,VAT or value added tax was introduced to the UAE, and it was at a modest 5%, well,it sounds modest at least. This tax is applied to the majority of goods and services, whether you're looking at clothes, dining, or even the phones you use, 5% may sound like a small percentage of money in comparison to some of the rates in Europe but it adds up, don't forget the fact that Dubai is one of the most glamorous cities in the world and its prices reflect it.

Expats end up realizing all too soon that their spending on groceries and food, and utilities come with an extra kick they might not have expected originally. Businesses are expected to register for VAT too and natura,lly this cost gets transferred to the consumers.

If you're thinking of coming to the city with the hopes of getting the investment opportunities by looking at properties, there are some costs to consider, sure they may not exactly be considered taxes but there are fees to pay. When you purchase a property, there is a 4% transfer fee that is given to the Dubai Land Department, there are many registration fees that can go up to thousands of AED depending on the property and its value, moreover when you buy properties and go for viewings it's all done through agents and they need their commission as well so there's a separate fee for that which is typically around 2% of the value of the property you end up purchasing.

Other fees you'd have to pay if you're renting would be things like housing fees, and agency fees if you use a broker. Just because you're not purchasing doesn't mean you're off the hook, tenants have some expenses themselves as well.

Yes it is true that Dubai was a no tax haven for businesses and the working class, that is until recently when the country decided to bring themselves on the same level as the rest of the world and so the government then decided to add a 9% corporate tax back in 2023 on the profits that businesses had if they exceeded a certain value, specifically AED 375,000 annually.

This is something that doesn't really affect all businesses alike and needs to be checked, it usually depends on how the company or business is registered and there may be many that are in the free zone, allowing them to enjoy tax incentives. It's still important to keep checking that your practices are in compliance with the rules, especially if you're outside the zone of having clients from the mainland.

While Dubai has all the advantages of giving people high salaries and the best lifestyle with no tax on their income, it's not a completely tax free country. There are many indirect taxation methods that the government still fixes in certain areas in order to get revenue but in a more subtle way.

If you're an expat considering this as a main objective, then you should be excited for all the advantages you get financially when you live in the country but just remember that it's important to look past just the main ‘no tax’ heading and go into more depth on what it means before making such a big decision.

The laws when it comes to finances and taxation in Dubai continue to change and evolve just like the rest of the city and the entirety of UAE, the country is putting itself not only to meet the global standards to push to go beyond and set the new standards. So just be sure to regularly check official government portals or invest in a tax advisor in the UAE and get some better advice.