Dubai Tax Rate: Complete Guide to UAE Taxation in 2025

Zero Taxes. This is what comes to mind when you mention Dubai. The city’s low-tax, pro-business environment is one of its strongest advantages when comparing it with other places.

While countries around the world are tightening tax policies, Dubai keeps its strong position, and that’s why millionaires, billionaires, entrepreneurs, and multinational corporations continue to move here, setting up their strategic bases.

But, since recent changes took place, both in corporate taxation and global tax regulations, some things are different now.

If you're considering Dubai as your next home or business location, understanding the latest tax regulations is crucial. Because while the tax advantages are still here, knowing the details can make all the difference.

So, what’s new in taxation for 2025? While Dubai remains a tax haven, the introduction of corporate tax and the global minimum tax is reshaping its taxation landscape.

Dubai’s Tax System in 2025: What’s Changing

Despite the recent tax updates, Dubai still holds its place as one of the most tax-friendly destinations in the world. If you’re looking for a place to maximize earnings, grow wealth, and scale a business without heavy tax burdens, here’s what you need to know:

• No Personal Income Tax – Whether you’re a salaried professional, an entrepreneur, or an investor, 100% of what you earn is a clean income. No deductions.

• Corporate Tax: 9% – If your business makes more than AED 375,000 ($102,000) annually, a flat 9% corporate tax applies. But for startups and SMEs under this threshold, the tax rate remains 0%.

• 15% Global Minimum Tax – For Large multinational enterprises (MNE) with over €750 million ($800M) in global revenue, the OECD’s global tax rule applies, with a 15% corporate tax rate.

• Value Added Tax (VAT): 5% – Most goods and services include a minimal 5% VAT, still one of the lowest consumption tax rates globally.

• No Capital Gains, No Inheritance Tax, No Wealth Tax – Whether you’re selling assets, passing down wealth, or accumulating capital, there’s zero tax on it.

Tax System Overview 2025

Personal Income Tax

One of the most compelling aspects of Dubai's tax system is the absence of personal income tax. This policy allows individuals to retain 100% of their earnings.

Additional tax exemptions include:

• Capital Gains: Profits from investments, such as stock market gains or real estate sales, are not taxed.

• Inheritance and Estate Transfers: Assets can be passed to heirs without incurring taxes.

• Wealth Tax: There is no taxation on an individual's net worth or accumulated assets.

While the UAE offers these significant tax advantages, it's essential for residents to ensure they meet the criteria for tax residency to fully benefit from these policies.

Corporate Tax in the UAE

Starting January 1, 2025, the UAE increases Corporate Tax to 15 % for large multinational companies (MNEs) with global revenues exceeding €750 million ($793 million). As of 2025, the corporate tax landscape is structured as follows:

• Standard Corporate Tax Rate: A 9% tax rate applies to businesses with annual profits exceeding AED 375,000.

• Small Businesses and Startups: Enterprises earning below this threshold continue to benefit from a 0% tax rate, fostering entrepreneurship and SME growth.

• Large Multinational Enterprises (MNEs): A 15% minimum corporate tax is imposed on MNEs with consolidated global revenues exceeding €750 million (approximately AED 3 billion), in line with the OECD's global tax framework.

• Sector-Specific Rates:
  • Oil and Gas Companies: Subject to a 55% corporate tax rate, reflecting the sector's significant contribution to the national economy.
  • Foreign Bank Branches: A 20% tax rate is applicable, ensuring a balanced contribution from international financial institutions operating within the UAE.

Businesses operating within designated Free Zones may continue to enjoy tax exemptions, provided they adhere to regulatory requirements and refrain from conducting business with the UAE mainland.

Value Added Tax (VAT)

The Value Added Tax (VAT) was first implemented in 2018, and now it's avital revenue stream for the UAE government. The VAT framework in 2025 includes:

• Standard VAT Rate: A 5% tax is levied on the majority of goods and services, contributing to the nation's infrastructure and public services.

• Registration Threshold: Businesses with annual taxable supplies and imports exceeding AED 375,000 are mandated to register for VAT.

• Exemptions and Zero-Rated Supplies: Certain sectors, such as healthcare, education, and exports, may qualify for VAT exemptions or a 0% rate, alleviating the tax burden on essential services and international trade.

Registered businesses are required to file periodic VAT returns and ensure compliance with the Federal Tax Authority (FTA) regulations.

Property Taxes and Fees

Dubai's real estate market is attractive due to its low-tax environment, but property transactions still involve some fees. Here’s what investors should know:

• Property Transfer Fee: 4% of the property's sale price, usually split between the buyer and seller.

• Registration Fee: AED 2,000 ($545) for properties under AED 500,000, and AED 4,000 ($1,090) for properties above that amount.

• Title Deed Fee: AED 250 ($68) for an ownership certificate.

• Mortgage Registration Fee: 0.25% of the mortgage value + AED 290 administrative fee.

• Annual Maintenance Fees: These vary based on the development but typically range from $15 to $60 per square meter per year.

• Rental Tax:
  • 5% of annual rent for residential properties.
  • 10% of annual rent for commercial properties.

Unlike many other countries, Dubai does not impose an annual property tax, making it an attractive place for real estate investors and long-term homeowners.

Excise Tax in the UAE

Excise tax applies to goods considered harmful to human health and the environment. In 2025, the excise tax rates in Dubai remain:

• 50% tax on sugary drinks (except plain soda).
• 100% tax on energy drinks.
• 100% tax on tobacco and smoking-related products (including e-cigarettes).
• 50% tax on all products with added sugar or sweeteners.

Who Pays Excise Tax?

Companies that import, manufacture, or store excise goods in the UAE are required to:

• Register with the Federal Tax Authority (FTA)
• File regular tax returns
• Submit excise tax payments on a quarterly basis

These taxes are designed to reduce the consumption of harmful products while generating revenue for the government.

Key Tax Obligations for Businesses in Dubai

Registration and Compliance

All businesses operating in Dubai are required to register with the Federal Tax Authority (FTA) for corporate tax. However, only those generating annual taxable profits above AED 375,000 are subject to the 9% corporate tax rate. Companies must complete their registration via the FTA portal before their financial year’s deadline to avoid penalties.

For Value Added Tax (VAT), businesses with an annual turnover exceeding AED 375,000 must also register for VAT.

Companies earning between AED 187,500 and AED 375,000 have the option for voluntary registration, which can be beneficial for reclaiming input VAT.

Businesses must adhere to strict tax filing deadlines:

• Corporate tax returns must be submitted within nine months after the financial year ends.

• VAT returns are due either monthly or quarterly, depending on the company’s turnover.

• Failure to meet deadlines results in penalties, starting from AED 1,000 for first-time delays, with escalating fines for repeated offences.

Reporting Requirements

To maintain compliance, businesses must keep accurate records of their income, expenses, and taxable transactions. For VAT, this means maintaining records of input VAT (on purchases) and output VAT (on sales) to ensure correct tax reconciliation.

For corporate tax filings, companies must provide detailed financial statements that comply with international accounting standards. Supporting documents, including invoices and proof of deductible expenses, must be readily available.

Larger businesses are typically required to file VAT returns monthly, while smaller enterprises follow a quarterly schedule. Staying compliant with these regulations reduces audit risks and prevents financial penalties, both of which can disrupt business operations and harm corporate reputation.

Common Mistakes in UAE Corporate Tax Filings

Even with clear tax regulations, many businesses in Dubai make costly mistakes when filing their corporate tax returns. Some of the most common errors include:

• Poor Record-Keeping – Failing to maintain proper records can lead to miscalculations, tax audits, and penalties. Businesses must store invoices, receipts, and other financial documents for at least five years to remain audit-ready.

• Misclassification of Expenses – Some business costs, such as entertainment expenses or interest payments, may have deductibility limits. Incorrectly categorizing these expenses can inflate taxable income, leading to higher tax liabilities.

• Missing Filing Deadlines – Late tax registrations or filings attract strict penalties. Companies should register with the FTA as soon as they qualify and set up automated reminders to track deadlines.

• Incorrect Tax Calculations – Misjudging tax liabilities often occurs due to misunderstanding deductions or applying incorrect tax rates. Regular internal audits and consulting tax experts can prevent costly errors.

• Overlooking Tax Incentives – Many businesses fail to take advantage of available tax relief programs, such as small business exemptions or Free Zone tax benefits. Keeping up with FTA guidelines and incentives helps businesses maximize savings.

• Improper Related-Party Transactions – Payments made to directors or shareholders must comply with the ‘arm’s length principle’, meaning transactions should reflect fair market value. Proper documentation is essential to avoid tax disputes.

How to Maintain Tax Residency in Dubai

Many expatriates and investors relocate to Dubai to take advantage of zero personal income tax. However, to legally qualify as a UAE tax resident, individuals must meet specific conditions.

Steps to Obtain UAE Tax Residency

1. Secure a UAE Residence Visa: This can be through employment, business ownership, or property investment.

2. Reside in the UAE for at least 183 days per year (cumulative, not consecutive).

3. Own or lease a property in Dubai (a long-term rental contract is sufficient).

4. Provide proof of income (salary statements, business earnings, or pension).

5. Open a UAE bank account and maintain regular financial transactions.

6. Apply for a Tax Residency Certificate (TRC) through the Federal Tax Authority.

Read more on how to get a UAE residence visa and the application process here: Dubai Residence Visa Requirements & Application.

Why is a Tax Residency Certificate (TRC) Important

A TRC is necessary for individuals looking to:

• Claim tax benefits under the UAE’s double taxation agreements (DTAs)
• Avoid being taxed in their home country while living in Dubai
• Prove their residency status for financial and banking purposes

The TRC application fee is AED 1,000 ($272) for individuals and AED 1,750 ($476) for businesses. The certificate is typically issued within 3 to 5 working days after approval.

Tax Benefits for Foreign Investors

Dubai remains a top choice for global investors due to its tax-friendly policies. Key tax benefits include:

• No Personal Income Tax – Investors retain 100% of their income.

• No Capital Gains Tax – Profits from stocks, property, and business sales are tax-free.

• No Inheritance or Estate Tax – Wealth can be passed to heirs without deductions.

• No Wealth Tax – There is no tax on an individual's total net worth.
  Business-Friendly Corporate Tax – Companies pay 9% corporate tax, but free zone entities can still enjoy 0% corporate tax under specific conditions.

• Double Taxation Agreements (DTAs) – Investors benefit from over 138 agreements to avoid double taxation.

These factors make Dubai one of the most attractive financial hubs for entrepreneurs, high-net-worth individuals, and business owners.

Dubai’s Double Taxation Agreements (DTAs)

To protect investors from paying taxes in multiple countries, the UAE has signed Double Taxation Agreements (DTAs) with over 138 nations.

How Do DTAs Work?

DTAs ensure that individuals and businesses pay taxes only in one country rather than both their home country and the UAE. If you are a UAE tax resident, you may be exempt from foreign taxes on:

• Employment and business income
• Dividends, interest, and capital gains
• Property transactions

Countries with UAE Double Taxation Agreements (DTAs)

The UAE has signed Double Taxation Agreements with over 138 countries, ensuring that individuals and businesses operating across borders are not taxed twice on the same income.

For individuals, this means tax-efficient income management, while for businesses, it offers cost-effective international operations without excessive tax burdens.

United Kingdom – The UAE-UK tax treaty prevents double taxation on employment income, business profits, dividends, and capital gains. British expatriates in the UAE can avoid UK income tax if they meet residency requirements.

United States – While the UAE does not have a formal DTA with the US, American citizens residing in Dubai may still benefit from tax credits under the US Foreign Earned Income Exclusion (FEIE), reducing their tax liabilities on income earned abroad.

Germany – German professionals and businesses operating in the UAE benefit from exemptions on income tax, corporate tax, and capital gains tax, ensuring smoother financial planning for investors and employees.

Canada – The UAE-Canada tax treaty ensures income from employment, dividends, and pensions is not taxed twice, making Dubai a preferred location for Canadian expatriates and retirees.

Australia – Australian residents working in the UAE can benefit from a tax-efficient structure that reduces or eliminates double taxation on salaries and investments.

India – One of the most beneficial treaties for expatriates and businesses, the UAE-India DTA prevents double taxation on personal and corporate income and provides reduced tax rates on dividends, royalties, and capital gains.

Singapore – Businesses operating between the UAE and Singapore can enjoy lower withholding tax rates on dividends, royalties, and interest payments, making trade and investment between the two countries highly efficient.

How to Claim Benefits Under UAE DTAs

To benefit from these treaties, individuals and businesses must obtain a UAE Tax Residency Certificate, issued by the Federal Tax Authority. This certificate officially confirms tax residency status in the UAE, allowing individuals and companies to claim tax relief under the respective treaty.

Key requirements for obtaining a UAE Tax Residency Certificate:

• Valid UAE residence visa (for individuals).

• Proof of physical presence in the UAE for at least 183 days per year.

• Property ownership or a long-term lease agreement.

• Business license and financial statements (for corporate applicants).

• Bank statements showing active financial transactions within the UAE.

The TRC application process typically takes 3 to 5 working days, and the certificate is valid for one year, allowing individuals and companies to claim tax benefits in their respective home countries.

Future of Taxation in the UAE

Dubai’s tax policies continue to evolve to align with international tax regulations while remaining attractive to businesses and investors. Key expected developments:

1. Global Minimum Tax (15%) for Multinational Corporations

• The UAE has agreed to implement the OECD’s 15% global minimum tax for multinational enterprises (MNEs), earning over €750 million ($800 million) globally.

• Local businesses and startups will not be affected.

2. Potential VAT Adjustments

• While VAT is currently 5%, future increases are possible as the government diversifies revenue sources.

• Some industry experts predict an increase of 7-10% within the next few years.

3. Increased Compliance Measures

• More economic substance regulations (ESR) to prevent tax evasion.

• Stricter corporate reporting requirements for businesses with offshore operations.

Benefits of a Tax-Free Lifestyle in Dubai

Dubai’s tax policies offer a level of financial flexibility that few other cities can match. While many countries continue to increase tax burdens on individuals and businesses, Dubai provides an environment where income, investments, and wealth can grow freely without deductions.

This is a major reason why entrepreneurs, professionals, and high-net-worth individuals continue to choose Dubai as their preferred place to live and work.

By eliminating personal income tax and keeping corporate tax rates low, Dubai allows residents to fully benefit from their earnings, reinvest without unnecessary financial obstacles, and build wealth more efficiently.

Why Dubai’s Tax System Works in Your Favor

• Full Control Over Your Earnings – In most countries, personal income tax can take a substantial percentage of your salary or business profits. In Dubai, that simply doesn’t happen. Whether you earn a salary or run a business, 100% of your income stays with you.

• No Capital Gains or Wealth Tax – In many countries, selling assets comes with a significant tax bill. In Dubai, capital gains are entirely tax-free, allowing investors to buy, sell, and reinvest without losing a portion of their profits to the government. Similarly, there is no wealth tax, meaning individuals can accumulate and manage their assets without annual tax deductions.

• More Financial Security Through Smart Tax Policies – Dubai’s tax-free salaries and low corporate tax rates create an environment where people can build long-term financial stability. Instead of losing income to high taxes, residents can allocate more funds toward savings, investments, and lifestyle improvements.

• A High Standard of Living Without Tax Burdens – In Dubai, residents get luxury living, premium healthcare, and high-end education while keeping more of their income.

• A Favorable Business Environment – Dubai is widely recognized as one of the best places to start and grow a business. Zero-tax Free Zones, a low 9% corporate tax for most businesses, and a clear regulatory framework make it easier for companies to expand and generate profit without excessive financial obligations.

• Tax-Free Investments with No Restrictions– Dubai imposes no additional tax on investment income. This allows individuals to diversify their portfolios and maximize returns without worrying about annual tax deductions on dividends, rental income, or other investment earnings.

• Efficient Banking and Financial Management – With no restrictions on transferring or investing funds internationally, residents of Dubai have the flexibility to move their money freely and invest in global markets.

• An Ideal Location for Global Business and Travel – Dubai’s location makes it a natural choice for those who travel frequently or conduct business across different regions. With direct access to Europe, Asia, and the Middle East, Dubai serves as a central point for business operations, client meetings, and international expansion.

Living in Dubai: A Tax-Efficient Choice for Investors and Professionals

A UAE residency offers a path to financial independence and long-term security. However, when settling in Dubai, tax obligations, banking access, and legal compliance must be carefully considered to ensure a smooth transition.

Understanding how to legally optimize taxes, manage multi-currency banking in dirhams, dollars, and euros, and navigate residency regulations is essential for a stable and hassle-free experience.

If your goal is to establish yourself in Dubai, Savory & Partners provides a clear and professional route to UAE residency, along with expert tax advisory services to help investors and business owners maximize financial benefits while ensuring full compliance.

FAQs on Dubai’s Tax System in 2025

1. Do individuals in Dubai pay any income tax?

No, individuals residing in Dubai do not pay personal income tax on salaries, wages, dividends, or capital gains. The UAE remains one of the few countries where 100% of personal earnings are tax-free, making it an attractive destination for expatriates and professionals looking to maximize their income.

2. How does the UAE’s corporate tax work in 2025?

Since June 2023, the UAE has introduced a 9% corporate tax on business profits exceeding AED 375,000 ($102,000). Companies earning below this threshold remain tax-free. However, large multinational enterprises (MNEs) with global revenues exceeding €750 million ($800M) are subject to a 15% corporate tax under OECD’s global tax framework. Businesses registered in Free Zones may still enjoy tax exemptions if they do not conduct business with the UAE mainland.

3. Do I have to register for VAT in the UAE?

Yes, businesses with an annual turnover exceeding AED 375,000 must register for Value Added Tax (VAT) at a standard 5% rate. Companies earning between AED 187,500 and AED 375,000 have the option for voluntary registration, which can be beneficial for reclaiming input VAT. VAT returns must be filed either monthly or quarterly, depending on the business’s revenue.

4. Is there a tax on real estate purchases or property ownership in Dubai?

Dubai does not impose an annual property tax on real estate ownership. However, property buyers must pay a one-time 4% property transfer fee, which is typically split between the buyer and seller. Additional fees include registration costs and annual maintenance charges, but there is no ongoing taxation on real estate holdings.

5. How can I obtain UAE tax residency, and what are the benefits?

To qualify as a UAE tax resident, you must:

• Hold a UAE residence visa (via employment, business, or property investment).
• Spend at least 183 days per year in the UAE.
• Own or lease a property in the UAE.
• Apply for a UAE Tax Residency Certificate (TRC) through the Federal Tax Authority (FTA).

6. Does the UAE tax foreign income or global assets?

No, the UAE does not tax foreign-sourced income or assets held outside the country. Whether you earn money from international investments, businesses, or rental properties abroad, Dubai does not impose any tax on foreign earnings, making it an ideal place for wealth management and international financial planning.

References

Federal Tax Authority UAE. (2025). Corporate Tax in the UAE – Guidelines & Compliance. Retrieved from https://tax.gov.ae

UAE Government. (2025). Understanding VAT in the UAE. Retrieved from https://u.ae/en/information-and-services/finance-and-investment/taxation/value-added-tax

Dubai Land Department. (2025). Property Transfer Fees and Real Estate Taxes in Dubai. Retrieved from https://dubailand.gov.ae

Organization for Economic Co-operation and Development (OECD). (2025). Global Minimum Tax Rules and Their Impact on UAE Businesses. Retrieved from https://www.oecd.org/tax/beps/