List of Taxes Prevailing in UAE Today and Taxes Expected in Future
The United Arab Emirates (UAE) attracts many investors and business owners because of its business-friendly environment. People say the UAE is a tax-free country, but that’s not completely true. The UAE Government has put some taxes in place to help the country grow and keep its economy strong.
Taxes That Are Present in the UAE
Today, different taxes affect people and companies in the UAE. Let’s break down each one using simple words and clear steps.
Value Added Tax (VAT)
The UAE brought VAT in 2018. The law says companies that earn AED 375,000 or more each year must pay 5% VAT on goods and services. If your business earns between AED 187,500 and AED 375,000, you can choose to register for VAT, but you don’t have to.
Businesses need to pay VAT every three months, within 28 days after the tax period ends.
Goods and services not charged with VAT:
- Some financial services (like certain loans and investments)
- International transportation services (with some exceptions)
- Healthcare services and supplies
- Residential buildings (except hotels)
- Private education and vocational training
- Local passenger transport services
Excise Tax
Excise Tax started in 2017. The main goal is to stop people from using products that can harm health or the environment. These include tobacco, sweet drinks, energy drinks, and electronic smoking products.
Excise Tax rates:
- 100% for tobacco, energy drinks, electronic smoking devices, and liquids for e-cigarettes
- 50% for carbonated drinks (not plain water) and sweetened drinks
Businesses must pay this tax every quarter. The deadline is 15 days after the tax period ends.
Customs Duty
Customs Duty is a tax paid when goods come into the UAE. Usually, it’s 5% of the cost, freight, and insurance value. Some things, like alcohol or tobacco, have much higher duties—sometimes 50% or even 100%.
But if you bring goods from GCC countries, the Greater Arab Free Trade Agreement members, Singapore, or EFTA nations, you usually don’t have to pay customs duty.
Tourist Tax
When visitors enjoy hotels, restaurants, or resorts in the UAE, they pay tourist taxes. The rates depend on the emirate and type of service. For example, Dubai charges a “Tourism Dirham” fee from AED 7 to AED 20 per room, per night, based on hotel rating.
Other tourist taxes added to hotel bills may include:
- Hotel Tax: 10%
- Service Fee: 10%
- Municipal Tax: 0–10%
- Tourist Fee: 6%
- City Tax: 6–10%
Property Transfer Tax
If someone buys property in the UAE, a property transfer fee is required. In Dubai, buyers and sellers split a 4% fee. In Abu Dhabi, the transfer fee is 2%. This rule covers all real estate transfers, even company shares if they own UAE property.
Municipal Rental Tax
People who rent homes or offices in the UAE pay a municipal rental tax. In Dubai, it’s 5% of annual rent for residents. In Abu Dhabi and Sharjah, the rates are 3% and 2%. If you rent commercial property, the tax is usually 10%, but it might change depending on the emirate.
Withholding Tax
Right now, there is no withholding tax in the UAE. The rate is 0%, which is better than in most other Gulf countries. This helps make the UAE attractive for investors and business owners from other places.
Oil and Gas Tax
Companies involved in oil and gas must pay a special tax. The rate is 55% and is decided by each emirate.
Expected Taxes Coming to UAE
Corporate Tax
The government plans to introduce corporate tax in June 2023. Companies with profits over AED 375,000 will pay 9% corporate tax. If a company makes less than AED 375,000, it pays 0%. But oil and gas companies must pay a higher tax rate (55%).
Right now, there are no other new taxes planned for the UAE.
Why Does the UAE Have These Taxes?
The UAE wants to:
- Help the economy grow
- Fund big national projects
- Stay strong in the global market
- Offer better public services
Tips for UAE Businesses and Residents
- Stay updated with tax rules so you don’t get fined
- Ask for help from experts like Mubarak Al Ketbi (MAK) Auditing
- Keep your documents organized
- Pay your taxes on time
How Can MAK Auditing Help You?
Mubarak Al Ketbi (MAK) Auditing always helps businesses and individuals understand tax rules in the UAE. Their experts give clear advice, help you avoid mistakes, and make sure you get all possible benefits. If you want to stay ahead of changes, MAK Auditing is your best partner. When it comes to UAE taxes, don’t let the grass grow under your feet—act fast, ask for expert help, and make sure your business stays safe!
For more information:
- Visit our office: Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates
- Contact/WhatsApp: +971 50 276 2132
