Arriving in Dubai and the UAE

Personal Income Tax

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Individuals are not directly taxed in the UAE.

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There are are no:

• personal income taxes

• social security taxes

• pension taxes

• inheritance taxes

• capital gains taxes or

• property taxes

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As a result, the UAE also does not issue personal tax identification numbers and does not require private individuals to submit tax returns.

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Should you get asked by a foreign bank/authority about your UAE tax number, you may submit your Emirates ID number instead (or leave the field blank).

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UAE Corporate Tax

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The UAE has a 9% corporate income tax.

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All standard LLCs have to register for corporate tax. This is included in our standard company setup service, and is handled by us at the time of incorporation. We share your company tax registration certificate with you.

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Sole proprietorships (freelance businesses) only have to register for corporate tax when exceeding revenues of AED 1mill/y.

Tax registration for sole proprietorships is not included in our standard service. Please let us know if you expect to exceed revenue of AED 1mill/y as a freelancer.​ (Source)

Not part of "freelancer income" are:

• Wages (as part of an annual employment contract)

• Personal Investment Income 

• Real Estate Investment Income

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The 9% corporate income tax only applies to corporate profits.

There are multiple tax exemptions:

• The first AED 375K/y in corporate profits is tax exempt (Source)

• If your company has revenues below AED 3mill/y, you qualify for "Small Business Relief" (Source)

  • Small Business Relief is currently scheduled to run until Dec 31, 2026. It may or may not get extended.​

  • Qualifying businesses do not have to pay any corporate tax.

• No 9% tax applies, if you derive your income from "Qualifying activities"

  • Qualifying activities include (Source):

    • a. Manufacturing of goods or materials.

    • b. Processing of goods or materials.

    • c. Trading of Qualifying Commodities.

    • d. Holding of shares and other securities for investment purposes.

    • e. Ownership, management and operation of Ships.

    • f. Reinsurance services.

    • g. Fund management services.

    • h. Wealth and investment management services.

    • i. Headquarter services to Related Parties.

    • j. Treasury and financing services to Related Parties.

    • k. Financing and leasing of Aircrafts.

    • l. Distribution of goods or materials in or from a Designated Zone.

    • m. Logistics services. Any income 

  • In addition, the income must only be earned from customers in other free zones or from abroad

    • Sales to the UAE mainland are always non-qualifying

    • Sales to another free zone company, which then sells to the UAE mainland are only qualifying if they are not considered "pass-through"; i.e., there has to be transformation, and/or goods gave to be traded at market values (Example)

  • You must have adequate substance (office, employees) in any UAE free zones (Source)​

  • Less than 5% or AED 5mill (whichever is lower) of your revenue must come from non-qualifying income

  • Non-qualifying income (even if less than 5% or AED 5mill) is still subject to 9% corporate income tax

• Business expenses, including salaries, are tax deductible for your company.

  • Salaries have to be reasonable and market-based to be tax-deductible (typically up to AED 1mill/y for small businesses)

  • Entertainment expenses (such as restaurant visits) are deductible up to 50%

  • Expenses such as clothing, travel and cars are only deductible if they are "necessary" to conduct the business. Dual-use (for the business and private) has to be documented

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Example of a corporate tax calculation:

Revenue: AED 4mill/y

Salaries: AED 2mill/y (for 2 individuals)

Other Business Expenses: AED 1mill/y (office rent, business travel, freelancers)

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Net Profit = AED 4mill - 2mill - 1mill = AED 1mill

Taxable Corporate Profit = AED 1mill - 375K (the base exemption) = AED 625K

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Tax Paid = 9% x AED 625K = AED 56.25K

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Accounting Software & Financial Statements

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Every company is required to prepare annual financial statements, which include:

• the balance sheet (showing the assets and liablities of the company, which should balance out)

• the income statement (showing the revenue, expenses and net profit of the company)

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You can prepare these yourself or using a bookkeeper. 

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We recommend using an accounting software to prepare your financial statements.

• ​Wafeq accounting software is custom-developed for the UAE in partnership with the UAE's Federal Tax Authority, and supports automatic bank feeds from Wio Bank and e-invoiving (which will be introduced as a mandatory requirement from 2026 onwards).

• Other accounting softwares such as XERO and ZOHO books may also be used, but often do not support integration with some UAE banks or e-invoicing

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At select free zones and for some mainland company types you are required to have your financial statements reviewed by an auditor. Free zones requiring anual audits include (among others):

• DMCC

• ADGM

• DIFC

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Corporate Tax Returns

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Your company's financial year (FY) is typically from Jan 1 to Dec 31.

The standard "tax period" as set by the FTA (Federal Tax Authority) is also Jan 1 to Dec 31.

• The tax period for your business is shown on your corporate tax registration certificate.

• You can apply to have both changed to any custom period; however, this is not recommended.

 

You have to file your corporate tax return within 9 months of the end of your tax period.

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In your first year of operations only, your reportable "tax period" may be up to 18 months long (instead of the standard 12 months) (Source).

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Example:

Your company was incorporated on Oct 1, 2024, and is liquidated on March 15, 2026.

You follow the standard FY definition of Jan 1 - Dec 31.

When are tax returns due?

• Your first reportable tax period is Oct 1, 2024 until Dec 31, 2025 (15 months in total).

  • The return is due 9 month later on September 30, 2026

• Your second (and last) reportable tax period is Jan 1, 2026 until March 15, 2026 (2.5 months)

  • The return is due 9 months later, on Dec 15, 2026​

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>> Need support filing your corporate tax return and applying for all tax exemptions? Contact us today!

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Registration for UAE Value Added Tax (VAT)

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The UAE has a 5% VAT rate.​

 

VAT Registration Obligations:

If your global revenue over the past 12 months (rolling basis, not CY!) is:

• below AED 187,500 in the past 12 months, you CANNOT register for VAT

• Is between AED 187,500 and 375,000, VAT registration is voluntary

• Exceeds AED 375,000, VAT registration is mandatory within 20 days, or a AED 10,000 fine may apply.

 

>> Please inform us if you are expecting your supplies to exceed AED 375,000 in a year. 

>> The threshold covers global revenues

>> We will register your company for VAT once you notify us

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Charging UAE Value Added Tax (VAT)

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Once you are registered for value added tax, you have the following rights and obligations:​

• You need to include your VAT number on your invoices

• You need to charge all UAE-based customers 5% VAT

• Charge 0% VAT to foreign clients (outside the UAE)

• File quarterly VAT returns, which include ALL transactions (including zero-rated transactions!)

• Pay output-VAT to the FTA (VAT which you charged your clients)

• Get refunds on input-VAT from the FTA (VAT which you paid to suppliers)

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Special Case: Designated Zones

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Some UAE free zones are considered “designated zones”; see list here.

Designated zones are typically "fenced" off, such as JAFZA, or Dubai CommerCity.

Meydan/SPC/DMCC are NOT designated zones.

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• Supplies from one designated zone to another = Outside the scope of VAT (not reportable)

• Supplies from a non-designated zone to a designated zone = Zero-rated (but still reportable)

• Supplies from a designated zone to any non-designated zone = Standard 5% applies

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For more details on UAE VAT, visit our detailed guide here.

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Value Added Tax (VAT) in Other Countries

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If you sell goods or services to other countries (outside the UAE), you may be liable for VAT or sales tax obligations in those countries. We can help you get VAT/Sales Tax-registered around the world and file your global tax returns. Contact us for details.​

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Personal Tax Residence Certificate

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You can apply for two types of Tax Resident Certificates (TRC) through the FTA.

• A 90 Day TRC

• A 180/183 Day TRC

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In addition, both certificates are available for "domestic" or "tax-treaty" purposes:

• The certificates for "tax-treaty" purposes are more difficult to apply for, and require you to submit a variety of (often changing) documents. 

  • If approved, you will be able to easily qualify for any tax-treaty benefits between the UAE and your home country​

  • You can only apply for this type if your country has a double tax treaty (DTT) with the UAE

• The certificates for "domestic" purposes are primarily used as evidence for domestic UAE entities (such as banks) that you reside here

  • Anyone can apply for this type of TRC​

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To apply, you need to:

• have spent the above number of days in the UAE (only full days count). For verification, you need to submit your entry/exit records provided by the UAE's immigration authority

• provide an annual tenancy agreement or title deed

• Additional documents may be needed if you apply for "tax-treaty" purposes, such as utility bills, employment contracts, health insurance, etc.

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Important: Tax residency certificates are often misunderstood:

• Having a UAE tax residency certificate does NOT mean you are automatically non-taxable in your home country

  • If you continue to have a business, employment income, a home or family in your home country, and spend a significant amount of time there, you may still be considered a tax resident there despite having a UAE TRC.​

  • You need to follow your home country's SPT (substantial presence test) or similar requirements in order to not be taxable there

• Similarly, if you spend a minimal amount of time in your home country (e.g., less than 90 days) and have limited ties (e.g., no home there), you don't need to apply for a UAE tax resident certificate. You won't be taxed in your home country anyway.

  • USA citizens are subject to citizenship-based taxation – and always have to report income to the US independent of where they live​

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Rather than relying on TRCs, we recommend:

1. Spend more time in any single country other than your home country and

2. Limit your ties to your home country (no home, insurance, driving licence, spouse/kids).

3. If you cannot meet rule number 1 (e.g., you constantly travel), ensure that you stay in your home country for less than 90 days/y

Following these rules would allow you to not get a UAE TRC, and not be taxable in your home country (except if you are a US citizen).

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TRCs are an extra step to solidify your claims of living in the UAE.

However, they are rarely necessary, nor are they a guarantee of tax residency. 

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