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Comparing UAE Stocks With International Stocks

The stock market is an important platform for investors to invest their money and earn returns. It provides a platform for companies to raise capital and expand their business.

In this article, we are discussing the differences between UAE stocks and International stocks.

The Dubai Financial Market is the Middle East's largest financial exchange

Geographical Scope

The first and most obvious difference between UAE stocks and International stocks is the geographical scope. UAE stocks represent companies that are listed on the stock exchange in the United Arab Emirates (UAE). In contrast, International stocks represent companies that are listed on stock exchanges outside of the UAE. International stocks can represent companies from various countries, such as the United States, China, Japan, and Europe.

Capital Gains Tax

Realized stock price gains - capital gains - are not taxed in the UAE. If you live here and invest in UAE stocks you won't have to pay capital gains taxes. If you live abroad and invest in UAE stocks, you may have to pay taxes in your home country on your UAE-derived gains.

There are a number of other countries and jurisdictions that also do not charge capital gains taxes on stocks owned by nonresident foreigners, these include Singapore, Hong Kong, the United States, and the United Kingdom. If you live in the UAE and invest in one of these international stock markets, you won't have to pay capital gains abroad or in the UAE.

Other countries like Germany do charge capital gains taxes on local stock gains even if you reside in the UAE.

Dividends Tax

There are no dividend (or income) taxes in the UAE. As a result, the UAE won't tax you on dividend income whether the dividends are derived from UAE stocks or international stocks.

However, the vast majority of countries do tax dividends, irrespective of whether you are a resident there or not.

As a UAE resident investing in US stocks, for example, you will have to pay a 30% withholding tax on US-derived dividends.

However, there are effective strategies to avoid these dividend taxes. These include investing in dividend stocks that are based in countries with double tax treaties with the UAE or in countries without dividend withholding taxes altogether.

Generally speaking, Singapore and Hong Kong never tax dividends. The UK and Ireland also do not tax dividends as long as you are a UAE resident, thanks to generous double tax treaties between the UAE and those countries.

There are special index funds that allow you to earn dividends on US stocks tax-free as a UAE resident. The availability and terms of these funds change regularly, so feel free to contact us for details.

Inheritance Tax

The UAE does not have any inheritance taxes or estate taxes. If you inherit UAE stocks or other property, the UAE government won't charge you. If you reside outside the UAE, your home country may tax your UAE inheritance.

If you live in the UAE and inherit assets including stocks that are based abroad, estate taxes may apply depending on where the assets are located.

US-based assets, including stocks, are free from inheritance taxes up to a value of 60,000 USD. Any amount above this threshold is taxed in brackets ranging from 18% to 40% if you live in the UAE.

Hong Kong- or Singapore-based assets including stocks are always free from inheritance taxes.

We are experts at advanced tax-optimized stock investment strategies for UAE residents. Check out our services here.

Market Capitalization

Another critical difference between UAE stocks and International stocks is market capitalization. UAE stocks are generally smaller in terms of market capitalization, while International stocks tend to be larger.

The reason for this is that the UAE stock market is still in its early stages of development, and therefore, most of the companies listed are relatively small compared to the larger companies listed on international stock exchanges.

Economic Conditions

The economic conditions in the UAE and other countries can also have an impact on the performance of their respective stock markets. UAE stocks are more closely tied to the local economy, and therefore, economic conditions in the UAE can have a significant impact on the performance of the stock market.

While Dubai with the UAE's biggest stock exchange does not directly depend on oil and gas revenues, its neighbors Abu Dhabi and Saudi Arabia do. Economic conditions in these neighboring emirates and countries indirectly affect the economic performance of Dubai. Higher oil prices benefit the overall economy, including real estate developers, retail brands, and banks and thus have an indirect effect on Dubai's highly diversified economy.

In contrast, International stocks are affected by the economic conditions of the countries in which the companies are based, and in many cases such as in the United States and China, are far more immune to individual risk factors.

Currency Risk

Investing in International stocks can expose investors to currency risk, which is the risk of currency fluctuations. This is because International stocks are denominated in a foreign currency, and changes in the exchange rate can impact the value of the investment. In contrast, UAE stocks are denominated in UAE Dirhams, which eliminates currency risk for local investors.

The UAE Dirham is pegged (fixed) to the US Dollar at 1USD = 3.6725AED. As a result, US Dollar-denominated stocks and financial assets similarly avoid the currency risk that British, German, Chinese, or Japanese stocks have.


Different countries have different regulations regarding the stock market, and this can also impact the differences between UAE stocks and International stocks. UAE stocks are subject to regulations set by the Securities and Commodities Authority (SCA), which is the regulatory body for the UAE stock market. International stocks, on the other hand, are subject to the regulations set by the regulatory bodies in their respective countries.

Both the United States and the European Union are known to more heavily regulate local financial markets and "protect" local investor interests than the UAE

In the United States, the Securities and Exchange Commission (SEC) and in the European Union the European Securities and Markets Authority (ESMA) both restrict the ability of locally traded companies to disadvantage small investors or promise above-average risk-adjusted returns.

Disagreement between these strict government authorities goes so far that European Union residents are effectively prevented from investing in US-based ETFs, for example.

As a UAE resident, you may not be as protected, but on the other hand, have unlimited access to global investment products.

Industry Exposure

UAE stocks tend to be more concentrated in specific industries such as real estate, financial services, and energy. This is because these industries have traditionally been the main drivers of the UAE economy. In contrast, International stocks offer investors exposure to a wider range of industries, including technology, healthcare, consumer goods, and others.

Cultural Differences

International stocks can also expose investors to cultural differences. When investing in stocks from other countries, investors should be aware of cultural differences that may impact the business practices of companies. This can include differences in corporate governance, labor practices, and other factors that may affect the performance of the investment.

Political Risk

Investing in International stocks can also expose investors to political risk. Political instability in a country can impact the performance of companies and the stock market in that country. In contrast, UAE stocks are generally less exposed to political risk, as the UAE has a stable political environment.


Diversification is an important concept in investing, as it refers to spreading your investments across different assets to reduce risk. International stocks offer investors a greater level of diversification compared to UAE stocks, as they provide exposure to different countries and industries. This can help reduce the impact of economic or political events in a single country or industry.


In conclusion, investing in UAE stocks and International stocks each has its own advantages and disadvantages. UAE stocks offer investors exposure to the local economy and the opportunity to invest in smaller companies, while International stocks offer greater diversification, industry exposure, and potentially higher liquidity. Investors should carefully consider their investment objectives and risk tolerance before deciding which type of stock to invest in. It is also important to seek the advice of a financial advisor before making any investment decisions.


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