UAE Tax Guide 2025: Essential Corporate Tax Rules for Expats & Business Owners

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Robin Philip
April 26, 2025

There has never been a better time to move to the UAE. No income taxes, simpler business set up processes, what’s not to love? While you’re looking up places in the country to add to your visit list, it’s important to remember that the country is not completely tax-free. This UAE tax guide breaks down all the important facets of the country’s tax laws and why it is a popular location for foreign businesses.

Snapshot of UAE’s Tax Situation

Income Tax	0%
Capital Gains Tax	0%
Property Tax	0%
Inheritance Tax	0%
Value Added Tax	5%
Excise Tax	50% or 100%
Corporate Tax	0% up to AED 375,000 9% from AED 375,000

UAE Tax Laws for Expats

As more people move to the UAE, the country has been expanding its laws and regulations to keep up with the growing population and better position itself as an international investment hub.

Corporate Tax

Corporate tax in UAE was a recent introduction to the country’s tax landscape. From the beginning of June 2023, companies had to pay the Federal Tax Authority (FTA) a 9% tax if their annual taxable income was over AED 375,000.

Taxable persons have to register for corporate tax on the EmaraTax platform and receive a Tax Residency Certificate (TRC). Once you get a TRC, you can file your returns and pay what you owe. An individual becomes a tax resident of the UAE if they stay in the country for more than 183 days in the year.

Free zone businesses who generate qualified income as Qualified Free Zone Persons (QFZP) are still exempt from corporate tax. However, every business (even the sole proprietorships) have to register for corporate tax, regardless of their revenue.

Your corporate tax filing deadline will depend on your financial year. Businesses must file within nine months of the end of their financial year. Working with a tax consultant in UAE can be a good idea for new residents or business owners to understand all the tax compliance rules in the country.

Value Added Tax (VAT)

A 5% VAT was levied on businesses from 2018. According to UAE tax law, VAT registration is open to businesses with taxable incomes over AED 187,500, but is mandatory for those with annual turnovers over AED 375,000.

Companies can register for VAT on the FTA website, and must file their returns within 28 days from their completion of their “tax period” to avoid penalties.

Category	VAT
Retail purchases	5%
Hotel stays	5%
Entertainment expenses	5%
Petrol expenses	5%
Exports	0%
Specific education & healthcare services	0%
International transportation	0%
New residential buildings	0%

Excise Tax

In 2017, the UAE introduced a new tax on items they deemed harmful for public health. The excise tax is levied on the following items:

Artificially sweetened products	50%
E-smoking products & liquids	100%
Tobacco products	100%
Carbonated drinks	50%
Energy drinks	100%

UAE Tax Guide For Foreign Businesses

If you’re thinking about moving to the UAE to start a business, it’s imperative that you understand how to follow the UAE’s tax laws and stay compliant with the business regulations. You can set up a business in a free zone, on the mainland, or an offshore company.

A consultant specializing in business setup in Dubai can advise you on the best location for your business activity and take you through the entire license and visa registration process. You can also hire A&A Associate for accounting services in Dubai to keep your books organized and your financial position healthy.

Most free zone businesses are exempt from corporate tax, as long as they generate qualifying income. Offshore companies are completely exempt from paying corporate tax. However, mainland companies are subject to corporate taxation if they exceed the income threshold.

How Foreigners in UAE Can Avoid Double Taxation

The country has multiple DTAAs (Double Taxation Avoidance Agreement) in place that prevents foreigners living in UAE to be taxed on the same income twice. There are currently 193 DTAs in place, with countries including:

United Kingdom
India
Philippines
Japan
Singapore
Morocco
New Zealand
France
Pakistan
Egypt
Nigeria

By eliminating double taxation, the UAE further increases its appeal to foreign investors and entrepreneurs.

To get started with your UAE Corporate Tax compliance, contact us at +971 50 483 6190 or email us at enquiry@aaconsultancy.ae.

Frequently Asked Questions

Is There Tax in Dubai for Foreigners?

Foreigners in Dubai do not have to pay any taxes on their income. There are also no taxes on inheritance or capital gains.

What is the UAE Tax Rate?

The corporate tax rate in the UAE is 9%. This is only collected from “taxable persons” with annual taxable income over AED 375,000.

How to Calculate Taxable Income in UAE?

To calculate taxable income in the UAE, you should first calculate your total revenue. Then, deduct all your operating expenses and depreciation to arrive at your taxable income.

Does UAE Have Income Tax?

The UAE does not levy income tax on its residents. This makes the country an attractive location for foreign talent and high net-worth individuals.

When is the UAE Corporate Tax Filing Deadline?

Businesses have nine months after their financial year to meet the corporate tax filing deadline. If you do not pay your taxes by the due date, you risk getting penalized by the Federal Tax Authority.

What is the VAT in UAE?

There has been a 5% VAT on certain goods and services in the UAE since 2018. Businesses have to register for VAT if they make over AED 375,000 in taxable income.

Is the UAE Tax Free For Foreigners?

The UAE tax free for foreigners, in the sense that it does not collect income tax from its residents. There is also 0% capital gains tax and tax on inheritances.

How to Get a VAT Refund in Dubai?

You can get a VAT refund in Dubai at any exit point in the country (sea, land, air) as long as you have the sales receipt. You can only get a VAT refund within 90 days of your purchase.

What is the New Tax Law in UAE?

From the beginning of 2025, there will be a 15% Domestic Minimum Top up Tax (DMTT) on large MNEs with total revenue exceeding $793.5 million in two out of the last four years as a way to mitigate tax avoidance.

Do Foreign Residents Pay Tax in UAE?

There is no income tax in Dubai for foreigners who are legal tax residents of the country. However, a 9% corporate tax will be imposed on business owners with annual turnovers more than AED 375,000.

How Long Do You Have to Live in Dubai to Pay No Tax?

If you live and work in Dubai, you do not need to pay personal tax. This is available to all residents who live in the country for at least 183 days out in a year.

What Happens if I Don’t Pay Corporate Tax?

Failure to make corporate tax payments to the Federal Tax Authority on time can result in a monthly 14% penalty on the unpaid amount, until it is fully paid off.

Does the USA Have a DTA With The UAE?

The USA does not have a Double Taxation Agreement with the UAE. US citizens must report their earnings on Form 1040, but can be eligible for certain foreign tax credits that could lower their tax liability.

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Robin Philip

Robin Philip is the visionary Founder and Group CEO of A&A Associate LLC, one of the largest consultancy firms specializing in accounting, auditing, and corporate taxation in the UAE. His career began at a prestigious Indian bank, where his passion for assisting individuals with their financial needs evolved into a mission to support entrepreneurs and startups.