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United Arab Emirates’ Tax System – Country Profile

The United Arab Emirates (UAE), known for its stunning landscapes, thriving economy, and luxurious lifestyle, is a place that often piques the interest of investors and expatriates alike. In this country profile, we will delve into the UAE’s unique taxation and legal framework, offering insights into personal income tax, corporate income tax, and various other aspects that make this federation of seven emirates a prime destination for financial opportunities.

Tax Overview

Personal Income TaxNone
Corporate Income Tax9%
Inheritance TaxNone
Gift TaxNone

Legal System

The United Arab Emirates (UAE) is a federation comprised of 7 Emirates, Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairahi. The legal system of the UAE is based on a mix of civil law and Sharia.

Currency

The currency of the UAE is the UAE Dirham (AED). There are no foreign exchange controls.

Personal Income Taxation

The UAE does not impose personal income tax on individuals, or gift, inheritance or wealth tax. However, individual Emirates impose tax on certain transactions.

Corporate Income Tax

The UAE introduced Federal corporate income tax under the CT Law, effective on June 1, 2023, based on the financial year of the company. The law imposes 9% corporate income tax on the world-wide income of certain domestic UAE corporations and foreign corporations that are managed and controlled from the UAE with income over 375,000 Dirhams. The CT law also introduced a participation exemption regime.

In addition, the individual emirates have authority to impose corporate income tax, but only do so on oil and gas exploration and production companies (up to 55%), and foreign banks (20%).

Value Added Tax (VAT)

The UAE levies VAT on the sale of goods and services at 5%, subject to exemptions.

Anti-Avoidance Rules

As part of the CT Law, the UAE introduced General Anti-Abuse Rules (GAAR), Transfer Pricing rules, and Thin Capitalization rules. The UAE also has Economic Substance rules. However, the UAE does not have CFC rules.

Local Trust and Foundation Laws

The Dubai International Financial Centre (DIFC), and the Abu Dhabi Global Market (ADGM) have introduced trust and foundation laws.

Double Tax Treaties (DTTs)

The UAE has a broad network of DTTs, including with most of the G20 countries.

Foreign Investment Protection

The UAE has BITs and FTAs with a number of countries for the protection against expropriation of investments that provide for international arbitration.

Common Reporting Standard (CRS)

The UAE has implemented CRS for the automatic exchange of account information, but has elected not to receive information under the non-reciprocal MCAA.

FATCA

The UAE has a FATCA Model 1B IGA with the United States, and does not receive information from the US.

In conclusion, the United Arab Emirates emerges as a compelling destination for investors and individuals seeking financial opportunities. With its zero personal income tax, competitive corporate income tax rate of 9%, and an extensive network of Double Tax Treaties (DTTs), the UAE offers a tax-efficient environment. Its evolving legal frameworks, such as the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), underscore its status as a global financial hub.

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United Arab Emirates Tax System

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