UAE Taxes
The UAE’s tax system, while relatively straightforward compared to many other countries, still holds nuances and details that can be overwhelming for newcomers. This comprehensive breakdown is here to unravel the complexities and offer you a clear understanding of all the taxes in the UAE, from federal to emirate-level levies.
Federal Taxes
1. Value Added Tax (VAT)
- Rate:5% (Standard rate)
- Scope: Most goods and services (excluding some essentials like basic food items and medical care)
- Collection: Businesses registered for VAT collect and remit the tax to the FTA. Consumers ultimately bear the cost through an increased price.
- Compliance: Businesses exceeding AED 375,000 in taxable supplies within 12 months must register for VAT.
- Tips: Check the FTA website for a detailed list of exempt items and specific VAT regulations.
2. Corporate Income Tax / Corporate Tax (CT)
- Rate: 9% (Standard rate)
- Scope: Net profits of certain businesses with taxable supplies exceeding AED 375,000 in 12 months. Exemptions apply to various sectors like Free Zones and public interest activities.
- Calculation: Taxable profit is based on accounting principles with specific adjustments for non-deductible expenses and incentives.
- Compliance: Businesses earning taxable income above the threshold must register for CT and file annual tax returns.
- Tips: Consult a tax advisor to identify potential exemptions and optimize your tax liability.
3. Excise Tax
- Rates: Varied (50% for carbonated drinks, 100% for tobacco and energy drinks, etc.)
- Scope: Specific goods considered harmful to health or the environment (listed on the FTA website)
- Collection: Manufacturers and importers pay the excise tax, passing it on to consumers through the selling price.
- Compliance: Businesses dealing in taxable goods must register for excise tax and comply with reporting and payment requirements.
- Tips: Understand the specific rate applicable to your products and ensure proper record-keeping.
Emirate-Level Taxes
1. Property Tax
- Rates: Vary by emirate (e.g., 1% for residential properties in Dubai, 1-5% range in Abu Dhabi based on property type)
- Scope: Annual tax on owning property within the emirate
- Collection: Paid directly to the emirate’s revenue authority
- Compliance: Property owners are responsible for registering and paying the tax.
- Tips: Check the specific rate and exemption criteria for your emirate.
2. Tourism Dirham
- Rates: Vary by emirate (e.g., AED 7 or AED 15 per night in Dubai depending on hotel rating, AED 10 per night in Sharjah)
- Scope: Daily fee charged to guests staying in hotels and similar tourist accommodations
- Collection: Hotels collect the fee and remit it to the emirate’s tourism authority
- Compliance: No action required by tourists; included in hotel bills.
3. Transfer Fees
- Rates:Typically around 2-5% of the property value
- Scope:Charged on the transfer of ownership of real estate within the emirate
- Collection:Paid by the buyer or seller as part of the property transaction
- Compliance:Handled by the property transfer agent during the transaction process.
Reference taken from:
- Federal Tax Authority (FTA): https://tax.gov.ae/en/
- Ministry of Finance: https://mof.gov.ae/
- Tax Guides & Insights :https://www.pwc.com/
Disclaimer: Above all information is for general reference only and sourced from internet, before making any kind of decision please visit the authorized websites of authorities and service providers.