Income Tax in Dubai

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It can be quite a confusing maze to guide you through when we talk about a foreign tax system. However, there is no income tax that is shown on the salary slip of the UAE residents. Yes, you read that right – Dubai does not levy any tax on the income of the residents as many other countries do. This is the main reason that makes it such a popular destination among the expats.

However, this does not imply that the emirate of Dubai is entirely tax-free. Especially when we talk about the expats, they need to bear in mind that they might not be required to pay tax on their earnings in Dubai, but they might have the responsibility of paying taxes on the same someplace else in the world instead. The reason behind this is that they do have taxable earnings in their home country.

The Dubai tax system can be favorable for the residents. However, if you have had a fresh move, you should consider seeking professional advice to further understand your tax obligations across the world.

What Income is Taxable in Dubai?

Let’s begin with the very first thing. Dubai is an emirate in the UAE – United Arab Emirates. Some international agreements and laws are in place to cover the entire UAE, and in some scenarios, each of the emirates is allowed to set their own rules. For instance, the double taxation agreement is set by the UAE as a whole, but the actual taxes applicable can be different for each emirate.

So, speaking about Dubai in particular, individuals are not taxed on the personal income earned. This means that if you are a resident in Dubai, you are not required to pay the Dubai authorities any taxes on your earnings from your work or any other streams of income.

However, it is important to remember that just because you do not have liabilities to pay tax on your income in Dubai does not mean that you do not have any other liabilities elsewhere. You might be having tax responsibilities somewhere else be it a country you earn an income from or your home country. Ignoring your responsibilities can lead to heavy fines and sometimes even legal actions.

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What are the Taxes in Dubai?

The good news for the expats residing in Dubai is that there is no direct income tax applicable. However, there are some other applicable taxes. The main present taxes that you need to keep in mind are the real estate tax that is applicable to the sale and purchase of a property and excise duty that is applicable to fizzy and energy drinks and tobacco products. There is also VAT – value-added tax applicable on the goods and services.

How does Dubai Run without Tax?

Dubai does not have any applicable tax on the income or earnings of the residents. The major sources by which the Government of Dubai manages and runs are the various Government fee along with the taxes charged (apart from the income tax).

How much Tax Do I Pay in Dubai on my Income?

The tax rate paid on the income earned by an individual in UAE is 0%. There are no taxes that are levied by the authorities on the income or wealth of the residents.

Under What Conditions do Dubai Residents Working Overseas Have to Pay Income Tax?

If you are someone who is working overseas, the local laws of the country that you move to will apply for you. Generally, there are some tests that help in figuring out whether or not you are deemed to be a resident that is required to pay tax. This helps in determining whether you will have to or you won’t have to pay taxes on some of or the whole of your income in your new residing country.

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What is the Double Taxation Agreement?

The double taxation treaties set in place help in ensuring that people do not have to pay taxes on the same income twice. But, not all of the treaties cover all sorts of income. For instance, they might be referring to just the income arising from employment in the treaty and not the one arising from the capital.  If you think any such treaty is applicable to your situation, you should consider seeking professional advice.

At present, the United Arab Emirates, and therefore, Dubai also has double taxation treaties set in place with more than 100 countries.

List of Countries with which UAE has signed a Double Tax Agreement

Some of the countries with which the United Arab Emirates has set Double Tax Agreements are mentioned as follows:

Austria

Colombia

Iraq

Mauritania

Slovak

Albania

Comoro Islands

Ireland

Mauritius

Slovenia

Algeria

Costa Rica

Italy

Moldova

South Africa

Andorra

Croatia

Japan

Montenegro

Spain

Angola

Cyprus

Jersey

Morocco

Sri Lanka

Antigua & Barbuda

Czech

Jordan

Mozambique

Sudan

Argentina

Ecuador

Kazakhstan

New Zealand

Switzerland

Armenia

Egypt

Kenya

Nigeria

Syria

Azerbaijan

Equatorial Guinea

Korea

Pakistan

Tajikistan

Bangladesh

Estonia

Kosovo

Palestine

Thailand

Barbados

Ethiopia

Kyrgyzstan

Panama

The Gambia

Belarus

Fiji

Latvia

Paraguay

Tunisia

Belgium

Finland

Lebanon

Philippine

Turkey

Benin

France

Libya

Poland

Turkmenistan

Bermuda

Georgia

Liechtenstein

Portugal

Uganda

Bosnia & Herzegovina

Germany

Lithuania

Romania

Ukraine

Brazil

Greece

Luxembourg

Russia (only for those companies that are owned by the United Arab Emirates’ government)

United Kingdom of Great Britain & Northern Ireland

Brunei Darussalam

Guinea

Macedonia

Rwanda

United Mexican States

Bulgaria

Holland

Magnolia

Saint Kitts & Nevis

Uruguay

Burundi

Hong Kong

Malaysia

Senegal

Uzbekistan

Cameroon

Hungary

Maldives

Serbia

Venezuela

Canada

India

Mali

Seychelles

Vietnam

China

Indonesia

Malta

Singapore

Yemen

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