Tax on investments in the UAE

With the changes in the world economy, more and more people are looking for new ways to invest their money. The UAE is one of the investment hot spots of the moment but it is not only due to Dubai’s booming property market (although that certainly helps). There are many other factors that make investing in this part of the world very attractive. Tax is one of the most important aspects of any business, especially in UAE. Tax is an amount of money that a person or business pays to the government for earning an income from their properties or business. Therefore, it is very important to understand how you can pay tax legally and ethically.

Please note this article will not cover all the details so we kindly suggest visiting the government website for more detail, and our investment consultants can arrange a tax accountant for detailed investment analysis if you require.

Company taxes and VAT rates in the UAE

VAT for businesses

The VAT is 5% for UAE businesses. Businesses must register for VAT if their taxable supplies and imports exceed AED 375,000 per annum and if they meet a threshold of AED 187,500. Any business may join to register voluntarily.

Tax on income from investments in the UAE

The United Arab Emirates (UAE) does not tax individual income. It does, however, levy a corporate tax on oil companies and foreign banks. The excise tax is levied on goods such as tobacco and alcohol which are harmful to the human body or the environment. Otherwise, the VAT is applied to most goods and services in the UAE.

Tax on capital gains from investments in the UAE

There is no capital gains tax in the UAE unless it is derived from a company sale that has to pay income tax or banking tax.

Double taxation

The United Arab Emirates is expanding its network of Double Taxation Agreements (DTA) and Bilateral Investment Treaties (BIT) to encourage strategic global partnerships. The country has secured approximately 193 DTAs and BITs with the purpose of exempting or reducing taxes on investments and profits from direct and indirect taxes.

Tax on property and wealth in the UAE

Transfer tax

A transfer charge is applied to the transfer of property in the UAE. This varies from one Emirate to other, but it is generally 4% in Dubai. Although both buyer and seller share the burden of this charge, it is generally paid for by the buyer.

Municipality/Rental tax

Residential tenants in Dubai pay 5% of their annual rent as a rental tax, while 10% is added for commercial tenants. Meanwhile, in Abu Dhabi, UAE citizens are not taxed on their properties, but their ex-pat counterparts pay 3%. In Sharjah, all tenants pay a tax of 2%.

Stamp duty

There is no stamp duty in the United Arab Emirates.

Conclusion

As you can see there are a few major factors that will influence the tax on investment and it is important to make sure you know what these factors are. By using our tax accountant and investing consultants, we can help you ensure your investments aren’t taxed beyond what they should be. For further information, please visit our website call us today.