Understanding Different Types of Taxes Levied in Dubai

Dubai, as part of the UAE, is known for its tax-friendly environment, which has become a major attraction for businesses and investors. However, it’s important to understand the types of taxes in Dubai that may apply depending on your business structure and operations.

1. Corporate Tax: In the past, there was no federal corporate tax on most businesses. However, starting in June 2023, a corporate tax of 9% was introduced for businesses generating profits above AED 375,000, while smaller businesses are exempt. This tax applies to most mainland businesses, but many free zones continue to offer tax exemptions for a specified period.

2. Value Added Tax (VAT): VAT was introduced in 2018 at a rate of 5%. This tax is applicable to most goods and services, though certain essential items, like healthcare and education, are exempt. Businesses with taxable supplies exceeding a specific threshold must register for VAT.

3. Excise Tax: This is imposed on goods that are harmful to health or the environment, such as tobacco, sugary drinks, and energy drinks.

4. Customs Duties: Dubai levies customs duties on imported goods, typically set at 5%, but exceptions exist for certain products.

5. Real Estate Tax: While there is no property tax, there is a 4% transfer fee on property sales.

Dubai's tax system remains one of the most favorable globally, with many exemptions available depending on business location and activity.