Company In Dubai will assist you in registering your business for VAT and securing an individual or corporate tax residency certificate from the Federal Tax Authority (FTA).
In the United Arab Emirates (UAE), taxation follows a unique model compared to many other countries. One of the key attractions of doing business in the UAE is its favorable tax environment, characterized by the absence of personal income tax for residents and corporate tax for most businesses. This tax-free regime is a significant draw for entrepreneurs and investors, fostering an environment conducive to business growth and international investment.
Unlock the potential of your business in the dynamic landscape of the United Arab Emirates with our comprehensive suite of services. From navigating the intricacies of setting up in designated free zones to ensuring compliance with VAT regulations, we provide expert guidance every step of the way. Our team specializes in corporate taxation, offering tailored solutions to optimize your financial strategies and maximize profitability. Whether you're a startup venturing into the UAE market or an established enterprise seeking to expand, trust us to streamline your journey to success.
Value Added Tax (VAT) in the United Arab Emirates (UAE) presents both challenges and opportunities for businesses operating within the country. Since its introduction in 2018, businesses have adapted to comply with VAT regulations, including registration, filing returns, and managing cash flow.
VAT is applicable to most goods and services sold for consumption in the UAE, impacting businesses across various sectors such as retail, hospitality, real estate, and professional services. From small enterprises to multinational corporations, VAT compliance is essential for all businesses conducting taxable activities, regardless of their size or industry. Navigating VAT requirements effectively is crucial for maintaining financial stability and competitiveness in the UAE market.
In the United Arab Emirates (UAE), corporate taxation follows a unique model that sets it apart from many other jurisdictions. One of the most appealing aspects of doing business in the UAE is its favorable corporate tax environment, characterized by the absence of corporate income tax for most businesses.
However, it's essential to note that businesses operating outside of designated free zones are subject to a corporate tax rate of 9%, which remains notably low compared to global standards. This low corporate tax rate, combined with the absence of personal income tax for residents, makes the UAE an attractive destination for businesses looking to minimize their tax burden and maximize profitability.
Resident companies are those that are established in the UAE with a minimum of one local director. The company is managed from the Emirates. The registered office of a Resident company is present in the country of incorporation. UAE residents or non-residents may own a Resident company.
Non-resident companies are also called Offshore companies. The registered office of a Non-Resident company is not present in the country of Incorporation. The ownership and management is vested on non-resident individuals. A non-resident company is not allowed to conduct any business transactions in the UAE. These companies enjoy tax exemptions of various kinds like Corporate tax etc.
The prominent business entities in the UAE are as follows.
Limited Liability Company (LLC)
Branch & Representative Office
Joint Stock Company (Private/Public)
A foreign investor is entitled to own up to 49% of the company shares when the company is incorporated in the UAE mainland. Whereas, if the company is incorporated in any one of the Free zone jurisdictions, foreign investors are entitled to own 100% of the shares.
Taxation rules pertaining to the resident companies in Dubai are simple and straightforward.
The UAE Excise tax was introduced on October 1st, 2017. The tax was imposed on specific products like energy drinks, carbonated beverages and tobacco goods. A 50 % tax rate is imposed on carbonated beverages. A 100% tax rate is imposed on energy drinks and tobacco goods. The Excise tax is levied on both locally produced and imported products.
Resident companies in Dubai are exempted from taxable income. However, there is an exception. Exceptions apply to 3 categories of business establishments and they are listed below.
Overseas bank branches – A tax rate of 20% (fixed) is applicable
Companies dealing with production – A tax rate of 50-55% is applicable
Oil and Gas survey - A tax rate of 50-55% is applicable
Financial year – January-December is considered as the financial year. The very first year of the company after its formation is not taken into consideration.
Dividends – Company dividends are exempted from taxation.
Real estate tax
When it comes to the reassigning of real estate property or asset to a new owner, a transfer fee is charged. The transfer fee is determined on the basis of the jurisdiction in which the transfer takes place.
Social security tax
Expat employees are exempted from Social security tax in the UAE. When it comes to a UAE national employee, a 17.5% tax rate is applicable based on the total salary of the employee.
In the UAE, the Value Added Tax (VAT) was launched on January 1st, 2018. A good majority of the goods and commodities come under VAT and the VAT rate imposed is 5% in UAE. However, based on certain conditions some goods and services are exempted from VAT and they are financial services, residential buildings supplies, passenger support supplies and bare land.
Business establishments or Resident companies with yearly revenue of more than Dh 375,000 must compulsorily register for VAT. VAT registration is optional for businesses whose annual turnover is in between Dh 375,000 and Dh 175,000. However, these rules are not applicable to Nonresident companies.
A lack of compliance with VAT registration rules and regulations can invite legal complications like fines and penalties. It can even obtain a black mark for the company. Besides providing VAT registration services, Kiltons tax consultants are proficient in providing various other Value Added Tax services in Dubai and across the UAE.
At present, stamp taxes are not collected in the UAE.
Rate, insurance and shipment charges of the import are the factors considered when it comes to Customs duties. The GCC Customs Union was formed in 2003 and UAE is a member of the same. The Customs Union was formed to improve the trade relations between the GCC nations. Customs duties are not applicable when a GCC nation conducts trade with another GCC nation.
At present, the personal income tax is not applicable in the case the of UAE. Therefore, the payroll taxes are not levied from the employees.
Taxes are applicable to hotel and entertainment services offered in many Emirates. However, the tax collection and administration need not be the same in all the Emirates. Tourists and individuals who book hotel rooms in Dubai are imposed a Tourism Dirham charge. The amount is charged on room/night basis and it may vary from 7 Dhs to 20 Dhs. The tax levied is around 10 Dhs in Abu Dhabi.
Kiltons offers valuable and updated Accounting and tax-related advice and assistance to the esteemed clients irrespective of the size of the organization. At Kiltons, we are committed to providing the most reliable tax services to our clients. Our tax consultant team comprises specialists adept in UAE taxation rules and can guide in every step of your business. For the latest tax updates concerning the Emirates, feel free to call Kiltons tax consultants.
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