Do I pay income tax in the UAE?

## Do I Pay Income Tax in the UAE?

No. The UAE has no personal income tax. This applies to all residents, whether UAE nationals or expatriates, and regardless of income level. There is no tax on:

• Employment salary and bonuses
• Freelance or consultancy income
• Dividends received
• Rental income
• Capital gains on asset disposals
• Investment returns

This zero-income-tax policy is enshrined in the UAE's tax framework and there is no current proposal to change it.

## What Does Not Exist in the UAE

Expats moving from countries such as the UK, Ireland, Australia, or the US often expect to encounter equivalents of the tax systems they know. In the UAE, the following do not exist for most residents:

• **PAYE (Pay As You Earn):** No tax is deducted from your salary by your employer
• **Income tax self-assessment:** No annual tax return required for employment or personal income
• **National Insurance or Social Security:** Not applicable to expats (see GPSSA below)
• **Dividend withholding tax:** Dividends from UAE companies are not subject to withholding tax
• **Capital Gains Tax:** No tax on the disposal of shares, property, or other assets at a personal level

## GPSSA for UAE Nationals

• Employee contribution: 5% of monthly salary
• Employer contribution: 12.5% of monthly salary
• Federal government top-up for salaries below AED 20,000

GPSSA contributions are not income tax. They are a pension and social security system that only applies to UAE nationals. Expatriates do not participate in GPSSA and make no equivalent deduction from salary.

## What Taxes Do Exist in the UAE?

While personal income tax does not exist, the UAE does have:

• **VAT at 5%:** On most goods and services consumed in the UAE (applicable to businesses, not personal income)
• **Corporate tax at 0%/9%:** On company profits above AED 375,000 (since June 2023)
• **Excise tax:** On tobacco (100%), energy drinks (100%), and sugary drinks (50%)
• **Municipal fees:** On hotel stays and residential rentals in some emirates
• **Real estate transaction fees:** Typically 4% in Dubai

## Tax Residency in the UAE

Spending 183 or more days per year in the UAE generally qualifies you as a tax resident. UAE tax residency is relevant for double tax treaty purposes when dealing with tax authorities in other countries.

A Tax Residency Certificate (TRC) from the FTA can be obtained to prove UAE tax residency to foreign tax authorities, potentially reducing withholding taxes on income sourced from treaty partner countries.

## What About Income from Other Countries?

If you are a UAE resident with income sources in other countries, those countries may still tax that income under their own rules, regardless of your UAE residency. The UAE's zero income tax only applies to taxes payable in the UAE.

For example, a UK-origin expat who retains UK property and rental income may still owe UK income tax on that rental income, even while living in the UAE. The UAE-UK double tax treaty determines how this is handled.

## Implications for Business Owners

For company owners in the UAE, profits retained in or paid out from a UAE company are not subject to personal income tax. However, from June 2023, the company itself may be subject to the UAE corporate tax at 9% on profits above AED 375,000. The individual shareholder still pays no personal tax on dividends received.

This differs from countries like Ireland or the UK where dividends are taxed as personal income at marginal income tax rates, making the UAE significantly more efficient for wealth accumulation at the personal level.