Known as a popular and respected business hub, Dubai is an ideal destination for those interested in placing their activities and generating money in the Emirate’s significant sectors. With a great taxation regime
related not only to Dubai’s free zones
, investors are encouraged to discover the benefits of the business environment in the UAE. In matters of legislation regarding the taxation system, our lawyers in Dubai
can provide the necessary legal support when opening a company in the city.
Dividends in Dubai
A company incorporated in Dubai
does not have to pay tax on the dividend income
received from a local or foreign investment. Dubai imposes no withholding tax on dividends
paid to local or foreign recipients. Also, dividend payments
are not tax-deductible from the paying company. Shareholders of Dubai companies
can be entitled to receive dividend payments
, as per the company’s internal rules and regulations. The manner in which the dividend payment
is made to the shareholders is chosen by the individual.
Branches in Dubai
which are subject to dividend payment
to a parent company abroad can benefit from the double tax treaties
signed by the UAE
and other countries. Our attorneys in Dubai
can tell you more about these treaties and can give you more information about how your business
is influenced by them, apart from the regulations concerning dividends
Taxation in Dubai
Dubai does not impose taxes
on the profits made by companies
and individuals. This means that the Emirate does not have a personal income tax
. As for the corporate income tax
, this is only applicable to a few types of companies which operate in selected business fields, like the banking sector or in oil and gas industry. Foreign nationals who want to invest in Dubai
need to comply with a few special requirements, like obtaining a free trade zone license
(if investing in such a zone), and special approvals for hiring local or foreign employees and others.
Tax news to consider in Dubai’s business environment
Starting with October 2017, the financial authorities in Dubai announced the introduction of the excise tax
which is imposed to the category of unhealthy products. Sugary and carbonated drinks, alongside with tobacco products are levied with an excise tax of 50% of the price. Shops, pubs, hotels, restaurants, and bars already introduced the excise tax
for such products, as soon as the legislation in this matter has been adopted and implemented.
After long debates and analyses made by the financial authorities in the Gulf Cooperation Council, the VAT
rate of 5% was adopted as a new fiscal measure for 2018. It is good to know that only a few categories of products and services will suffer price changes due to the VAT tax
which is set at 5%. Education, healthcare, basic food, clothes, international transport and export of goods are among sectors where VAT
will not be imposed. Even if the tourism in Dubai
represents a large source of income in the UAE, there will be no exceptions regarding the VAT
, but with the mention that it will be settled at low rates.
We remind that for the moment the dividends are not subject to any kind of taxation in Dubai, the profits of companies registered here being entirely protected from this point of view. This also includes the businesses which are settled with foreign capital in the UAE's territory. Additionally, there are no taxes on royalties, capital gains, interests, or on personal incomes. This kind of taxation system is part of an important plan to encourage as much as possible the foreign investments in the UAE.
Our lawyers in Dubai
can help you open a company
and make all the necessary arrangements. If you have further questions about the taxation of foreign companies in Dubai
or about the investment opportunities, you can contact our Dubai law firm