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Taxation of Foreign Companies in Dubai

Taxation of Foreign Companies in Dubai

Updated on Tuesday 19th April 2016

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Taxation_of_Foreign_Companies_in_Dubai.jpgDubai is a popular business center and it is largely a tax-free city, with important advantages for those who open a company there and those who come, live and work in Dubai. Taxation for foreign companies is made based on a few taxation principles, the same that are considered advantageous for those who start a Dubai based business.

A foreign company in Dubai

A company is considered a tax resident in the city, if it is incorporated in Dubai, all its shares are owned by UAE residents and all or a large amount of the company’s income is derived from trade and businesses performed within the UAE. Also, the company’s main management office needs to exercise its activities in Dubai. This city is well known for its very attractive taxation regime. The emirate has almost no taxes for companies and no taxes for personal income.
Foreign companies that want to open a branch or a subsidiary in Dubai benefit from the same convenient taxation regime. There are no corporate income taxes on profits. Only banks and oil companies are subject to corporate income tax. There are no withholding taxes, no taxes on dividends and no taxes on interest. Since there are no taxes on income and profits, there is no need for tax returns.
Dubai also offers other advantages for investors: no VAT, although there are speculations regarding its introduction, no taxes on branch profits and no stamp and capital duty. If you choose to base your company in this city, our Dubai lawyers can tell you more about the real estate property tax, if you are interested in purchasing property there. Some business activities, like imports, have indirect taxes and alcohol has a special taxation regime in Dubai.

The Dubai Free Zones

Dubai has a number of free zones and these are the preferred areas for investments for foreign companies in Dubai, as there are many tax advantages in these zones. Some of the zones are:
- the Jebel Ali Free Zone,
- the Dubai Airport Free Zone,
- the Dubai Media City,
- the Dubai Internet City etc.
Dubai has signed a number of double tax avoidance agreements to make sure that foreign companies and individuals do not pay the same taxes twice.
You can contact our Dubai law firm for more information about company formation in this city, taxation and benefits.


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