Summary
| Corporate Income Tax Rate (%) | 0* |
| Capital Gains Tax Rate (%) | 0* |
| Branch Tax Rate (%) | 0* |
| Withholding Tax (%) | 0* |
* No taxes are imposed by the federal government of the United Arab Emirates. See Section B for further information.
Taxes on corporate income and gains
Corporate income tax. Although no federal taxation currently exists in the United Arab Emirates (UAE), each of the individual Emirates (Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain) has issued corporate tax decrees that theoretically apply to all businesses established in the UAE. However, in practice, these laws have not been applied. Taxes are currently imposed at the Emirate level only on oil and gas producing companies in accordance with specific government concession agreements, and on branches of foreign banks under specific tax decrees or regulations or in accordance with agreements with the Rulers of the Emirates in which the branches operate.
The preceding paragraph describes how the practice has evolved in the UAE at the level of the individual Emirates. No general exemption is contained in the Emirates’ tax decrees. Persons investing in the Emirates should be aware of the risk that the tax decrees may be more generally applied in the Emirates in the future and of the remote risk that they may be applied retroactively. They should also bear in mind the potential introduction of federal-level taxation in the medium to long term.
In August 2015, the UAE Ministry of Finance (MoF) announced the potential introduction of corporate tax in the UAE. No further details have been provided with respect to the proposed tax rate or timeline. The MoF stated that after an announcement has been made that the draft law has been finalized, it will be at least 12 months before businesses will be required to fulfill their UAE corporate tax obligations. This will allow businesses to prepare for the implementation of the corporate tax.
Tax incentives. Several of the Emirates have free zones that offer tax and business incentives aimed at making the UAE a global financial and commercial center. The incentives usually include tax exemptions for a guaranteed period, the possibility of 100% foreign ownership, absence of customs duty within the free zone and a “one-stop shop” for administrative services. The free zones include, but are not limited to, the Dubai Airport Free Zone (DAFZ), Dubai International Financial Centre (DIFC) (typically for financial services), Dubai Internet City (DIC), Dubai Media City (DMC), Dubai Multi Commodities Centre (DMCC), Dubai World Central (DWC) and Jebel Ali Free Zone (JAFZ). Approximately 30 free zones are located in the Emirate of Dubai alone.
Customs duties
The UAE is a member of the Gulf Cooperation Council (GCC), together with Bahrain, Kuwait, Oman, Qatar and Saudi Arabia. On 22 December 2002, the GCC member states approved regulations for the implementation of the GCC Customs Law, which unifies customs procedures in all GCC customs administrations and establishes a unified GCC customs union. All GCC member states have enacted the GCC Customs Law. However, the practical implementation of the law is not completely consistent.
The UAE is a member of the World Trade Organization. Unlike some of the other GCC member states, the UAE has not signed any free-trade agreements as a stand-alone partner. However, the GCC is a partner with respect to several free-trade agreements, some bilateral and some with other trading blocks.
Under the GCC Customs Law, most foreign imports are subject to customs duty of 5% of the Cost, Insurance and Freight (CIF) invoice value of the imported goods, except tobacco and alcohol (which generally attract higher rates), and the items on the exemption list (which generally attract lower or zero rates). This import duty is levied at the first point of entry to the GCC. No export duty is imposed on goods leaving the GCC.
In general, goods do not incur customs duty on import into, and on transfers within, a UAE free zone, and no export duty is imposed on goods removed from a UAE free zone. However, if the goods leave the free zone for a destination within the GCC, customs duty is levied on the import at the first point of entry into the GCC.
Foreign-exchange controls
Neither the federal government of the UAE nor the individual Emirates impose foreign-exchange controls.
Tax treaties
The UAE has tax treaties currently in force with the following jurisdictions.
Albania India Poland
Algeria Indonesia Portugal
Armenia Ireland Romania
Austria Italy Russian Federation
Azerbaijan Japan (limited)
Bangladesh Kazakhstan Serbia
Belarus Korea (South) Seychelles
Belgium Latvia Singapore
Bosnia and Lebanon Slovenia
Herzegovina Lithuania Spain
Brunei Darussalam Luxembourg Sri Lanka
Bulgaria Malaysia Sudan
Canada Malta Switzerland
China Mauritius Syria
Cyprus Mexico Tajikistan
Czech Republic Montenegro Thailand
Egypt Morocco Tunisia
Estonia Mozambique Turkey
Finland Netherlands Turkmenistan
France New Zealand Ukraine
Georgia Pakistan Venezuela
Germany Panama Vietnam
Hungary Philippines Yemen
In addition, treaties with the following jurisdictions are in various stages of negotiation, renegotiation, signature, ratification, translation or entry into force.
Andorra Guernsey Mauritania
Argentina Guinea Moldova
Barbados Hong Kong SAR Nigeria
Belize Jersey Palestinian
Benin Jordan Authority
Comoros Kenya Peru
Croatia Kyrgyzstan Slovak Republic
Ecuador Libya Uganda
Ethiopia Liechtenstein United Kingdom
Fiji Macedonia Uruguay
Greece Malawi Uzbekistan