19 08 2020

What are the taxes in Dubai?

What are the taxes in Dubai?

How does the tax system work in Dubai?

In many ways, taxes in Dubai are the same as in all other Emirates. In Dubai, value added tax is withheld, but there is no income tax. If we consider the various agreements on double taxation, then in the Emirate of Dubai all existing agreements are in force.

There is an opinion that the absence of income tax is a temporary measure, but the Prime Minister of the United Arab Emirates has a firm and opposite opinion. He said that "the UAE will never levy an income tax to fix the problem of the shortage of funds."

There are also exceptions to taxation, for example, banks operating internationally and companies in the energy sector are subject to income tax. Also, alcohol was included in the list of exceptions, for the import of which you need to pay a tax of 50%, and 30% - when buying alcoholic beverages for personal purposes with an appropriate license.

The authorities began to fight with various bad habits of the population since 2017, when taxes on tobacco products and energy drinks were established at 100%, and on soda - 50%.

Dubai is subject to a tourist tax levied by adding to the cost of a hotel reservation or a check in a cafe or restaurant. The size of this tax is 10%. For example, if you have chosen an inexpensive place to stay, then the surcharge will average up to 10 dirhams, but if the choice fell on hotels with 5 stars, then the surcharge will be up to 30 dirhams per night.

It is also necessary to take into account taxes, which are called municipal taxes. There are only 2 such taxes:

1 - Rent tax of 5% of the rental value for the year is levied on tenants who rent residential or commercial real estate and is paid along with the payment for utility services.

2 - City tax is also payable along with utility bills. It includes street lighting, fees for the disposal of garbage and other waste, etc. The city tax is 10%.

If you are using a centralized common room cooling system instead of conventional stationary air conditioners, you may notice a larger increase in the amount of utility bills. This is due to payment for services to companies that provide cooling services.

Using the services of the airport, you will need to pay a fee of 35 dirham, which will be used to modernize the entire infrastructure of Dubai National Airport. Such fees are included in the cost of the plane ticket. Transit passengers, children under the age of 2 years and board personnel are exempt from tax.

The VAT introduced in the UAE in 2018 is 5%.

The exceptions are the following areas: education, financial services, health care, social services, oil refining, as well as residential real estate.

If you reside in Dubai, you are exempt from income and capital gains taxes, inheritance tax and stamp tax.