7 Things to Know About Tax if You're Moving to the UAE
If you’re looking at moving to the United Arab Emirates, تهانينا (congratulations)!
From its stunning skyscrapers and landscapes to its beautiful beaches, there’s plenty to love about the UAE – but before you move, you’ll want to know what your tax future will look like.
We’ve got you covered, with everything you need to know before you start your new life in this desert paradise.
If you’re raring to go, fill in this form to receive up to six free shipping quotes, and see how much it would cost to make the move of a lifetime.
Dubai is a stunning centre of commerce
1. There is no income tax
The money you earn is yours to keep.
None of your salary will go to the development of the country’s public services, which are primarily funded by oil and gas exports.
The lack of income tax is used to attract companies and high-skilled workers to the Gulf nation.
2. In fact, the UAE barely has any taxes
The UAE also doesn’t have a net worth tax, estate tax, gift tax, or capital gains tax.
Corporate taxes are imposed in the seven individual emirates, but only on foreign oil and gas companies and branches of foreign banks. Other businesses are unaffected.
This contrasts sharply with the UK’s 19% corporate tax rate, the US’s 21% rate, and Australia’s rate, which is either 25% or 30%, depending on how much a business makes.
3. VAT is the only national personal tax – and it’s low
You’ll be charged a 5% Value-Added Tax (VAT) on all goods and services that you’re likely to encounter in the UAE.
This means that whenever you buy a product – from a loaf of bread to a new laptop – you’ll automatically pay an extra 5% fee. In comparison, the UK has a 20% VAT rate.
Since putting VAT in place in 2018, the UAE’s leaders have created some exemptions to the tax.
These mostly apply to special services like cargo transport, the import of precious metals, and the supply of rescue vehicles.
But state education is also exempted, so if you or your children attend an Emirati state school or university, you won’t have to pay VAT on your fees.
The awe-inspiring Sheikh Zayed Grand Mosque in Abu Dhabi
4. Visitors can get their VAT payments back
The government’s Tax Refund for Tourists Scheme allows anyone who visits the UAE to claim back 85% of any VAT they pay in the country for products that were:
- Purchased from a company participating in the scheme
- Not excluded from the scheme
- Bought by someone who explicitly intends to leave the UAE with these products in the next 90 days
So be sure to spread the good news to any family and friends who want to see you in your new surroundings, and let them know they can claim this refund through US-based company Planet.
This may help them to balance the books, as tourist facilities like hotels and restaurants in the country often levy taxes on visitors to the country, according to the government.
These can include:
- A 10% room tax
- An automatic 10% service charge
- A 6% ‘tourism fee’
5. Only citizens of certain nations pay social security taxes
Emirati nationals pay 5% of their salary to a social security tax that goes towards retirement and pension funds, with their employer contributing another 12.5% – or 15%, if the employer is a public entity – according to KPMG.
Nationals from the other countries in the Cooperation Council for the Arab States of the Gulf – that is, Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia – also pay this tax.
If you don’t come from any of those countries, you won’t pay social security taxes.
6. Fizzy drinks and cigarettes may be more expensive due to taxes
Since 2017, the UAE government has enforced an excise tax “to reduce consumption of unhealthy and harmful commodities”.
The list of taxed goods includes:
- Fizzy drinks
- Energy drinks (including any drink with caffeine)
- Any product with added sugar or sweeteners
- Tobacco and tobacco products
- Electronic smoking devices, including associated tools and liquids
Fizzy drinks and sweetened products are taxed at 50%, while the other products on this list are taxed at 100%.
The excise tax is paid by the companies that sell these goods, but it often results in a higher price for consumers – so bear that in mind if you enjoy any of the products in question.
7. Tax evasion should not be attempted
If, despite the lack of taxes on individuals in the UAE, you still somehow manage to commit tax evasion, you can expect to receive a harsh punishment.
If you’re found guilty, the penalty is a prison sentence and a fine of up to five times the amount of tax that you evaded, according to expert legal source Lexology.
Because the law doesn’t state any specifics about prison sentences, the court will decide whether you should spend as little as a month, or as much as three years behind bars.
If you feel ready to move to the UAE, you can take the next step by filling in this form for free shipping quotes from trusted specialists who can move your belongings to your new home.