Dubai, a major business center in the Middle East has been treated as a tax haven for the Investors / Businessmen. The Taxation system is very satisfactory for the Businessmen and Investors. The corporate tax is set at a maximum rate in the oil and bank sectors in the Emirates.
Taxation aspects for Companies in Dubai
> CORPORATE TAX
1. Corporate taxation in Dubai is limited only to banks and oil companies.
2. Oil companies in Dubai are subject to a maximum amount of 55% corporate income tax on the UAE-sourced income.
3. Branches of foreign banks in Dubai, subject to 20% tax rate on their Dubai source income.
4. calculation method for the taxable income:
| For Banks | For Oil Companies |
| according to their audited financial statements | according to their concession agreements |
5. Free trade zones (FTZs) have their own rules and regulations and there is no corporate tax.
> VAT (VALUE ADDED TAX) IN DUBAI
In the year 2018, the VAT was introduced in the UAE to provide a new source of income. VAT is a tax on the consumption or use of goods and services levied at each point of sale.
Registration Criteria:
| Mandatory Registration | Optional Registration |
or
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Kindly note that:
If you fail to register for VAT on time, a late registration administrative penalty of 20,000 AED will apply.
VAT Rate:
- UAE Authorities implemented the VAT rate of 5%on jewelry, tobacco, luxury cars, and alcohol industry etc. (low rate as compared to other countries worldwide) for particular goods and services.
- VAT charged at 0% also on few services:
- investments in precious materials;
- the supply or residential properties;
- education services;
- healthcare services.
> EXERCISE TAX IN DUBAI
UAE have implemented an excise tax, generally ranging from 50% to 100%, non- essential goods which includes tobacco products and carbonated drinks / energy drinks, luxury cars etc.
> DIVIDEND TAX IN DUBAI
Companies established in UAE can get benefit from the double taxation treaties signed by UAE and there is no tax on dividends / no withholding tax imposed for foreign or local investments. dividend payments are not tax-deductible from the paying company.
> INDIRECT TAXES REGIME IN DUBAI
| hotels and entertainment activities | 10% municipal tax |
| import of alcoholic beverages; | 50% tax |
| purchase of alcohol | 30% tax |
> INDIVIDUAL TAXATION ASPECTS:
UAE has been treated as a tax haven country for businessmen and investors. And No Income Tax Provisions / Compliance Obligations are applicable to individuals in UAE (DUBAI).
Prepared by CS Lalit Rajput !! lalitrajput537@gmail.com
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