What most people don’t know is that citizens in the UAE are not obligated to pay income tax. However, taxation in UAE exists for other purposes. So, if you feel you are in the dark about it all, you won’t be after reading this full guide on UAE taxes including VAT, excise tax, corporate tax, and income tax.
Usually, the Federal Tax Authority UAE imposes a tax on certain authorities and other associations or individuals. In this article, you will find all the details about UAE tax law along with everything regarding it.
- Taxes for Individuals
- Tax Residency Certificate
- EmaraTax
- Taxes for Corporates
- Tax Identification Number
- FAQs
Taxes in UAE for Individuals
Income Tax
One of the virtues of living in the United Arab Emirates is that currently, there is no tax on personal income. However, if a person conducts any type of business will be subject to UAE CT(Corporate Tax) at 9% on income; this is based on the cabinet decision.
Tourist Tax
One of the first things tourists look into before visiting the UAE is taxation. Normally, taxes are included in the net sum of transactions. So, the UAE would charge a 10% tax on hotel rooms, service charges, and municipality fees.
They also charge a 6% tourism fee. Lastly, city taxes would range from 6% – 10%. However, in 2018, the FTA issued a Tourist Tax Refund Scheme which refunds the VAT to tourists upon departing the UAE.
Taxes in UAE for Corporates
Corporate Tax (CT)
The UAE tax news announced that on 9 December 2022, The Federal Decree-Law No. 47 was released subjecting taxation on certain corporations’ profits.
This law applies to the below companies
- Foreign legal entities that do not reside in the UAE but have a permanent establishment there
- UAE corporates and other legal entities that are incorporated in the UAE or that are effectively managed and governed there
- Individuals who manage a business or engage in commercial activity in the UAE in accordance with a cabinet decision that will be issued soon
UAE corporate tax rate is 9%; however, in certain cases regarding the UAE taxes and corporations, specific organizations and businesses are exempted from corporate tax.
Moreover, you can check in the following table the exempting parties:
| Parties that are Automatically Exempted | –Entities that are controlled by the government and specified by the cabinet decision – The governmental entities |
| The ones listed in the cabinet decision | The qualified public entities |
| Notified parties to the Ministry of Finance | Extractive businesses |
| Approved parties by the Federal Tax Authority | – Private and public pension and social security funds – The qualified investment funds |
Value Added Tax (VAT) in UAE
The UAE introduced VAT on January 1st, 2018, implying that 5% of VAT rate applies on most goods and other services.
In addition, it’s known that more than 180 countries use VAT. It might be confusing to some due to the similarity but VAT differs from sales tax to end-consumers.
For corporations, registration to the VAT might be obligatory or optional. So, have a look below to learn about each case.
- Mandatory Registration. VAT Tax registration is mandatory for a business whose taxable supplies and imports exceed AED 375,000/annum
- Voluntary Registration. The registration is optional if the sum of the business’s taxable supplies and imports exceeds AED 187,500/annum
For registration, you can use this manual.
Excise Tax
The goal behind the excise tax is to decrease the use of harmful items while also increasing government revenue that may be used to fund public services.
Moreover, the registration requirements and compliance obligations are connected to reporting and paying excise tax for all companies that import, produce, or release excise goods from a specific zone.
According to the UAE Tax Authority excise tax is applied on certain goods including the following:
- Sweetened drinks and energy drinks
- Smoking tools and devices (electronic is included)
- Carbonated drinks
- Liquids used in electronic smoking devices and tools.
- Tobacco and tobacco products
| Product | Tax Percentage |
| Carbonated Drinks | 50% |
| Tobacco Products | 100% |
| Energy Drinks | 100% |
Tax Residency Certificate in UAE (TRC)
Tax residency certificate is also known as Tax Domicile Certificate. It proves a person’s right to receive the benefit by avoiding double taxation in the UAE agreement.
TRC Benefits for Applicants
The decision doesn’t include individuals only, but companies can also obtain a Tax Residency Certificate. Here are the benefits of a tax residency certificate:
- The availability of the certificate for individuals and companies and both can be covered
- The avoidance of double taxation as a resident in the UAE
- The accessibility to the international markets when planning a business in the UAE
Fee
The required fee for getting TRC is as follows
- AED 50 for submission
- AED 500 for all tax registrants
- AED 1,000 for the non-tax registrant (individuals)
- AED 1,750 for the non-tax registrant (legal person)
Required Documents for Obtaining TRC
- Individuals
- Your passport
- A Residence Permit that is valid.
- Your Emirates ID.
- Residential lease agreement as an authorized copy
- The individual’s Income certificate
- A personal bank statement for the year of request
- An entry and exit certificate from the Federal Authority of your identity and Citizenship
2. Legal Persons
- The group’s trade license
- Their proof of authorization
- A copy of the audited financial accounts
- A bank statement for the financial year of the request
- The memorandum of association as an authorized copy
3. Government Entities
- The Certificate of Incorporation or a copy of it
- Request letter issued by the Governmental organization
How Can You Obtain a Tax Residency Certificate?
Residents can apply to obtain certification online and easily; here is how:
- Log in to the UAE Federal Tax Authority portal. Click on “Create Tax Residency Certificate” from the main dashboard.
- Fill in the required information and upload the needed documents. Keep in mind that documents differ depending on the applicant.
- The website will automatically verify if the information meets the criteria. Then, a confirmation will be sent to your email address to proceed with payment.
- Once payment is finalised you will receive the residency certificate via UAE Express Courier.
Tax Identification Number in UAE
The tax identification number (also known as TIN) is a 15-digit code provided by the FTA (Federal Tax Authority) of the United Arab Emirates.
The code can be used by individuals and corporations in order to track taxes. In some countries, the TIN number is also used as a VAT identification number.
EmaraTax
EmaraTax is an e-service dedicated to enhancing taxation procedures in UAE to ensure better and faster services for taxpayers. This platform deals with major government entities including UAE Central Bank.
All work in providing a smoother and easier experience for the users. In other words, EmaraTax is a smart way to do taxes and everything regarding them online from your phone. You can use the website or download the app as it’s available for both IOS and Android.
FAQs
In the UAE, individual residents and businesses that fall under the tax threshold are not assigned a Tax Identification Number (TIN).
Instead, all governmental and financial interactions are facilitated through the use of the National ID, known as the Emirates ID (EID Number)
Yes, companies in the UAE are assigned a Taxpayer Identification Number (TIN), which serves as a unique identifier for tax purposes.
Besides, this number is crucial for the government to efficiently track and manage the financial activities of businesses, ensuring adherence to the country’s tax laws and regulations.
This was our detailed guide on Taxation in UAE to know about everything about this topic if you’re new to the country. Whether you’re looking to launch your new business or just need to know your rights as a resident, this article sums it all up.
You can also know about MoHRE Labour Contract on Property Finder if you just moved here and want to know more about your rights.
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