Taxes and Tax Schemes in the UAE | What You Need to Know in 2025

The United Arab Emirates, a federation of seven emirates renowned for its business-friendly environment and strategic location between East and West, operates one of the world's most attractive tax systems. Located in the Arabian Gulf, the UAE has transformed itself into a global business hub, attracting individuals and companies from around the world with its favorable tax regime.

The UAE's economy has demonstrated remarkable resilience and diversification beyond its traditional oil-based revenues. The country has established itself as a leading financial center, tourism destination, and technology hub while maintaining a highly competitive tax environment. The introduction of corporate tax in 2023 marked a significant evolution in the UAE's tax system, aligning with global standards while preserving its attractive features.

The expat community in the UAE is substantial, comprising approximately 88% of the population. Many are drawn to the territory's tax advantages, modern infrastructure, and high standard of living. Key sectors such as financial services, technology, tourism, and real estate provide numerous opportunities for foreign professionals seeking tax-efficient employment.

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UAE Income Tax

The UAE maintains its position as a zero personal income tax jurisdiction, making it highly attractive for employees and self-employed individuals. Residents do not pay tax on their employment income, regardless of whether it is earned within the UAE or abroad. This applies to all types of personal income, including:

• Salary and wages
• Investment returns
• Rental income
• Capital gains
• Business profits

The absence of personal income tax significantly enhances take-home pay and makes the UAE particularly attractive for high-income professionals.‍

If you want to have a better understanding of the tax system in UAE, you can check the Taxation section of the UAE page.

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UAE Tax on Overseas Income

‍The UAE does not impose tax on overseas income brought into the country. This creates significant advantages for international investors and professionals managing global income streams. There is no requirement to declare foreign income, and residents can freely repatriate their overseas earnings without tax implications.

While tax residency certificates are available for those requiring them for international tax purposes, the UAE's tax residency is primarily relevant for corporate entities and accessing double tax treaties.‍

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UAE Tax on Investments

‍Investment activities in the UAE enjoy a tax-favorable environment. The territory imposes:

• No capital gains tax on property or stock investments
• No tax on rental income
• No inheritance or gift tax
• No wealth tax

This tax-free status on investment income makes the UAE an attractive location for wealth management and investment activities. However, investors should be aware of their tax obligations in their home countries, as some may require declaration of UAE-sourced income.‍

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UAE Corporate Taxation‍

As of 2025, the UAE implemented a federal corporate tax system with a standard rate of 9% for taxable income exceeding AED 375,000. The system includes several important features:

Small business relief applies to revenue below AED 375,000, effectively creating a 0% tax rate for small enterprises. Free zone companies maintaining adequate substance and complying with regulations can continue to benefit from 0% tax rates on qualifying income.

The corporate tax framework includes:

• Generous loss carry-forward provisions
• Group relief options
• Extensive exemptions for intra-group transactions
• No withholding taxes

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Special Tax Regimes‍

The UAE offers special advantages through its extensive network of free zones. Each free zone provides specific benefits including:

• 0% corporate tax on qualifying income
• 100% foreign ownership
• Full capital repatriation
• Customs duty exemptions

Free zones often cater to specific industries, such as Dubai International Financial Centre (DIFC) for financial services or Dubai Multi Commodities Centre (DMCC) for commodities trading.‍

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Regional Comparison

Tax Planning for the UAE‍

Effective tax planning in the UAE requires consideration of several key areas:

Business structure selection must account for the new corporate tax regime and free zone benefits. International professionals should consider tax implications in their home countries, as many maintain worldwide taxation systems.

Corporate structures require careful planning to optimize free zone benefits and corporate tax positions. Regular review of tax positions ensures continued optimization as regulations evolve.