In short: Dubai is regarded as a tax haven — but it has not been entirely tax-free since 2017. There is an excise tax on certain consumer goods, 5% VAT, since 2023 a 9% corporate tax above a threshold of AED 375,000, and a 4% real estate transfer tax. There continues to be no tax on personal income, capital gains, inheritance, or gifts.
Contents
- Excise tax
- VAT in Dubai
- Corporate tax in Dubai
- Small Business Relief
- Income & capital gains tax
- Inheritance & gift tax
- Real estate transfer tax in Dubai
- Frequently asked questions
Despite its reputation as a tax haven, Dubai has levied a number of direct and indirect taxes since 2017. So far these mainly affect entrepreneurs and self-employed individuals who maintain customer relationships within the United Arab Emirates or import products into the UAE. If you are planning to set up a company in Dubai, it is worth first reading our article on company formation in Dubai.
Excise tax
In 2017, taxes were introduced for the first time in the UAE’s more than 50-year history. Excise tax applies to products that, when imported commercially, are harmful to the environment or the human body. Depending on the product, the rate is between 50% and 100%.
Alcohol and cigarettes — including electronic cigarettes and accessories — are taxed at 100% of the net purchase price on commercial import. Sugary drinks and foods are taxed at 50%. Excise tax is payable before or at the latest upon import. Trading companies whose customers are not based in the UAE are not affected.
Example: A German e-cigarette wholesaler with a company seat in Dubai that sells its goods to customers in Germany is not subject to excise tax. Tax would only be due if the products were imported into the UAE.
VAT in Dubai
With the introduction of 5% VAT in 2018, bookkeeping obligations were also introduced for entrepreneurs and self-employed individuals serving customers in the UAE. Companies with a place of business in Dubai or the UAE that mainly serve local customers — such as restaurants or car rental companies — must remit VAT.
Entrepreneurs and self-employed individuals whose turnover within the UAE is below AED 375,000 (around €94,000) per year do not need to remit VAT.1
Example: A services company based in Dubai invoices €500,000 of services to customers in Europe and €65,000 to customers in the UAE in one year. Since UAE turnover is below AED 375,000, the company is fully exempt from VAT.
Corporate tax in Dubai
In June 2023, a 9% corporate tax was introduced in the UAE for the majority of entrepreneurs and self-employed individuals. It does not matter whether the profits are generated inside or outside the UAE. Entrepreneurs nevertheless benefit from a threshold of AED 375,000 (around €94,000) per year, as well as various planning options. All business expenses, including the salaries of managing shareholders, can be deducted in full.
| Item | Amount |
|---|---|
| Annual profit before managing director’s salary | €350,000 |
| Tax-free threshold (AED 375,000, approx.) | €94,000 |
| Taxable profit | ≈€256,000 |
| Corporate tax (9%) | ≈€23,040 |
If the managing director instead pays themself €25,000 per month into their personal account in Dubai, the company’s profit falls to €50,000 per year — below the AED 375,000 threshold. Since there is no income tax in the UAE, the effective tax rate in this example falls to 0%. We explain how this structure can be reconciled with genuine management in the UAE in our article on company formation in Dubai.
Certain business activities remain tax-free regardless of the threshold, including the manufacturing and processing of goods, trading in qualifying commodities, holding shareholdings for investment purposes, fund and wealth management services, and shipping and reinsurance services.2
Small Business Relief
One of the most attractive measures for small businesses is Small Business Relief. Companies with annual turnover below AED 3 million (around €750,000) are fully exempt from corporate tax — even if profit exceeds the standard threshold of AED 375,000. The UAE Ministry of Finance extended this scheme via Ministerial Decision No. 131, on 7 August 2026, from the original end of 2026 to 31 December 2029.3
Income & capital gains tax in Dubai
There is no income tax and no payroll costs in the UAE. Employers are only responsible for the cost of their employees’ residence permits. Capital gains such as interest, share gains, dividends, gains from property sales, rental income, and crypto gains are also not subject to taxation.
Since the introduction of corporate tax in 2023, many entrepreneurs exceeding the AED 375,000 threshold have made use of the tax exemption on personal income: a managing director’s salary can be deducted in full for tax purposes, reducing the tax burden at company level while remaining untaxed for the recipient.
Inheritance & gift tax in Dubai
There is neither inheritance nor gift tax in the UAE. However, if the recipient or heir is resident in a country that levies inheritance or gift tax — such as Germany — the tax is due there. We cover how to properly structure this dual situation when emigrating in the PSK article on inheritance and gift tax when emigrating.
Real estate transfer tax in Dubai
The real estate transfer tax for land and property in Dubai is 4% and is normally paid by the buyer to the Dubai Land Department.4 It differs from emirate to emirate: while Dubai and Ras Al Khaimah charge 4%, Abu Dhabi, Sharjah, and Umm Al Quwain charge 2%. In Ajman, nationals pay 2% and foreigners pay 3%.
Frequently asked questions about taxes in Dubai
Is Dubai really tax-free? No, not entirely. There has been excise tax since 2017, VAT since 2018, and a 9% corporate tax above a threshold since 2023. Personal income, capital gains, inheritance, and gifts remain tax-free.
From what turnover do I have to pay VAT in Dubai? Registration is required from turnover of AED 375,000 (around €94,000) within the UAE per year. Turnover with customers outside the UAE does not count towards this.
How much longer does Small Business Relief apply? Following the extension via Ministerial Decision No. 131 of August 2026, companies with annual turnover below AED 3 million benefit from full corporate tax exemption until 31 December 2029.
Is real estate transfer tax due when buying property in Dubai? Yes, at a rate of 4% of the purchase price, payable to the Dubai Land Department. Other emirates apply partly lower rates.
Conclusion
Dubai continues to offer a tax-advantaged environment for international investors, entrepreneurs, self-employed individuals, and professionals. While there is no personal income or capital gains tax and only a moderate 9% corporate tax on high profits, VAT and real estate transfer tax provide government revenue. Anyone who knows the current thresholds and deadlines can make targeted use of the available planning options — ideally with a clean structure from the outset.
Legal status as of: 08/2026. This article does not replace individual tax advice.
Paul Simon Kasper, Tax Advisor and Foundation Consultant, Owner of PSK Steuerberatung
Paul Simon Kasper advises German entrepreneurs and self-employed individuals on the tax framework in the UAE — from corporate tax to the Qualifying Free Zone Person structure to how it interlocks with German tax law. Learn more about him on LinkedIn and at steuerberatung-psk.com/uber-uns.
1 UAE Federal Tax Authority, Registration for VAT.
2 UAE Federal Tax Authority, Corporate Tax Guide on Free Zone Persons.
3 Ministry of Finance UAE, Ministerial Decision No. 131 of 2026, reported among others by The National, 07/08/2026.
4 Dubai Land Department, Transfer of Registration Fees.
