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Worldwide Tax Summaries

United Arab Emirates

Last reviewed - 04 September 2023

Individual - Significant developments

Currently, there are no plans to introduce personal income taxation in the United Arab Emirates (UAE).

Individual - Taxes on personal income

Absence of taxation
There is currently no personal income tax in the United Arab Emirates. As such, there are no individual tax registration or reporting
obligations.

Under the Federal Decree-Law No. 47 of 2022 on the Taxation on Corporations and Businesses (‘UAE CT Law’), natural persons who
conduct a business or business activity in the United Arab Emirates will be subject to UAE CT at 9% where the total turnover derived from
such business or business activity exceeds 1 million UAE dirham (AED). For this purpose, wages, personal investment income, and real
estate investment income will not be considered for determining such turnover.

Local income taxes

There is no federal or Emirate-level personal income tax in the United Arab Emirates.
Individual - Residence

On 9 September 2022, the UAE Cabinet of Ministers issued Decision No. 85 of 2022, which provides a new domestic definition and criteria
for when an individual shall be considered a tax resident of the United Arab Emirates for the purposes of any UAE tax law or double tax
treaty (DTT). The effective date of the new rules is 1 March 2023.

A natural person will be considered a UAE tax resident if the individual meets any of the below mentioned conditions:

Has one’s usual or primary place of residence and one’s centre of financial and personal interests in the United Arab Emirates.

Was physically present in the United Arab Emirates for a period of 183 days or more during a consecutive 12-month period.
Was physically present in the United Arab Emirates for a period of 90 days or more in a consecutive 12-month period and is a UAE
national, holds a valid residence permit in the United Arab Emirates, or holds the nationality of any Gulf Cooperation Council (GCC)
member state, where the individual:
has a permanent place of residence in the United Arab Emirates, or
carries on an employment or a business in the United Arab Emirates.

Individual - Other taxes

Social security contributions

There is a social security regime in the United Arab Emirates that applies to qualifying UAE and other GCC national employees only. Non-
GCC nationals are not subject to social security in the United Arab Emirates.

For UAE national employees, social security contributions are calculated at a rate of 20% of the employee's gross remuneration as stated
in the local employment contract. Social security obligations also apply to employees of companies and branches registered in a free trade
zone (FTZ). Out of the 20%, 5% is payable by the employee, 12.5% is payable by the employer, and an additional 2.5% contribution is
made by the government. A higher rate of 26% is applied in the Emirate of Abu Dhabi, where the contribution of the employer is increased
to 15%, the government’s contribution is increased to 6%, and the employee’s contribution remains 5%.
For other GCC nationals working in the United Arab Emirates, social security contributions are determined in accordance with the social
security regulations of their home country.

The employer is responsible for withholding and remitting employee social security contributions.

In the Dubai International Financial Centre (DIFC), the DIFC Employee Workplace Savings Scheme (DEWS) has been introduced, replacing
the End of Service Gratuity Benefit (EOSG) , with the aim of protecting long-term employee savings. The new scheme was rolled out on 1
February 2020, and employers now are required to make monthly contributions to DEWS or an alternative regulated Qualifying Scheme, as
opposed to paying a lump sum ‘gratuity payment’ to an employee at the end of their employment. Employers are required to contribute
monthly contributions of 5.83% or 8.33% of the employee’s basic salary (the actual percentage is contingent upon the employee’s length
of service) into the scheme.

Unemployment insurance scheme

The unemployment insurance scheme introduced in Federal Decree-Law No. 13 of 2022 applies to Emirati and foreign workers and
entered into effect on 1 January 2023. The scheme provides financial support to qualifying individuals in the public and private sectors in
the event of unemployment.

The scheme divides subscribers into two categories: (i) those who earn AED 16,000 or less as basic salary per month and (ii) those who
earn more than AED 16,000 as their monthly basic salary. Those who fall under the former category are required to pay a monthly
subscription fee of AED 5, while those who fall under the latter category must pay a monthly subscription fee of AED 10. Given that this is
a new law, we are waiting for further details on the implementation of the scheme. Thus far, the obligation for the deduction of the monthly
subscription fee falls on the employee.

While the scheme is mandatory for Emirati and foreign workers in the private and public sectors, it does not apply to the following groups:

Investors.

Domestic workers.

Employees contracted on a temporary basis.

Minors (those under the age of 18).

Retirees who are already receiving pensions and who have joined a new employer.

Capital gains taxes

There is currently no personal income tax in the United Arab Emirates. As such, capital gains tax is not imposed on UAE national or
resident individuals.

Consumption taxes
Value-added tax (VAT) was implemented in the United Arab Emirates on 1 January 2018.

See Value-added tax in the Other taxes section of the Corporate tax summary for more information.

Net wealth/worth taxes

There are currently no wealth taxes imposed on individuals in the United Arab Emirates.

Inheritance, estate, and gift taxes

There are currently no inheritance, estate, or gift taxes imposed on individuals in the United Arab Emirates.

Municipal or property tax

Most Emirates impose a municipality tax on properties, mostly by reference to the annual rental value. It is generally the tenants' obligation
to pay the tax. In some cases, separate fees are payable by both tenants and property owners. For example, in the Emirate of Dubai, the
municipality tax on property is currently imposed at 5% on annual rental value for commercial properties, also known as 'market fees' (paid
by property owners), and 5% for residential properties, also known as 'housing fees' (paid by tenants).

A registration fee may be levied on transfer of ownership of land or real property. For example, a land registration fee is levied in the
Emirate of Dubai at a rate of 4% of the fair market value of the property on any third-party sale (a cost generally shared between the buyer
and seller), payable to the Dubai Land Department. In Dubai, the registration fee may also apply on the direct or indirect transfer of shares
in an entity that owns real property.

These levies are imposed and administered differently at varying rates by each Emirate.

Luxury taxes
There are currently no luxury taxes levied in the United Arab Emirates.

Excise taxes
On 1 October 2017, the United Arab Emirates implemented an excise tax on tobacco and tobacco products, carbonated drinks, and
energy drinks.

On 1 December 2019, the United Arab Emirates expanded the scope of excise tax to include sweetened drinks, electronic smoking
devices and tools, as well as liquids used in electronic smoking devices and tools.

The applicable tax rates are as follows:

100% on tobacco and tobacco products, electronic smoking devices and tools, liquids used in electronic smoking devices and tools,
and energy drinks.

50% on carbonated drinks and sweetened drinks.

Customs duties
Generally, a customs duty of 5% is imposed on the cost, insurance, and freight (CIF) value of imports. Other rates may apply to certain
goods, such as alcohol and tobacco, and certain exemptions and reliefs may also be available. Further, the United Arab Emirates imposes
anti-dumping duties on imports of certain goods, such as car batteries, ceramic and porcelain tiles, and hydraulic cement. The anti-
dumping duty rates vary depending on the HS codes of the goods and country of export and/or origin. In some cases, the anti-dumping
duty is 67.5% of the CIF value of the goods.

The United Arab Emirates is part of the GCC Customs Union, which was established in 2003 to remove customs and trade barriers among
the GCC member states. No customs duties are levied on trade between the GCC member states (subject to certain conditions).
Additionally, the United Arab Emirates grants duty free imports to most national goods originating in member countries of the Greater Arab
Free Trade Agreement, Singapore, the European Free Trade Association countries (i.e. Norway, Switzerland, Iceland, and Liechtenstein),
Israel, and India.

While the UAE FTZs are areas within the territory of the United Arab Emirates, these are, however, considered outside the scope of the
customs territory. Therefore, goods imported into the UAE FTZs are not subject to customs duty. Customs duty is suspended until the
goods are imported into the GCC local market.
Hotel tax and tourism levies
Most Emirates impose hotel levies, which apply on the value of hotel room rental, services, and entertainment. These levies are imposed
and administered differently by each Emirate.

A Tourism Dirham fee is levied in the Emirate of Dubai. This is a charge on hotel guests and tenants of hotel apartments ranging from AED
7 to AED 20 per room per night depending on the star classification of the hotel, for example a five-star hotel will levy a Tourism Dirham
fee equal to AED 20 per room per night whereas a two-star hotel will levy a Tourism Dirham fee equal to AED 10 per room per night. In the
Emirate of Abu Dhabi, hotels will levy a tourism fee equal to 6% of the hotel room rental and a destination fee of AED 15 per night.

In addition to the above tourism fees, the Emirate of Dubai also requires hotels to levy a 7% municipality fee on each hotel sale. The
Emirate of Dubai does not impose destination fees. Likewise, in the Emirate of Abu Dhabi, hotels are required to levy a 4% municipality
fee. A hotel sale is revenue generated by a hotel for services provided to their guests or visitors, which includes rent for the hotel room,
food, beverages, and other services.

Hotels in all Emirates levy an additional service charge equivalent to 10% of the hotel sale revenue.

Individual - Income determination

Absence of taxation
There is currently no personal income tax in the United Arab Emirates.

Individual - Deductions

Absence of taxation
As there is currently no personal income tax in the United Arab Emirates, tax deductions are not applicable.
Individual - Foreign tax relief and tax treaties

Foreign tax relief

As there is currently no personal income tax in the United Arab Emirates, claiming relief for foreign taxes paid is not applicable.

Tax treaties
UAE national or resident individuals and UAE resident companies have access to an extensive and growing DTT network. The DDT could
allow for relief from taxation in DTT partner countries. The DTTs currently in force are listed below. A number of other DTTs are at various
stages of negotiation and ratification.

Albania Guinea Pakistan

Algeria Hong Kong Panama

Andorra Hungary Paraguay

Angola India Philippines

Argentina Indonesia Poland

Armenia Ireland Portugal

Austria Israel Romania

Azerbaijan Italy Russia (1)

Bangladesh Japan Saudi Arabia

Barbados Jersey Senegal

Belarus Jordan Serbia

Belgium Kazakhstan Seychelles

Belize Kenya Singapore

Bermuda Korea, Republic of Slovakia

Bosnia and Herzegovina Kosovo Slovenia

Botswana Kyrgyzstan South Africa

Brazil Latvia Spain

Brunei Lebanon Sri Lanka

St. Vincent & the

Bulgaria Liechtenstein
Grenadines

Cameroon Lithuania Sudan

Canada Luxembourg Switzerland

China, People’s Republic of Malaysia Syria

Comoro Islands Maldives Tajikistan

Costa Rica Malta Thailand

Croatia Mauritania Tunisia

Cyprus Mauritius Turkey

Czech Republic Mexico Turkmenistan

 Egypt Moldova Ukraine

Estonia Montenegro United Kingdom

Ethiopia Morocco Uruguay

Fiji Mozambique Uzbekistan

Finland Netherlands Venezuela

France New Zealand Vietnam

Georgia Niger Yemen

Greece North Macedonia Zimbabwe

Notes

1. Government institutions only.

Individual - Other tax credits and incentives

There is currently no personal income tax in the United Arab Emirates.

Individual - Tax administration

Absence of taxation
There is currently no federal or Emirate-level personal income tax in the United Arab Emirates. Accordingly, there are no individual tax
registration or reporting obligations.

Individual - Sample personal income tax calculation

Absence of taxation
There is currently no personal income tax in the United Arab Emirates.

Individual - Other issues

Exchange control
There are no foreign exchange control restrictions in the United Arab Emirates that may impact cross-border remittances.

Immigration and visa rules

A visa or residency permit is required to live or work in the United Arab Emirates. Long-term visas and residency permits can be obtained
on the basis of investment, ownership of a businesses, or on the basis of an employment contract with a UAE employer.

Separate rules apply for business, tourist, and other visas.

United States (US) Foreign Account Tax Compliance Act (FATCA)

On 17 June 2015, the United Arab Emirates signed the Model 1B Intergovernmental Agreement (IGA) with the United States, which came
into force on 19 February 2016 (US-UAE Model 1 IGA), with the US Internal Revenue Services (IRS) regarding the exchange of information
related to US individuals and certain type of US-owned entities, with an effective date of 1 July 2014.
On 6 July 2015, the UAE Ministry of Finance (MoF) issued guidance notes on the requirements of the US-UAE Model 1 IGA on the
implementation of FATCA (UAE FATCA Guidance Notes). The UAE FATCA Guidance Notes expand upon the UAE-US Model 1 IGA,
including the definitions, implementation of the due diligence procedures, and reporting obligations. The UAE FATCA Guidance Notes do
not hold the force of law.

The exchange of information is conducted on an annual basis, occurring in September of each year, between the UAE competent
authority and the US IRS. UAE reporting financial institutions for FATCA purposes need to submit their FATCA returns to their relevant
financial regulator (or the UAE MoF for unregulated entities) by 30 June of each year (unless otherwise informed). Filing of nil reports is
required under FATCA.

Common Reporting Standard (CRS)

On 22 February 2017, the United Arab Emirates signed the Multilateral Competent Authority Agreement (MCAA) on Automatic Exchange of
Financial Account Information, and the Convention on Mutual Administrative Assistance in Tax Matters (MAC) was signed on 21 April
2017.

The exchange of information is conducted on an annual basis, occurring in September of each year, between the UAE competent
authority and competent authorities of jurisdictions that have agreed to exchange information with the United Arab Emirates.

On 3 August 2020, the UAE MoF issued Guidance Notes for CRS purposes (UAE CRS Guidance Notes). The UAE CRS Guidance Notes do
not hold the force of law.

UAE reporting financial institutions for CRS purposes need to submit their CRS returns to their relevant financial regulators (or the UAE
MoF for unregulated entities) by 30 June of each year (unless otherwise informed). Filing of nil reports is required under the CRS.

United Arab Emirates contacts

 Jochem Rossel
Tax Partner - Middle East Specialist Tax Services Leader, PwC Middle East
+971 50 225 6909

Hanan Abboud
Tax Partner - M&A and International Tax, PwC Middle East
+971 56 177 7642

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