Tax Advice in Dubai and the UAE: 2025 Complete Guide

Dubai’s reputation as a global hub for wealth, trade, and entrepreneurship has always been closely tied to its favorable tax environment. For decades, the UAE was considered a “tax-free haven” — attracting thousands of entrepreneurs and expatriates. But as the country matures into a diversified global economy, its tax system has evolved significantly.

While individuals continue to enjoy zero personal income tax, businesses must now navigate a modern tax framework that includes:

• Corporate Tax (9%)
• Value Added Tax (VAT) (5%)
• Excise Tax (50%–100%)
• Customs Duties (5%)
• Economic Substance Regulations (ESR)
• Transfer Pricing Requirements

This means that getting the right tax advice in Dubai is no longer optional — it is essential for compliance and growth.

Key Facts: UAE Tax System in 2025

• Corporate Tax: Introduced in June 2023, set at 9% on taxable profits above AED 375,000 (UAE Ministry of Finance).
• VAT: Introduced in 2018, fixed at 5%, one of the lowest rates globally (Federal Tax Authority).
• Excise Tax: Applies at 50% on sugary drinks and 100% on tobacco and energy drinks (Learn more about Excise Tax Guide).
• Tax Residency Certificates (TRCs): Available for individuals and companies to benefit from the UAE’s network of 140+ Double Tax Treaties (UAE Ministry of Finance TRC Services).
• Free Zones: Can still enjoy 0% corporate tax on qualifying income if strict substance rules are met.
• Global Alignment: UAE tax laws align with OECD Base Erosion and Profit Shifting (BEPS) standards.
• Penalties: Failure to register for corporate tax or VAT on time can result in fines starting from AED 10,000 (FTA Penalties).

1. Corporate Tax in Dubai (2025 Update)

Corporate Tax is the most significant recent development in the UAE tax system.

• Standard Rate: 9% on taxable profits over AED 375,000.
• Small Business Relief: Available until 2026 for entities with revenue under AED 3 million.
• Free Zones: Eligible for 0% tax on qualifying income (e.g., transactions with other Free Zone entities or exports).
• Transfer Pricing: Entities must comply with OECD-based rules and submit Master and Local Files if thresholds are met.

Fact: The UAE corporate tax rate (9%) is one of the lowest globally compared to the OECD average of 23%

2. Value Added Tax (VAT)

Introduced in 2018, VAT transformed the UAE into a consumption-based tax system.

• Rate: 5% (flat rate, one of the lowest worldwide).
• Registration Thresholds:
  • Mandatory: AED 375,000 annual turnover.
  • Voluntary: AED 187,500.
• Reporting: Quarterly VAT returns filed online through the FTA e-Services Portal.
• Zero-rated Categories: Healthcare, education, exports, international transport.
• Exempt Categories: Residential property (second sale), certain financial services, bare land.

3. Excise Tax

Excise tax is levied on specific goods to discourage harmful consumption:

Businesses must register with the FTA Excise Tax System and file monthly returns.

4. Customs Duties

• Standard Import Duty: 5% on CIF (cost, insurance, freight) value.
• Free Zone Companies: Exempt if goods are imported/exported outside Mainland UAE.
• Special Rates: Higher duties apply for certain goods such as alcohol and luxury items.

For details, refer to Dubai Customs.

5. Double Taxation Treaties (DTTs)

The UAE has one of the largest networks of DTTs in the world, with over 140 agreements signed (UAE Ministry of Finance – DTT List).

Benefits include:

• Reduced withholding tax on dividends, interest, and royalties.
• Preventing double taxation for expatriates.
• Facilitating cross-border trade and investment.

6. Comparative Tax Rates: UAE vs Global Hubs

Fact: The UAE remains one of the most tax-attractive jurisdictions worldwide while maintaining strong financial regulation.

7. Common Tax Mistakes Businesses Make in Dubai

1. Late registration for VAT or Corporate Tax.
2. Misclassifying income between Free Zone and Mainland operations.
3. Ignoring transfer pricing obligations.
4. Incorrect VAT input claims.
5. Failing to maintain proper accounting records (minimum five years).
6. Not applying for a Tax Residency Certificate when claiming treaty benefits.

8. FAQs: Tax Advice in Dubai

Do expatriates pay personal income tax in Dubai?
No. The UAE does not impose personal income tax.

Is corporate tax applicable in Free Zones?
Yes, but Free Zone companies may maintain 0% corporate tax on qualifying income if conditions are met.

What are penalties for non-compliance?

• AED 10,000 for late corporate tax registration.
• AED 1,000–2,000 for late VAT returns.
• Heavier fines for deliberate evasion

How do I prove UAE tax residency?
Individuals must reside in the UAE at least 183 days per year to qualify for a Tax Residency Certificate

Why Affinitas DMCC is Your Trusted Tax Advisor in Dubai

At Affinitas DMCC, we provide expert guidance on all aspects of UAE taxation, ensuring that businesses and individuals remain fully compliant while optimizing their structures. Our services include:

• Corporate Tax registration and filing.
• VAT advisory, audits, and returns.
• Excise tax registration and monthly filing.
• Assistance with Tax Residency Certificates.

With international expertise across the UAE, Georgia, Malta, Switzerland, and Luxembourg, we combine local knowledge with global strategy.

Get Professional Tax Advice in Dubai with Affinitas DMCC

Phone: +971 (0) 4 576 2903
Email: in*******@af***********.com
Office: Fortune Tower, Jumeirah Lake Towers – Dubai
Contact us today for a free consultation with our tax experts.