Dubai’s Taxing Regime
Dubai has long been a top destination amongst expats from all corners of the world. Besides being a business-friendly destination, foreign workers are attracted to Dubai because of its tax-friendly environment as well. The United Arab Emirates (UAE) is known worldwide for its tax-free policy.
Therefore, what does Dubai have to offer foreign workers looking to move to the emirate for work in relation to tax?
Dubai is extremely beneficial to expats who work and reside in the city due to its tax-free environment. However, the emirate does impose taxation in certain cases.
Generally, the UAE has been considering introducing an Income Tax for several years now. A few years ago, there were headlines all over the news informing the world that Dubai’s residents would be subject to taxes. It finally turned out they were policies inflicted by Dubai in order to gather fees from Emirates IDs, car registrations as well as road tolls. Although the aforementioned are types of taxes, they are not important in comparison to introducing an Income Tax.
Companies and individuals’ wealth are not subject to taxes in the UAE. Furthermore, Dubai will never introduce taxation in order to collect funds to relieve state debts, so it is not likely that the emirate will implement Income Taxation in the near future.
However, those interesting in working in Dubai must keep in mind that if you earn income in the emirate, but are subject to tax in another country, you are required to state your earnings and pay your tax. For instance, if you are a UK tax resident who owns property within the emirate whereby you rent out, you are obligated to show this income when submitting your UK tax forms and possibly pay tax.
Furthermore, you are also subject to tax in the UK if you are a UK tax resident who has moved to work in the UAE for six months.
However, those who move to the UAE permanently and do not reside in the UK for a complete tax year will not be subject to any tax within Dubai under the condition that:
• They have not resided or worked within the UK for more than a complete tax year;
• They visit the UK for 183 days or less during a full tax year;
• On every visit to the UK within the tax year, they spend 91 days or less for 4 consecutive years (arrival and departure days are not included in the days spent in the UK).
It is recommended that every individual seeks professional advice when considering moving to Dubai or the UAE in general in order to get informed about what taxation he/she is subject to pay.