Dubai Insights | Magnetar Assets LLC

Magnetar Assets LLC

Oct 8

Living in Dubai has Benefits- Tax Benefits

Dubai, as part of the United Arab Emirates (UAE), has long been attractive for expats, entrepreneurs, and investors. One of the biggest draws is the favourable tax regime. Below are the main tax advantages of residing in or doing business from Dubai.

1. No Personal Income Tax

Individuals (employees, freelancers, etc.) do not pay income tax on salaries, wages, bonuses, or any other personal income in Dubai.
Also, there is no tax on investment income for individuals: no capital gains tax, no dividend tax, no tax on rental income for most cases.

2. No Inheritance, Wealth, or Estate Taxes

Dubai has no inheritance tax, no wealth tax. This means assets transferred upon death are not taxed under a separate “estate tax” scheme as in some other jurisdictions.

3. Real Estate and Property Investment Advantages

No annual property tax: Once you own property, you do not pay recurring property taxes (like you might with “property tax” in the U.S., UK, etc.).
No capital gains tax on property sales: If you sell a property for more than you bought it, that profit (gain) is not taxed.
Full repatriation of profits & capital: Money from sales, rental income, etc., can be moved out without tax penalties.

4. Business / Corporate Tax Regime

For many years Dubai (and more broadly UAE) had no or very low corporate taxes in many sectors, especially in free zones. Free zones often offer long periods of tax holiday / exemption, 100% ownership, etc.
However, starting June 1, 2023, the UAE introduced a federal corporate tax rate of 9% on business profits above a certain threshold (AED 375,000). Companies under that threshold may be exempt.
Free zone companies may still enjoy special exemptions if they meet “substance” requirements, follow the regulations, etc. 2

5. Double Taxation Treaties (DTAs)

The UAE has entered into many agreements to avoid double taxation. These allow individuals and companies to avoid paying tax twice, once in the UAE and again in another country on the same income.
To benefit from these treaties, one generally needs to qualify as a UAE tax resident and sometimes get a Tax Residency Certificate.

What Taxes Do Exist in Dubai / UAE

It’s important to know that “tax-free” doesn’t mean “cost-free.” There are various taxes, fees, and levies; some are indirect, sector-specific, or apply under specific circumstances.

Value-Added Tax (VAT): 5% on most goods and services. Introduced in 2018.
Corporate tax (as above) on businesses with taxable profits over the threshold.
Taxes on certain industries: For example, foreign banks operating in Dubai are subject to specific taxation.
Property transfer fees / registration fees: When buying or selling property, there are transfer charges. Eg: ~4% in Dubai (shared between buyer & seller in some cases) for property transfer in some emirates.
Tourism / hotel taxes / municipal fees: hotel stays and some services may have additional tourism fees, service charges, etc.

Considerations & Limitations

While the tax advantages are substantial, there are things to be aware of — especially for expats.

Just because Dubai doesn’t tax your income doesn’t necessarily mean your home country won’t. If you remain tax resident elsewhere, you might have obligations there (e.g., U.S., UK, etc.).
“Free zones” often require you to stay within certain conditions (substance, registration, etc.) to keep tax benefits. If you operate outside them or violate terms, you could lose exemptions.
The corporate tax introduced in 2023 means that business structures and profit levels matter more than before. For high-profit businesses, this must be accounted for.
Indirect costs: VAT, fees, customs duties, real estate transaction costs, etc., still add up. While less visible than income tax, they affect cost of living/business.

Who Benefits Most

High earners from abroad who can move their income to Dubai (or earn income there) stand to gain greatly because they avoid high marginal income tax rates in many countries.
Real estate investors, especially those buying property for income or capital appreciation, because they keep nearly all their return (no income tax on rent, no tax on gains, no property tax).
Entrepreneurs / Businesses especially in free zones, exporting services or goods, or those with international operations, can structure operations to minimize tax exposure.
Wealthy individuals / families who want to preserve generational wealth without the drag of inheritance or wealth taxes.

Recent Changes & Future Outlook

As mentioned, the UAE introduced the corporate tax (9%) in 2023 for businesses above a profit threshold.
Also, starting January 1, 2025, there is a Domestic Minimum Top-up Tax (DMTT) of 15% for large multinationals (with revenues above a certain global threshold) to align with OECD’s global minimum tax rules.
The UAE continues to expand its network of double tax treaties, tighten due diligence and “substance” rules, and adjust regulations to remain compliant with global tax standards.

Conclusion

Living in Dubai offers real, substantial tax benefits, especially for those coming from high-tax jurisdictions. The lack of personal income tax, capital gains tax, inheritance/wealth taxes, and property taxes gives residents and investors a level of financial freedom uncommon in many places. Meanwhile, business and corporate tax regimes are becoming more formalized but still remain highly competitive.

If you’re considering moving to Dubai, investing there, or doing business from there, these tax features can be a powerful part of your planning. But as with any jurisdiction, the details (residency status, home country obligations, business structure) matter a lot.

Please email us for further information:

miesha@magnetarassets.com