Dubai Corporate Tax System: Everything You Need to Know
Introduction
Dubai has become one of the most popular destinations for entrepreneurs and investors who want to reduce taxes and grow internationally. For many years Dubai was known as a tax-free jurisdiction. Today the United Arab Emirates (UAE) has introduced corporate tax but the system remains very competitive compared to Europe and the US. With 0% personal income tax and a corporate tax rate that can be as low as 0% or 9% depending on business type, Dubai continues to attract thousands of businesses each year.
In this article we explain how the Dubai tax system works, what the new corporate tax rules mean, and why Dubai remains one of the most attractive jurisdictions in the world for company formation and relocation.
No Personal Income Tax
One of the biggest advantages of Dubai is the absence of personal income tax.
Salaries, wages, and personal earnings are not taxed.
Dividends and capital gains for individuals are also tax-free.
This makes Dubai a top choice for entrepreneurs, consultants, and high-net-worth individuals who want to maximize their personal income.
The lack of personal income tax is often the first reason people choose Dubai over European countries where rates can exceed 40–50%.
Corporate Tax in Dubai
Until 2023 companies in Dubai paid no corporate income tax. However the UAE has introduced a federal corporate tax to align with international standards.
The corporate tax rate is 9% on profits above AED 375,000 (around €90,000).
Profits below this threshold are taxed at 0%.
Many free zone companies can still benefit from a 0% corporate tax rate if they meet certain requirements.
This means that most small and medium businesses continue to pay little or no tax while larger international companies face a competitive 9% rate
Free Zones and Tax Benefits
Dubai is famous for its free zones which provide significant benefits for businesses.
Companies registered in free zones may qualify for 0% corporate tax as long as they only do business outside the UAE or with other free zone companies.
No customs duties on imports and exports within free zones.
Full foreign ownership of the company without the need for a local partner.
Some of the most popular free zones include Dubai Multi Commodities Centre (DMCC), Jebel Ali Free Zone (JAFZA), and Dubai Internet City
VAT in Dubai
The UAE introduced Value Added Tax (VAT) in 2018.
The standard VAT rate is 5%.
VAT applies to most goods and services but is still one of the lowest VAT rates in the world.
Many businesses can reclaim VAT on expenses if registered.
Compared to European VAT rates of 20–25% the UAE system remains highly attractive.
Double Tax Treaties
Dubai benefits from the UAE’s extensive network of double tax treaties with more than 130 countries.
These treaties prevent double taxation on income and dividends.
They make Dubai an excellent hub for holding companies and cross-border investments.
Entrepreneurs can structure businesses to benefit from both low taxes and treaty protection.
Lifestyle and Business Environment
Taxes are only one part of Dubai’s attractiveness. The city offers:
A strategic location between Europe, Asia, and Africa.
World-class infrastructure and international transport links.
English widely spoken in business and legal contexts.
High quality of life with safety, modern housing, and year-round sunshine.
For many entrepreneurs the lifestyle benefits are just as important as the tax savings.
Dubai vs European Jurisdictions
How does Dubai compare with low-tax EU countries like Cyprus and Malta?
Personal tax:
Dubai → 0% on all personal income.
Cyprus → progressive rates, but dividend and interest exemptions for non-domiciles.
Malta → progressive personal tax, no tax on foreign dividends for non-domiciles.
Corporate tax:
Dubai → 0% up to AED 375,000, then 9%. Free zones can remain at 0%.
Cyprus → 12.5% flat.
Malta → 35% nominal but effective 5% with refunds.
Complexity:
Dubai → simple rules for most free zone businesses.
Cyprus → straightforward.
Malta → refund system requires more administration.
Result: Dubai is unbeatable for personal taxes (0%), while Cyprus and Malta are often better for EU-based companies that want easier access to the European market.
Why Entrepreneurs Choose Dubai
Entrepreneurs relocate to Dubai because it offers:
0% personal income tax.
0–9% corporate tax depending on structure.
A wide network of tax treaties.
A safe and modern lifestyle.
Strategic access to global markets.
This combination makes Dubai one of the best choices worldwide for international business owners, digital nomads, and investors.
Frequently Asked Questions (FAQ)
Does Dubai tax personal income?
No. Dubai and the UAE do not levy personal income tax on salaries, dividends, or capital gains.
What is the corporate tax rate in Dubai?
The standard rate is 9% on profits above AED 375,000. Profits below this amount are taxed at 0%. Free zone companies may still qualify for 0% corporate tax.
Do free zone companies pay tax in Dubai?
Many free zone companies continue to pay 0% corporate tax if they only do business outside the UAE or with other free zones.
Does Dubai have VAT?
Yes. Dubai applies a 5% VAT on most goods and services which is much lower than in Europe.
Is Dubai a tax haven?
No. The UAE has introduced corporate tax to comply with international rules but the system remains one of the most competitive in the world.
Conclusion
Dubai’s tax system combines 0% personal tax, a 0–9% corporate tax rate, and one of the lowest VAT rates worldwide. Together with free zones, double tax treaties, and a business-friendly environment, Dubai offers one of the most attractive setups for entrepreneurs and companies.
For individuals and businesses looking to reduce taxes while gaining access to a global hub, Dubai remains one of the best options available today.
Considering setting up in Dubai? Offshore Pathway helps entrepreneurs and companies establish businesses, navigate free zone rules, and benefit from Dubai’s tax system. Contact us today to start your journey.