The UAE boasts an appealing tax environment with a 0% personal income tax and various business-friendly policies. Here are the key tax categories relevant to businesses:

1. Corporate Tax

Starting from the fiscal year beginning on or after June 1, 2023, the UAE has implemented a corporate tax on business profits. The proposed tax rates are:

• • No tax on taxable income up to AED 375,000
  • 9% tax on taxable income above AED 375,000

Non-Taxable Income & Exemptions:

• • Businesses dealing with commercial activities and natural resource exploitation
  • No withholding taxes on domestic and cross-border payments
  • Dividend, capital gains, and other incomes of individuals’ shares or assets in their name
  • Interest and other incomes from bank accounts or savings plans
  • Earnings from salaries or employment income
  • Dividends and capital gains from qualifying shareholdings in UAE firms
  • Intra-group transfers and qualifying reorganizations
  • Real estate investments by individuals without requiring a business license

2. Value Added Tax (VAT)

Effective from January 1, 2018, VAT in the UAE is levied at 5% on a broad range of goods and services. This indirect tax is part of the UAE’s strategy to diversify its revenue sources beyond oil and petroleum.

Zero-Rated Supplies Include:

• • Medical supplies and equipment
  • Trading in gold, silver, and platinum
  • Natural gases and crude oil
  • First-time residential sales
  • Healthcare services
  • Exports and international transportation
  • Educational services

Exempt Supplies Include:

• • Provision of certain financial services
  • Residential real estate
  • Vacant land
  • Local passenger services

3. Excise Tax

Excise tax is imposed on items deemed harmful to health or the environment. It applies to products such as:

• • 100% on tobacco products and e-cigarettes/e-cigarette accessories
  • 50% on carbonated beverages
  • 50% on drinks with added sugar or sweeteners
  • 100% on energy drinks

Exemptions Include:

• • Beverages for specific dietary requirements (GCC Standard 654)
  • Medicinal purpose beverages (GCC Standard 1366)
  • Ready-to-drink beverages (at least 75% milk or milk substitutes)
  • Baby formula or baby food

4.Tourist Tax

Tourists in the UAE are subject to various taxes at eateries, hotels, hotel apartments, and resorts. These taxes include:

• • 10% off the room rate
  • 10% municipal fees
  • 10% service charge
  • Tourism Dirham Fee (AED 7-20 per night, based on hotel rating)
  • 6-10% city tax
  • 6% tourism charge