The UAE does not tax the salaries or investment income of individuals. That is why it is often described as a tax-free country, and it is true for personal earnings. It is not true for businesses or for spending. Companies pay 9% corporate tax above a threshold, most goods and services carry 5% VAT, and specific products carry excise tax.
The taxes at a glance
| Tax | Rate | Who pays |
|---|---|---|
| Personal income tax | None | No one: salaries and most investment income are not taxed |
| Corporate tax | 0% up to AED 375,000, then 9% | Companies and certain business individuals |
| Domestic minimum top-up tax | 15% | Large multinational groups only |
| VAT | 5%, with zero-rated and exempt supplies | Consumers, collected by registered businesses |
| Excise tax | Product-specific | Importers and producers of certain goods |
| Customs duty | Generally 5% on imports | Importers |
Individuals: no income tax
There is no tax on employment income, interest, dividends or capital gains received by an individual in a personal capacity. An employee does not file a UAE income tax return. The exceptions are individuals who run a business or a trade, who can fall within corporate tax, and tax on the income a person earns abroad under other countries' rules. A UAE tax residency certificate is a separate matter; see the tax residency certificate guide.
Corporate tax
Corporate tax applies to financial years starting on or after 1 June 2023. Taxable income up to AED 375,000 is taxed at 0% and the excess at 9%. A qualifying free zone person can be taxed at 0% on qualifying income. Small business relief, for businesses below a revenue limit, is ending for tax periods after 2026. See what is UAE corporate tax, QFZP explained and small business relief ending.
Freelancers and sole traders
A natural person is taxed only if business turnover exceeds AED 1 million in a calendar year. See corporate tax for freelancers.
Domestic minimum top-up tax
A 15% top-up tax applies to large multinational groups under the global minimum tax rules. It is not relevant to most businesses. See domestic minimum top-up tax.
VAT
VAT at 5% applies to most goods and services since 1 January 2018. Exports are zero-rated and certain categories are exempt. A business registers once taxable supplies pass AED 375,000. See how VAT works in the UAE and the registration threshold.
Excise tax
Excise tax applies to goods considered harmful. Tobacco and energy drinks are taxed at 100% of the excise price. Sweetened drinks moved from a flat 50% to a sugar-based charge per litre from 1 January 2026 under Cabinet Decision No. 197 of 2025. Check the FTA's current schedule before relying on a rate. See excise tax services.
Customs duty
Most imports carry customs duty at 5% under the GCC common tariff, with exceptions. VAT on imports is usually settled at customs. See import tax in the UAE.
Withholding tax
The UAE currently applies withholding tax at 0%. See UAE withholding tax.
What this means for you
- Employees: no income tax, but VAT on spending.
- Business owners: register for corporate tax, and VAT above the threshold.
- Freelancers: check the AED 1 million turnover test.
- Importers: customs duty and import VAT.
AONE helps with corporate tax and VAT registration, filing and review; see UAE corporate tax and VAT services.
Sources
Excise rate changes are summarised from published reports on the 2026 sweetened drinks model. Rates change, so confirm on the Federal Tax Authority site.
A quick guide by situation
| You are | Main taxes to think about |
|---|---|
| An employee | VAT on spending; no income tax |
| A freelancer with turnover under AED 1 million | VAT only if above the registration threshold |
| A company owner | Corporate tax, and VAT above AED 375,000 |
| An importer | Customs duty and import VAT |
| A producer or importer of excise goods | Excise tax, plus VAT and corporate tax |
| A large multinational group | Domestic minimum top-up tax as well |
Taxes outside the UAE
No UAE income tax does not mean no tax anywhere. A UAE resident with income from another country may be taxed there, and a person who remains tax resident in another country stays within its rules. The UAE has double tax treaties with many countries. A tax residency certificate helps prove UAE residence. See the tax residency certificate guide.
Registrations in order
- Corporate tax registration for the company. See corporate tax registration.
- VAT registration once taxable supplies pass the threshold.
- Excise registration if you produce or import excise goods.
- Customs registration if you import.
Tax residency for individuals
Because there is no income tax, tax residency in the UAE matters mainly for treaty claims and for proving residence to another country's tax authority. The UAE issues tax residency certificates on application, subject to conditions such as the time spent in the country or a residence and business presence. A certificate does not itself end tax duties elsewhere; each country applies its own residence rules. See the tax residency certificate guide.
Other charges that are not income tax
Several fees and charges exist alongside the taxes above. Municipal and government fees apply to licences, property transactions and some services. Employers contribute to pension schemes for UAE and GCC national employees. These are not income taxes, and they vary by emirate and by authority. If you are budgeting a business, treat them as costs to confirm rather than taxes to calculate.
Tax rules are changing
Recent years have brought corporate tax, a minimum tax for large groups and changes to excise and penalties. Plan for more change, not less. Our guide to UAE tax changes in 2027 and the compliance calendar track what is coming.
Examples of where the line is drawn
An employee in the UAE does not pay income tax on salary. A business, however, may pay corporate tax on profit above the threshold, and registered businesses charge VAT on taxable supplies. A shareholder receiving a dividend from a UAE company may not face UAE tax on it, but the rules in the investor's home country may still apply. The pattern is that the UAE does not tax personal income, while it does tax business profit and consumption.
Advice for people moving to the UAE
If you are relocating, check two things: whether your home country will continue to tax you as a resident or citizen, and whether a treaty reduces double taxation. The UAE side is the simple part. The harder question is usually the other country. Seek advice in both before you move.
What a business owner should do
For a company, the practical questions are corporate tax registration, VAT registration if the turnover requires it, and keeping accounts that support both. Many owners also look at the structure they trade through, because the choice between a mainland company and a free zone company changes the tax treatment. See mainland vs free zone.
Checks before you rely on a tax claim
When you read that the UAE has no tax, ask: which tax, for whom and from when. Check the source against the FTA or the Ministry of Finance, and look at the date of the article, because the rules have changed in recent years.
Frequently asked questions
Not for individuals. Salaries and most investment income are not taxed. Companies pay corporate tax, and most spending carries 5% VAT.
0% on taxable income up to AED 375,000 and 9% on the excess, for financial years starting on or after 1 June 2023. Large multinational groups also face a 15% top-up tax.
Not income tax. Employees pay VAT on purchases like everyone else, but file no income tax return in the UAE.
A freelancer is within corporate tax only if business turnover exceeds AED 1 million in a calendar year. Below that, no corporate tax applies.
5%, with zero-rated exports and some exempt categories.
The UAE applies withholding tax at 0%.