Tax implications for business setup in Dubai?
Dubai has long been celebrated as a tax-efficient jurisdiction, making it highly appealing for business setup in Dubai. While the UAE historically enjoyed a reputation for having virtually no taxes, recent years have seen the introduction of new tax regimes, primarily Value Added Tax (VAT) and, more recently, Corporate Tax. For any entrepreneur planning a business setup in Dubai, it’s crucial to understand these implications, as they directly impact profitability and compliance.
Key Takeaways:
- The UAE introduced a 9% Corporate Tax effective June 1, 2023, for mainland and non-qualifying free zone businesses with taxable income exceeding AED 375,000.
- Qualifying Free Zone Persons can maintain a 0% corporate tax rate on their qualifying income if they meet specific criteria.
- A 5% Value Added Tax (VAT) applies to most goods and services, with a mandatory registration threshold of AED 375,000 annual taxable turnover.
- Excise Tax is levied on specific goods