Dubai Tax Rates and Tax System 2026

Table of Contents

• Is Dubai Tax Free? The Short Answer
• Dubai Tax Rates 2026 at a Glance
• Dubai Corporate Tax Rate: 0%, 9% and 15%
• Free Zone or Mainland? QFZP Conditions
• Small Business Relief (AED 3 Million)
• Dubai VAT Rate and Registration Thresholds
• Excise Tax: The New Tiered Model
• Dubai Customs Duty Rate
• Personal Income Tax and Property Fees
• Registration, Returns, Deadlines and Penalties
• UAE Tax Residency and Double Tax Treaties
• Who Does the Dubai Tax System Suit?
• Sources and Official Legislation

Is Dubai Tax Free? The Short Answer

Dubai levies no personal income tax on salaries, rental income or individual capital gains. Companies, however, have been subject to corporate tax since 1 June 2023: the first AED 375,000 of taxable profit is taxed at 0%, and anything above that at 9%. Goods and services carry 5% VAT, and imports a 5% customs duty. Dubai is therefore not tax free — it operates a low-rate, narrow-base tax regime.

Dubai Tax Rates 2026 at a Glance

The table below covers every tax and government charge a company or an individual is likely to meet in Dubai. Corporate tax, VAT, excise and customs are federal and apply across the United Arab Emirates; the property and municipality charges are specific to the Emirate of Dubai.

Dubai Corporate Tax Rate: 0%, 9% and 15%

Corporate tax is governed by Federal Decree-Law No. 47 of 2022 and applies to financial years beginning on or after 1 June 2023. The headline rate is 9%, but because the first AED 375,000 of taxable profit sits in a 0% band, the effective burden on small and mid-sized companies is materially lower. Registration and filing obligations are not tied to profitability: a company that made no profit still has to register and file.

Does the AED 375,000 Threshold Apply to Revenue or Profit?

This is the single most misread rule. The AED 375,000 threshold applies to taxable profit, not revenue. A company turning over AED 2 million but reporting AED 300,000 of taxable profit pays no corporate tax. Taxable profit starts from accounting profit prepared under accepted accounting standards and is then adjusted for non-deductible expenses, the entertainment restriction, the interest limitation rule and other statutory items.

Worked Example: Corporate Tax on AED 1,000,000 of Profit

Take a Dubai mainland company with AED 1,000,000 of annual taxable profit. The first AED 375,000 is taxed at 0%. The remaining AED 625,000 is taxed at 9%, giving AED 56,250 of corporate tax — an effective rate of 5.6%. The same profit in a jurisdiction with a 25% corporate rate would carry a charge close to AED 250,000. A step-by-step breakdown is set out in how corporate tax is applied in Dubai.

15% DMTT for Large Multinational Groups

For financial years starting on or after 1 January 2025, the UAE applies a Domestic Minimum Top-up Tax aligned with the OECD Pillar Two rules. UAE entities belonging to multinational groups whose ultimate parent reported consolidated revenue above EUR 750 million in at least two of the four preceding financial years top their effective rate up to 15%. The regime has been granted OECD transitional qualified status, which allows groups to rely on the safe harbour provisions. Domestic companies and single-jurisdiction groups fall outside its scope entirely.

R&D Tax Incentive: Up to 50% of Qualifying Spend

The UAE has opened a corporate tax credit for research and development. Phase one went live on 18 March 2026 and provides a non-refundable credit of up to 50% of qualifying R&D expenditure, capped at AED 5 million per year. For software, advanced manufacturing, biotechnology and engineering businesses, the incentive can bring the effective corporate tax charge close to zero.

Free Zone or Mainland? QFZP Conditions

Free zone companies are not automatically tax free. The 0% rate applies only to the qualifying income of a company that holds and maintains Qualifying Free Zone Person (QFZP) status. The framework was set by Cabinet Decision No. 100 of 2023, and the lists of qualifying and excluded activities were restated by Ministerial Decision No. 229 of 2025.

What Are the QFZP Conditions?

The company must maintain adequate substance in the free zone — real people, assets and expenditure — derive income from qualifying activities, comply with the arm's length principle and transfer pricing documentation rules, and prepare audited financial statements. Non-qualifying revenue must stay within the de minimis limit: the lower of 5% of total revenue or AED 5,000,000.

What Happens If You Fail the QFZP Conditions?

Failing any condition costs the company its QFZP status for that tax period and the following four tax periods, with all income falling to the standard 9% rate. Choosing between a free zone and the mainland is therefore a question of whether the business model fits the qualifying activity list, not simply of licence cost.

Small Business Relief (AED 3 Million)

Start-ups and small companies can elect into Small Business Relief. A taxpayer whose revenue does not exceed AED 3,000,000 in the relevant tax period and in all previous tax periods may treat its taxable income as nil and pay no corporate tax. The relief was originally limited to tax periods ending on or before 31 December 2026; Ministerial Decision No. 131 of 2026, issued on 29 July 2026, extended it to tax periods ending on or before 31 December 2029. The relief removes the tax, not the paperwork — registration and annual filing continue.

Dubai VAT Rate and Registration Thresholds

VAT has applied across the UAE since 1 January 2018 at a standard rate of 5%, well below the OECD average. Exports of goods and services outside the UAE are zero-rated, while certain financial services, bare land and local passenger transport are exempt.

Mandatory and Voluntary VAT Registration

Registration is mandatory once taxable supplies and imports over the previous 12 months exceed AED 375,000. Businesses above AED 187,500 may register voluntarily, which is often worthwhile during an investment phase because it allows input VAT to be recovered. Returns are normally quarterly; taxpayers with annual turnover of AED 150 million or more file monthly. Filing and payment fall due within 28 days of the end of each tax period.

Zero-Rated vs Exempt: Why the Difference Matters

Neither adds VAT to the invoice, but the consequences differ. On zero-rated supplies the input VAT you incur is recoverable; on exempt supplies it becomes a cost you absorb. An export-led Dubai company can therefore sit in a permanent VAT refund position. Records must be kept for at least five years, and invoices must meet the statutory content rules for refund claims to succeed.

Excise Tax: The New Tiered Model

Excise tax targets goods considered harmful to health or the environment. A significant change took effect on 1 January 2026: Cabinet Decision No. 197 of 2025 replaced the flat percentage on sweetened drinks with a tiered volumetric model based on sugar content per 100 ml. Carbonated drinks no longer form a separate 50% category; the charge now follows sugar density.

Concentrates, powders and gels are assessed on the final prepared form. Importers and producers must hold sugar analysis reports from accredited laboratories; without documentation the highest tier applies by default.

Dubai Customs Duty Rate

Imports into the UAE carry a general customs duty of 5% of the CIF value — goods plus insurance and freight. Alcohol is charged at 50% and cigarettes and tobacco at 100%. Goods held in a free zone create no duty liability until they enter the UAE market, which is why re-export and distribution businesses find the structure so efficient for working capital. Travellers benefit from an allowance of up to AED 3,000 for gifts and personal effects.

Personal Income Tax and Property Fees

Dubai charges no personal income tax. Salaries, bonuses, dividends, rental income and individual capital gains are untaxed, and there is no inheritance or gift tax. Individuals carrying on a business are treated differently: a natural person whose annual business turnover exceeds AED 1,000,000 becomes a corporate taxpayer. Employment income, personal investment income and personal real estate investment income are excluded from that calculation.

Is There Property Tax in Dubai?

There is no recurring annual property tax; charges arise on transactions instead. The Dubai Land Department collects a 4% transfer fee on property sales — legally split between buyer and seller, though in practice most contracts place the whole amount on the buyer — alongside fixed title deed and map fees and a registration trustee charge. Residential tenants pay a municipality housing fee of 5% of annual rent, collected in monthly instalments through the DEWA bill.

Registration, Returns, Deadlines and Penalties

Corporate tax registration runs through the Federal Tax Authority's EmaraTax portal. You will need the trade licence, memorandum of association, authorised signatory documents and passport and Emirates ID details for owners and directors. The corporate tax return and the payment are both due within nine months of the end of the tax period — a company on a calendar financial year therefore files by 30 September of the following year.

Late Registration and Filing Penalties

Failing to register on time attracts an administrative penalty of AED 10,000. Late filing, late payment and inadequate record keeping each carry their own penalties. When a business ceases, corporate tax deregistration must be requested within three months, and VAT deregistration within 20 business days. Building these dates into a compliance calendar is the simplest way to avoid the charges altogether. Ongoing bookkeeping and filing support is available through our Dubai accounting and finance services.

UAE Tax Residency and Double Tax Treaties

Setting up a company in Dubai does not by itself change your personal tax residency, and holding a residence visa or an Emirates ID does not make you tax resident either. Under UAE rules an individual is tax resident if they spend 183 days or more in the country within a 12-month period, or if they are a UAE national or resident who meets a 90-day test together with a permanent home or business connection. Residency is evidenced by a Tax Residency Certificate obtained through EmaraTax.

Do You Still Pay Tax in Your Home Country?

Often, yes. The UAE has an extensive treaty network, but relief depends on your home jurisdiction's own rules — controlled foreign company legislation, place-of-effective-management tests and exit taxation can all pull profits back into the home tax base regardless of where the company is registered. Substance in the UAE, board decisions taken locally and a documented commercial rationale are what make the structure hold. Our Dubai tax consultancy team reviews both sides before the company is incorporated.

Who Does the Dubai Tax System Suit?

A 9% headline corporate rate sits well below the 20–30% band common across Europe. Combined with no personal income tax, no withholding tax, no restriction on profit repatriation, a broad treaty network and free zone incentives, the result is a genuinely competitive platform.

Three profiles benefit most: export and service-export businesses whose revenue falls inside the qualifying income definition; holding structures using the participation and capital gains exemptions; and regional headquarters serving Gulf, African and South Asian markets. The advantage is thinner where activity is aimed mainly at the UAE domestic market, where substance is weak, or where management genuinely sits in another country. Choosing the right licence and location at the outset is covered in our guide to company formation in Dubai mainland.

Sources and Official Legislation

• UAE Ministry of Finance – Corporate Tax: mof.gov.ae
• UAE Ministry of Finance – Domestic Minimum Top-up Tax: mof.gov.ae
• Ministerial Decision No. 131 of 2026 – Small Business Relief extension: mof.gov.ae/tax-legislation
• Cabinet Decision No. 197 of 2025 – tiered volumetric excise model: mof.gov.ae
• Federal Tax Authority and the EmaraTax portal: tax.gov.ae
• UAE Government Portal – Taxation: u.ae
• Dubai Land Department – property registration fees: dubailand.gov.ae