is Dubai still tax free in 2024?

In 2023, the United Arab Emirates (UAE) initiated the implementation of a 9% business tax, featuring exemptions for numerous free zones that play a pivotal role in fueling the country's economy. This move marks a departure from the UAE's historical tax-free status, with the intention of diversifying revenue streams and maintaining its position as a prominent regional commercial hub, beyond its traditional reliance on tax-free oil production.

This business tax rollout comes on the heels of the introduction of a 5% value-added tax (VAT) in 2018. These strategic tax measures signify a deliberate shift away from the UAE's longstanding tax-free reputation, which has historically positioned the nation as a global center for trade, tourism, and a magnet for high-net-worth individuals. The gradual erosion of its tax-free status reflects the UAE's commitment to boosting non-oil revenue and adapting to evolving global economic dynamics.

Nonetheless, there remain substantial advantages to working, trading, and residing in the UAE. Notably, personal income tax continues to stand at 0%, and the 9% business tax offers several exemptions contingent on the geographical area and business category. A crucial aspect to highlight is that companies are not obligated to file tax returns until 2025.

It's important to contextualize the UAE's tax policy within the framework of the new global minimum corporate tax established by the Organisation for Economic Cooperation and Development (OECD). This global initiative, endorsed by 136 signatories, including the UAE, aims to ensure that major corporations contribute a minimum of 15%, thereby increasing the difficulty of tax avoidance.

While the UAE has not yet released regulations detailing the implementation of the OECD tax, tax experts suggest that, had the UAE not introduced its corporate tax system, another country in which the company operates could claim the 15%. The UAE's legislation distinguishes between 0% and 9% taxes, with specific provisions for smaller income earners and exemptions for personal income derived from employment, investment, and real estate.

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