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Practically no taxes are paid in Dubai. However, there are two main ones affecting companies: Corporate Tax and VAT (VAT). In addition, there are other specific taxes that do not directly affect companies, but it is important to take them into account:
- Property Tax: You pay 4% of the value when you purchase a property.
- Tourist tax: Applies to the hotel sector.
- Tolls and other specific taxes.
Below, we explain the two main taxes that affect companies.
The Corporate Tax is the corporate tax in Dubai, designed to tax business profits. Unlike other countries, the rate is extremely competitive, set at 9% of annual profits, which this tax rate applies when the first 90,000 euros of net profit are exceeded. This makes it a very attractive destination for companies looking to optimize their tax burden.
Thanks to the Small Business Relief program, companies with annual revenues of less than 750,000 AED are fully exempt from this tax until December 31, 2025. This means that small and medium-sized businesses can operate without worrying about this tax, which encourages entrepreneurship and investment in the country.
Important: If your company exceeds exempt income, the general rule of 9% will apply.
All companies must register for Corporate Tax within 3 months of their creation. Failure to do so will result in a fine of AED 10,000 (approximately €2,500).
The VAT or Value Added Tax in Dubai has a standard rate of 5%, much lower than in most countries. This tax applies to the sale of goods and services within the country, although there are key sectors that are exempt from VAT, such as: education, health, international transportation, and financial services.
VAT Required
Registration is mandatory if your company bills more than 375,000 AED per year. You should also register if you expect to exceed that amount in the next 30 days.
Deadline: Make sure you complete your registration no later than 30 days after you reach this threshold.
Penalties for non-compliance: Failure to register can lead to a fine of AED 20,000 (approximately €5,000).
Voluntary VAT
If your annual billing is between AED 187,500 and AED 375,000, you can register on a voluntary basis. This is useful if you anticipate growth in your business and want to comply with regulations from the start. Failure to register voluntarily does not result in penalties.
Avoiding sanctions is critical to operating smoothly in Dubai. Here are the most common penalties:
Corporate Tax: AED 10,000 (2,500€) for not registering the company on time.
VAT: AED 20,000 (€5,000) for not meeting registration deadlines.
To avoid problems with Dubai's tax authorities, it is essential to have a specialized company that manages legal and tax processes. At Gestoria Ibérica, we offer:
Basic Plan: Accounting management, tax reporting and access to a CRM.
Iberian Plan: Includes basic plan services, tax and legal advice, contract drafting and default claims.
These are the main features, you can get more information on our website.
Compliance with Corporate Tax and VAT regulations in Dubai is essential to avoid sanctions and to take full advantage of the country's tax advantages. To ensure that your company is in good standing and optimizing your taxes, rely on specialized advice.
At Gestoria Iberico, we offer you a comprehensive and personalized service to manage all the tax procedures of your company in Dubai.
Schedule a free consultation at the link for more information.
