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Moving to UAE? Here’s Some Important Tax Information you Need to Know
Posted on Tuesday, May 10th, 2022 | By IndusInd Bank
Planning to move to the UAE? You are in for a surprise. Apart from the amazing skyscrapers, sandy beaches, and tourist destinations to explore, UAE has some of the most liberal tax policies around the globe. This attracts many corporates and individuals to work out of the UAE. Here is some important tax information that you need to know before moving to the UAE:
Income tax
There is none, at least for now. People working in UAE do not need to pay any income taxes.
The UAE does not levy any tax on income. Whether it’s a business or an individual working independently, everything that a person earns is not taxable. However, this is about to change as the UAE recently announced a federal corporate tax on businesses for the first time ever. From June 1, 2023, businesses with an income of more than AED 375,000 will be subject to a corporate income tax at a fixed rate of 9% on income exceeding AED 375,000. The income tax will stay at 0% for incomes below that level.
Capital gains tax
Capital gains tax is again zero in the UAE. As the region is funded mostly by oil and gas money, it barely levies any taxes. In fact, there is no concept of taxes such inheritance tax, capital gains tax, estate tax, etc. in the UAE
VAT
The only tax needed in UAE is the 5% VAT that is levied on the sale and purchase of all goods and items. Compared to other countries, this tax rate is again very low, which is something to cheer about. There are some exemptions to VAT as well such as state education.
Tourists can claim VAT refunds
In order to attract tourism, UAE allows tourists to claim VAT refunds for goods purchased in the UAE when they are headed back at the airport. There are a few conditions that should be met, however, to claim this tax refund:
- The goods must be purchased from a company participating in the VAT refund scheme
- Tourists need to leave the UAE within 90 days of purchase along with the goods
Expensive if you are a smoker
Another thing to know about taxes in the UAE is that unhealthy goods such as fizzy or carbonated drinks and cigarettes are taxed at much higher rates under the name of excise tax. Cigarettes in the UAE attract a tax of a whopping 100%, while it is 50% for fizzy drinks.
Final words
Lastly, people planning to move to UAE need to be aware of factors such as repatriation of money, managing your assets back home, etc. IndusInd PIONEER Banking can help you out with all that. The IndusInd Bank NRI account is specially catered to the needs for NRIs. It is an end-to-end solution for NRIs and includes features such as remittance services, document pick-ups from overseas locations, and portfolio management services. Opening an NRE account will enable NRIs to avail FD and SA rates without any Taxation or TDS – which is a huge advantage. And with IBL giving among the highest FD and SA rates among the Indian banks this leads to a benefit of the client. If you would like to know more, click here.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
