UAE tax for expats — what you actually pay
Personal income (0%), VAT (5%), corporate (9% over AED 375K), end-of-service gratuity, US ETF dividend withholding, and the hidden costs nobody warns expats about. Updated for 2026.
1. Personal income tax — still 0%
UAE residents pay 0% personal income tax as of 2026. Salary, bonuses, freelance, capital gains on personal investments — all untaxed at the federal level. This is the headline reason the UAE remains one of the most expat-friendly residency setups globally. There is no sign of personal income tax being introduced; the Ministry of Finance confirmed in 2024 that it remains off the table.
2. VAT — 5% on most goods and services
Introduced in 2018. Standard rate is 5%. Zero-rated categories include exports, international transport, certain healthcare and education, and the first sale of newly-constructed residential property. Exempt categories include bare land, local passenger transport, and residential rental (after the first sale).
3. Corporate tax — 9% over AED 375,000
Introduced June 2023. Applies to UAE-incorporated entities and qualifying foreign branches. The first AED 375,000 of taxable income is tax-free; profits above are taxed at 9%. Free zone entities can still qualify for 0% on certain qualifying income. If you're freelancing through your own UAE company, check whether you fall above the threshold; many sole-proprietor consultants don't.
4. End-of-service gratuity
Mandated by UAE labor law. After 1 year of continuous service: 21 days' basic salary per year for years 1-5, then 30 days per year thereafter. Capped at 2 years' total salary. Paid out in AED at termination. Tax-free at receipt in the UAE; taxability in your home country depends on your tax residence.
5. ETF dividend withholding (the hidden cost)
If you hold US-domiciled ETFs (VT, VTI, BND), the IRS withholds 30% on dividends for non-resident aliens. UCITS-domiciled equivalents (VWRA, VAGU) withhold ~15% at the Ireland level. For long-term investors, the difference compounds substantially. Most UAE expats should prefer UCITS funds over US-domiciled ETFs unless they're filing US taxes anyway.
6. Home-country tax residency
Just because you live in the UAE doesn't automatically mean you're tax-resident here. The 'tax residence certificate' from the Federal Tax Authority requires 183+ days physically in the UAE. Without it, your home country may still claim residency based on its own rules (UK statutory residence test, India's 60-day rule, etc.). Get the certificate if you want clean treaty access.
7. Property — DLD fee, not income tax
Buying property triggers a 4% Dubai Land Department fee (split between buyer and seller, but typically buyer pays full). No annual property tax. Rental income is taxable in your home country if you're tax-resident there; in the UAE itself, it's untaxed.
8. What changes if you leave the UAE
Most countries have a 'days present + ties' test for re-establishing tax residency. Plan moves around the calendar year for clean cuts. Your end-of-service gratuity is paid in the country you depart from, but might be taxable on receipt in your new country. Consult a tax advisor before any cross-border move; the cost is small relative to the avoidable tax mistakes.
Track your UAE finances properly
Multi-currency, ETF-aware, expat-tested. Free forever plan.
Get one finance post a week
Boglehead-grounded math, no spam, unsubscribe anytime.