Establishing Your Business in Dubai: A Highly Coveted Destination
Dubai has long been a sought-after location for professionals and entrepreneurs looking to establish their businesses in a privileged environment. However, a major development is set to disrupt Dubai’s tax landscape starting from June 2023. Let’s explore the upcoming changes and what they mean for entrepreneurs.
Moving to Dubai and the Real Estate Market
Dubai, the most important city in the United Arab Emirates, has attracted the attention of numerous entrepreneurs due to its reputation as a luxury and global business hub. Here, you’ll find the world’s most prestigious brands, such as Ferrari, Bulgari, and Hilton, along with renowned Michelin-starred chefs who have opened their restaurants. Dubai is famous for its extraordinary architectural wonders, like the artificial islands of Palm Jumeirah and The World, which have captivated millions worldwide. Dubai’s real estate market is highly dynamic, offering a wide range of properties, from luxurious villas to affordable commercial spaces starting at €90,000. Dubai also offers fully equipped office complexes with gyms and co-working spaces, fostering creativity and work efficiency.
The Tax Change in Dubai
Dubai has gained a reputation as a zero-tax destination, attracting entrepreneurs eager to take advantage of its tax benefits. However, starting from June 2023, the Ministry of Finance of the United Arab Emirates has announced the introduction of a new federal business tax. This tax will apply to corporate profits exceeding AED 375,000 (approximately €90,800) and will encompass all types of businesses and commercial activities, except for those involved in natural resource extraction and those located in Dubai’s free zones, which will remain exempt.
New Business Tax in Dubai
The federal business tax rate will be 9% on the net accounting profit recorded by companies, making it one of the lowest corporate tax rates in the world. A differentiated tax rate will also be introduced for large multinational corporations that meet specific criteria, but we won’t delve into the details in this video. For businesses with taxable income up to AED 375,000, the tax rate will remain at 0%. The good news is that individuals will not be subject to this tax. Therefore, income from employment, real estate properties, stock investments, and all other non-trade-related income in the UAE will remain tax-free. Foreign investors who do not engage in business activities in the country will also be exempt from this tax.
Dubai’s tax landscape is undergoing a significant change starting from June 2023 with the introduction of a federal business tax. Although this marks the end of the zero-tax era, Dubai will remain one of the best destinations to establish an offshore company due to its low tax rates. Entrepreneurs will still have ample opportunities for success and prosperity in the city of luxury and global entrepreneurship. It’s important to stay informed about these tax developments and adapt your business strategies accordingly to continue benefiting from Dubai’s favorable business environment. Our program for freelancers and entrepreneurs may be just what you need.