The UAE Federal Government doesn’t impose taxes on the individual nor on the wealth of firms. Therefore, you do not need to pay income tax, wealth tax, or corporate tax. Dubai, nay, the UAE is a tax-free country for all employees working in the country whether they’re expatriates or local citizens. It doesn’t matter where they are working and how much they are earning. The money they earn is their own money. So, the benefit of having a tax-free salary means that an individual can save enough money to invest elsewhere.
I’m not discussing here that it’ll always stay a tax-free country, that is, income-tax will not be imposed in years to come. At present, there’s no income tax on the people working in Dubai or the United Arab Emirates. But, the Khaleej Times report says that The UAE has no plans to impose a personal income tax, according to a top government official. Furthermore, if you’re working in Dubai for a salary you’re earning, yet you’re a tax citizen or resident of another country. If so, you may be responsible to declare your income to your homeland and pay tax on it.
Tax-Free NRIs in Dubai
Whilst, if you’re an Indian residing in the UAE, as an NRI you’re not accountable for taxation in India from your salary you’re receiving in the UAE for your work. On the other hand, if you’re also doing a work in India while residing in Dubai on a residence visa. You should not ask for depositing money from Indian client into your Indian bank account since it falls under black money transaction. For example, if you’re blogging on a particular topic and earning money from advertisements or affiliate marketing. You should ask to receive money in the country where you live. Don’t use Indian account if they are paying you from Indian branch. It’s like you’re working for an Indian company’s branch in Dubai, where your company is paying your salary in India. The company, perhaps, settling its black money by paying you in India in return for a work you do in a foreign country. It’s very similar to Hawala transfer from or to a foreign country.
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However, for other countries, you may be liable to declare your income you’re earning in the UAE and pay tax on it. In the case, you need to confirm your own country’s taxation law whether you’re accountable for declaring your UAE income or not. So, I explained here briefly about India because I am also an NRI, that is, Non-Resident Indian. NRI is the person who is holding Indian passport for his/her foreign residency. The NRI, don’t need to pay any tax (s)he earns in Dubai to Indian Income Tax Department. However, you need to confirm with your tax consultant if you have invested in India from the money you’ve earned from Dubai during your vacation period.
Tax-Free Dubai Life
Dubai is a very popular city, it has attracted many people from across the globe. It was a desert town 30 years ago, now it’s booming economy and becomes a microcosm with ultra-modern and record-breaking architectures. The city guarantees the safety of each person without imposing personal taxes. Therefore, people of Dubai enjoying a tax-free life. Not only Dubai, but the UAE as a country is known as a tax-free country. It’s one of the reasons why many people all over the world consider moving to Dubai.
NOTE: Whatever I discussed here is all about the income tax on the individual in the United Arab Emirates – Not about other forms of taxes such as municipal tax, VAT, utility taxes, etc.
Double Taxation Avoidance Agreement
The UAE has signed the agreement of DTAAs [that is, Double Taxation Avoidance Agreement], with many countries to make sure that people will not have to pay taxes to two different governments from the income they earned in one country.