United Arab Emirates
Social security contributions
There is a social security regime in the United Arab Emirates that applies to qualifying UAE and other Gulf Cooperation Council (GCC) national employees only. Non-GCC nationals are not subject to social security in the United Arab Emirates.
For UAE national employees, social security contributions are calculated at a rate of 17.5% of the employee's gross remuneration as stated in the local employment contract. Social security obligations also apply to employees of companies and branches registered in a free trade zone (FTZ). Out of the 17.5%, 5% is payable by the employee and the remaining 12.5% is payable by the employer. A higher rate of 20% is applied in the Emirate of Abu Dhabi (where the contribution of the employer is 15%). For other GCC nationals working in the United Arab Emirates, social security contributions are determined in accordance with the social security regulations of their home country.
The employer is responsible for withholding and remitting employee social security contributions.
In the Dubai International Financial Centre (DIFC), proposals for a mandatory employer savings scheme designed to replace the statutory end-of-service gratuity payment regime for non-UAE and other GCC nationals is expected to take effect on 1 February 2020. Under the existing proposals, which are still subject to formal enactment, employers are required to contribute monthly contributions of 5.83% or 8.33% of the employee’s basic salary (the actual percentage is contingent upon the employee’s length of service) into the scheme.
Capital gains taxes
There is currently no personal income tax in the United Arab Emirates. As such, capital gains tax is not imposed on UAE national or resident individuals.
Value-added tax (VAT) was implemented in the United Arab Emirates on 1 January 2018. See Value-added tax in the Other taxes section of the Corporate tax summary for more information.
Net wealth/worth taxes
There are currently no wealth taxes imposed on individuals in the United Arab Emirates.
Inheritance, estate, and gift taxes
There are currently no inheritance, estate, or gift taxes imposed on individuals in the United Arab Emirates.
Municipal or property tax
Most Emirates impose a municipality tax on properties, mostly by reference to the annual rental value. It is generally the tenants' obligation to pay the tax. In some cases, separate fees are payable by both tenants and property owners. For example, in the Emirate of Dubai, the municipality tax on property is currently imposed at 2.5% on annual rental value for commercial properties (paid by property owners) and 5% for residential properties (paid by tenants).
A registration fee may be levied on transfer of ownership of land or real property. For example, a land registration fee is levied in the Emirate of Dubai at a rate of 4% of the fair market value of the property (a cost generally shared between the buyer and seller), payable to the Dubai Land Department. In Dubai, the registration fee may also apply on the direct or indirect transfer of shares in an entity that owns real property.
These levies are imposed and administered differently by each Emirate.
There are currently no luxury taxes levied in the United Arab Emirates.
On 1 October 2017, the United Arab Emirates implemented an excise tax on tobacco and tobacco products, carbonated drinks, and energy drinks.
On 1 December 2019, the United Arab Emirates expanded the scope of excise tax to include sweetened drinks, electronic smoking devices and tools, as well as liquids used in electronic smoking devices and tools.
The applicable tax rates are as follows:
- 100% on tobacco and tobacco products, electronic smoking devices and tools, liquids used in electronic smoking devices and tools and energy drinks; and
- 50% on carbonated drinks and sweetened drinks.
Generally, a customs duty of 5% is imposed on the cost, insurance, and freight (CIF) value of imports. Other rates may apply to certain goods, such as alcohol and tobacco, and certain exemptions and reliefs may also be available.
The United Arab Emirates is part of the GCC Customs Union, which was established in 2003 to remove customs and trade barriers among the GCC member states. No customs duties are levied on trade between the GCC member states. Additionally, the United Arab Emirates grants duty free imports to most national goods originating in member countries of the Greater Arab Free Trade Agreement, Singapore and the European Free Trade Association countries, i.e. Norway, Switzerland, Iceland and Liechtenstein.
While the UAE FTZs are areas within the territory of the United Arab Emirates, these are, however, considered outside the scope of the customs territory. Therefore, goods imported into the UAE FTZs are not subject to customs duty. Customs duty is suspended until the goods are imported into the GCC local market.
Hotel tax and tourism levies
Most Emirates impose hotel levies, which apply on the value of hotel services and entertainment. These levies are imposed and administered differently by each Emirate.
A Tourism Dirham fee is levied in the Emirate of Dubai. This is a charge on hotel guests and tenants of hotel apartments ranging from 7 UAE dirham (AED) to AED 20 per room per night. In the Emirate of Abu Dhabi, the fee is equal to AED 10 per room per night.
In addition to the above charge, the Emirate of Abu Dhabi also imposes a municipality fee that is levied on hotel stays at a rate of 2% on the total value of the invoice. The Emirate of Dubai has also introduced such municipality fee, however, at a higher rate of 7% as of July 2018 (previously levied at 10%). In addition, a service charge of 10% is imposed on the total value of the invoice, which is levied by the Department of Economic Development.