United Arab Emirates
Social security contributions
There is a social security regime in the United Arab Emirates that applies to qualifying UAE and other 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 20% 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 20%, 5% is payable by the employee, 12.5% is payable by the employer, and an additional 2.5% contribution is made by the government. A higher rate of 26% is applied in the Emirate of Abu Dhabi, where the contribution of the employer is increased to 15%, the government’s contribution is increased to 6%, and the employee’s contribution remains 5%.
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), the DIFC Employee Workplace Savings Scheme (DEWS) has been introduced, replacing the End of Service Gratuity Benefit (EOSG) , with the aim of protecting long-term employee savings. The new scheme was rolled out on 1 February 2020, and employers now are required to make monthly contributions to DEWS or an alternative regulated Qualifying Scheme, as opposed to paying a lump sum ‘gratuity payment’ to an employee at the end of their employment. 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.
Unemployment insurance scheme
The unemployment insurance scheme introduced in Federal Decree-Law No. 13 of 2022 applies to Emirati and foreign workers and entered into effect on 1 January 2023. The scheme provides financial support to qualifying individuals in the public and private sectors in the event of unemployment.
The scheme divides subscribers into two categories: (i) those who earn AED 16,000 or less as basic salary per month and (ii) those who earn more than AED 16,000 as their monthly basic salary. Those who fall under the former category are required to pay a monthly subscription fee of AED 5, while those who fall under the latter category must pay a monthly subscription fee of AED 10. Given that this is a new law, we are waiting for further details on the implementation of the scheme. Thus far, the obligation for the deduction of the monthly subscription fee falls on the employee.
While the scheme is mandatory for Emirati and foreign workers in the private and public sectors, it does not apply to the following groups:
- Domestic workers.
- Employees contracted on a temporary basis.
- Minors (those under the age of 18).
- Retirees who are already receiving pensions and who have joined a new employer.
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 5% on annual rental value for commercial properties, also known as 'market fees' (paid by property owners), and 5% for residential properties, also known as 'housing fees' (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 on any third-party sale (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 at varying rates 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.
- 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. Further, the United Arab Emirates imposes anti-dumping duties on imports of certain goods, such as car batteries, ceramic and porcelain tiles, and hydraulic cement. The anti-dumping duty rates vary depending on the HS codes of the goods and country of export and/or origin. In some cases, the anti-dumping duty is 67.5% of the CIF value of the goods.
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 (subject to certain conditions). 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, the European Free Trade Association countries (i.e. Norway, Switzerland, Iceland, and Liechtenstein), Israel, and India.
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 room rental, 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 AED 7 to AED 20 per room per night depending on the star classification of the hotel, for example a five-star hotel will levy a Tourism Dirham fee equal to AED 20 per room per night whereas a two-star hotel will levy a Tourism Dirham fee equal to AED 10 per room per night. In the Emirate of Abu Dhabi, hotels will levy a tourism fee equal to 6% of the hotel room rental and a destination fee of AED 15 per night.
In addition to the above tourism fees, the Emirate of Dubai also requires hotels to levy a 7% municipality fee on each hotel sale. The Emirate of Dubai does not impose destination fees. Likewise, in the Emirate of Abu Dhabi, hotels are required to levy a 4% municipality fee. A hotel sale is revenue generated by a hotel for services provided to their guests or visitors, which includes rent for the hotel room, food, beverages, and other services.
Hotels in all Emirates levy an additional service charge equivalent to 10% of the hotel sale revenue.