United Arab Emirates
Social security contributions
There is a social security regime in the United Arab Emirates (UAE) 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 UAE.
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 UAE, 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.
Capital gains taxes
There is currently no personal income tax in the UAE. As such, capital gains tax is not imposed on UAE national or resident individuals.
Value-added tax (VAT) was implemented in the UAE 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 UAE.
Inheritance, estate, and gift taxes
There are currently no inheritance, estate, or gift taxes imposed on individuals in the UAE.
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 UAE.
On 1 October 2017, the UAE implemented an excise tax on tobacco and tobacco products, carbonated drinks, and energy drinks.
On 1 December 2019, the UAE 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 UAE 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 UAE 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 UAE 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 UAE, 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 levie a Tourism Dirham fee equal to AED 10 per room per night.
In the Emirate of Abu Dhabi, hotels have been exempt from levying a tourism fee in response to the COVID-19 pandemic until 30 June 2021. As of 1 July 2021, hotels will be required to levy a tourism fee equal to 6% of the hotel room rate and a destination fee of AED 15 per night.
In addition to the above tourism fees and destination fee, the Emirate of Dubai also requires hotels to levy a 3.5% municipality fee on each hotel sale, noting that the Dubai Municipality reduced the municipality fee from 7% to 3.5% in response to the COVID-19 pandemic. Likewise, the Emirate of Abu Dhabi has granted hotels an exemption of levying municipality fees until 30 June 2021 in response to the COVID-19 pandemic. As of 1 July 2021, hotels will be 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.