Difference between (VAT) taxes in Dubai and other regions in the UAE

October 12, 2023

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All the development that has taken place in Dubai has cost the government billions of dollars. From 6 lane roads to well-planned and well-built districts, tax money has been used efficiently to create one of the best business cities in the world.

Different tax laws are followed all around the world. These tax laws are designed according to the prevailing conditions and area specific factors. Factors such as area size, size of population, income and wealth of the population and the occupation of people have an impact on how tax laws are made.

Even in the UAE, you will find that tax laws are not the same for every city of the emirates. The reason behind this difference is to encourage the investors to invest while paying lesser taxes. You will therefore see different options that are available when it comes to company formation. Taxes are one of the major factors that make business owners opt for Free zone company formation.

What are the major differences?

UAE consists of different emirates and laws may vary a little. When it comes to taxes, Dubai is a little different than other emirates. The reason behind this is the creation of the city as a business hub in the Middle East and for that special arrangements and laws had to be made.

Today, there are different types of economics zones in which companies can be formed in Dubai. The incentives are not only of the facilities provided for different types of industries. The most important factor that makes companies use these zones are the tax advantages.

  1. Taxes are generally low for companies in these zones.
  2. Free zone company formation will allow your business to be free from tax payments.
  3. Lower taxes allow your business to operate with lower costs than it would incur if it was not setup in an economic zone.
  4. Not all industries are taxed, so you can make use of the opportunity if your business falls into the non-taxed category.

In Dubai corporate taxes are levied on companies who have a working capital of a million dirhams or more. The rate keeps rising for every bracket of working capital.

Other tax regulations are similar for all of the UAE. The country mainly generates its income through indirect taxation rather than direct taxation. Income tax, capital-gains tax or corporate taxes are not levied in other regions the UAE.

What are the advantages for new businesses?

It is great news for your business setup Dubai, that you can legally avoid paying taxes in Dubai. At KWS Middle East, we can provide you with more advantages to help you push your costs further down. Apart from company formation services, KWS Middle East also provides support services for your business setup Dubai. These support services allow you to get products and trademarks registered within no time. Our team of experts knows what is required for all these processes and how you can get done with them in a flash.

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