UAE Tax System 2026 — No Income Tax, Corporate Tax & VAT Explained
Updated April 2026 • UAE Finance Guide • 8 min read
Overview
The UAE's tax system is one of the most favorable in the world. There is zero personal income tax, making it a top destination for high earners globally. However, recent introductions of corporate tax and VAT mean the system is evolving.
Key Details
Personal income tax: 0%. There is no income tax on salaries, bonuses, or employment income regardless of amount. This applies to all residents — UAE nationals and expats alike. There is also no capital gains tax on personal investments.
Important Considerations
Corporate tax (introduced June 2023): 9% on business profits exceeding AED 375,000. Profits up to AED 375,000 are taxed at 0%. Free zone companies meeting qualifying conditions may benefit from 0% corporate tax rate. Small businesses under the threshold effectively pay no corporate tax.
Additional Information
VAT: 5% on most goods and services since January 2018. Certain items are zero-rated (exports, international transport) or exempt (residential property, local transport, bare land, financial services). Businesses with taxable revenue exceeding AED 375,000 must register for VAT.
Practical Tips
Excise tax: 100% on tobacco products, 100% on energy drinks, 50% on carbonated drinks, and 100% on electronic smoking devices. This is paid by manufacturers and importers, not directly by consumers.
More Information
No tax on dividends, interest income, or capital gains for individuals. No inheritance or estate tax. No property tax (only service charges). This combination makes the UAE one of the most tax-efficient jurisdictions globally.
Frequently Asked Questions
Does UAE have income tax?
No, the UAE charges zero personal income tax on all forms of personal income including salary, bonuses, and investment returns.
What is UAE corporate tax rate?
9% on business profits above AED 375,000 (introduced June 2023). Free zone companies may qualify for 0% rate.
What is the VAT rate in UAE?
5% on most goods and services. Basic food, healthcare, and education may be zero-rated or exempt.
Do expats pay tax in UAE?
No personal tax. However, you may still have tax obligations in your home country depending on citizenship (US citizens) or residency rules.
Is there capital gains tax in UAE?
No, there is zero capital gains tax for individuals on any investment including stocks, property, and crypto.