Taxes for Expats in the UAE

    Your complete guide to expat tax in the UAE:

    Income tax

    Income tax in the UAE

    No personal taxation for expats currently exists in the United Arab Emirates (UAE).

    Laws covering corporate tax exist in all the individual emirates but, in practice, taxes are enforced only on the following entities:

    • Foreign oil and gas producing companies (oil/hydrocarbon companies with actual production in the Emirates) at rates set forth in their government concession agreements (which are confidential).
    • Branches of foreign banks at rates fixed by decree or in agreements with the Rulers of the Emirates where the banks operate.

    The UAE has over 70 Double Tax Treaties (DTTs) either in force or pending. The UAE and the UK signed such an agreement in April 2016.

    EoSB

    Do I get an expat pension and what are end of service benefits?

    End-of-service benefits:

    A foreign expat employee who is not a national of a GCC country and who completes a period of continuous service that is longer than one year is entitled to gratuity equal to the total of the following amounts:

    • 21 days basic wages for each year of the first 5 years of service
    • 30 days basic wages for each year thereafter, up to a maximum of 2 years

    The gratuity is calculated based on the last basic wage paid to the expat employee. It is payable on the termination or expiration of the employment contract. The employee is entitled to a gratuity for any fraction of a year of service if the employee has completed at least one year of continuous service.

    The calculation can vary further depending on the nature of the employment contract (limited or unlimited) and the circumstances of termination or cessation of employment.

    CGT/IHT

    Capital gains, inheritance tax and wills for expats in the UAE

    No capital gains tax is imposed in the UAE.  Capital gains are taxed as part of regular business profits.  The UAE does not impose net worth tax or estate and gift taxes on expats.

    However...

    ...whilst there is no inheritance tax regime, inheritance, in the absence of a will, is dealt with in accordance with Islamic Shari’a principles.

    Therefore, not only is it critical that if you're an expat in the UAE you have a compliant will, but you must also not assume that just because you've expatriated to live in the UAE that your estate will not be liable to inheritance tax (IHT) in your old home nation, or any nation where you hold assets.  

    For example, those domiciled in Britain remain liable for IHT on their worldwide estate.

    If you are concerned about mitigating your IHT liability, we'd like to offer you a free initial consultation to determine whether we can help you.

    Social security

    Social security

    The UAE does not impose social security taxes on foreign employees.

    However, under UAE labor laws, the employer is required to accrue roughly 21 days of “basic wage” every year and pay out to the employee upon completion of at least one year of employment.

    Social security contributions are due only in respect of GCC nationals. Employer and employee pension contributions for UAE national employees are 12.5% and 5%, respectively, of the agreed contractual salary as per the employment contract.

    Finally...

    We believe the above information is accurate, however tax rates and rules can change, and we are NOT tax experts.  Therefore, please do not rely exclusively on the information to determine your liability for tax.

    Speak to a local tax expert for personalised advice, or consult an international taxation consultancy.

    If you'd like our help to source someone to assist you, please get in touch and we will do all we can to help.

    Relax, and join the 10,000 other international investors who have made the smart decision to let us help.

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