Europe, Middle East and Africa Tax Facts 2012 - Crowe Horwath ...

UNITED ARAB EMIRATES
INCOME TAX RATES 2012
Individuals
No direct personal taxation.
The UAE does not require social insurance contributions for expatriates. UAE and
other GCC nationals working in the UAE contribute to retirement and pension funds in
accordance with specifi c regulations.
Companies
There is no federal tax in the UAE. Each of the Emirates (Abu Dhabi, Ajman, Dubai,
Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain) have issued tax decrees
but in practice these have not been applied. There is a risk that these laws may be
applied more generally in future and there is a remote risk that they will be approved
retroactively. Taxes are currently imposed at the Emirates level on:
� Oil and gas producing companies: as per specifi c government concession
agreements; and
� Branches of foreign banks under specifi c tax decrees or regulations or
agreements with the Rulers of the Emirates in which the branches operate.
Several free zones have been created across the UAE. These free zones provide tax
exemptions for a guaranteed period, currently a maximum of 50 years.
MUNICIPALITY TAX
Municipal taxes are imposed on hotel services and cinema shows. Service charge
percentages vary among the Emirates. A service charge of 5% to 10% is charged on
food purchased in restaurants. Hotels charge a 10% to 15% service charge per night
on room rates.
PROPERTY TAX
In most of the Emirates, property tax is payable by residential and commercial tenants
by reference to the annual rent of residential property, generally at a rate of 5% and for
commercial property at a rate of 5% to 10% payable to the local municipality.
SALE/PURCHASE FEE
A fee of 2% of the sale value is levied on transactions of sale/purchase of properties in
Dubai. This is collected at the time of the registration of the transaction. This rate may
vary for other Emirates.
CUSTOMS DUTY (Federal Customs Authority)
The member states of the Gulf Cooperation Council (GCC), which are Bahrain, Kuwait,
Oman, Qatar, Saudi Arabia and the United Arab Emirates, approved regulations for the
implementation of the GCC Customs Union on 22 December 2002. All of the states have
adopted the unifi ed customs duty generally calculated at 5% of the invoice value on most
goods (except those on the exempted list, which are allowed free of duties, and certain
restricted items, such as alcohol and tobacco products, which are subject to duty at much
higher rates) imported into the region. If goods are shipped directly from a non-GCC
country to the customer, duty is payable at the fi rst entry point. The duty is levied on the
cost, insurance and freight (CIF) value. The duty is payable by the importer of record.
VALUE ADDED TAX (VAT)
There is no value added tax in the UAE at the moment, although the imposition of VAT
is being considered by the government.
CAPITAL GAINS TAX (CGT)
No tax is imposed on capital gains earned in the UAE at present
TREATY NETWORK
Tax treaties with over 47 countries.
CONTACT:
Farooq Ladha
farooq.ladha@crowehorwath.ae
Horwath Mak
PO Box 6747, Dubai UAE
Tel: +971 4 4473951 Fax: +971 4 4473961
www.crowehorwath.ae
Europe, Middle East and Africa Tax Facts 2012 53
Last updated: May 2012