Dubai Tax-Exempt Income for Foreign Investors (2025)

Key Areas of Tax-Exempt Income:

• Personal Income:
  • Salaries and wages received by individuals are generally exempt from personal income tax in Dubai and the wider UAE.
    This remains a major draw for expatriate professionals.
• Free Zone Benefits:
  • Many businesses operating within Dubai's free zones may continue to benefit from corporate tax exemptions, but this is highly dependent on meeting specific conditions.
  • It is absolutely vital to thoroughly investigate the specific regulations of the free zone you are interested in, as rules can vary significantly.
  • Specifically, the "Qualifying Free Zone Person" concept is very important.
    To maintain 0% tax, strict conditions must be met.
• Dividends and Participation Exemption:
  • The UAE's corporate tax regime includes a "participation exemption" that can exempt dividends and other profit distributions received by a UAE taxable person from a UAE or foreign juridical person.
  • To qualify, certain conditions must be met, including:
    • A minimum ownership interest (typically 5% or greater).
    • A minimum holding period.
    • That the participation is subject to UAE CT or tax in its country or territory of residence at a statutory rate that is not lower1 than 9%.  
  • This is a complex area, and it is strongly advised to seek professional tax advice.
• Investment Funds:
  • The UAE's CIT regime aims to achieve tax neutrality for investors deploying capital into Investment Funds.
    Therefore certain conditions allow Investment Funds income to be exempt.
  • It is very important to see the guides issued by the Federal Tax Authority regarding investment funds.
• International Transportation:
  • Income earned by a non-resident from operating aircraft or ships in international transportation may be exempt from corporate tax under certain conditions.

  Important Considerations

  • Corporate Tax Law:
    • The introduction of the federal corporate tax has changed the landscape.
      It is essential to stay updated on the latest regulations from the Federal Tax Authority (FTA).
  • Free Zone Compliance:
    • Maintaining compliance with free zone regulations is crucial to retain tax exemption benefits.
  • Economic Substance Regulations:
    • Businesses must comply with economic substance regulations to demonstrate that they have genuine economic activity in the UAE.
  • Professional Advice:
    • Due to the complexity of tax regulations, it is highly recommended to seek professional tax advice from experts in Dubai.

  Reputable Tax Advisory Firms:

  • Consult with established tax firms in Dubai for personalized guidance.
  
  
  By understanding these key aspects, foreign investors can navigate Dubai's tax system effectively.