Is Property Tax-Free In Dubai? Find Out Today!

Everyone hates paying taxes. It is a fact of life that taxes are a part of every activity people do. Whether it is buying gas or a chocolate bar, there is a tax on the purchase. But there is some good news when you invest in Dubai.

While it is advertised that there is no tax on property, there are a couple of taxes that are applied when one makes a purchase, sells or they are renting a home. The purchase and selling tax is a one-time fee shared by the buyer and the seller.

For renters, the tenant pays a 5% tax on the rental contract which is added to the utility bill. Thus, even in Dubai, there are still some taxes that have to be paid.

Dubai Property Tax Calculator

If you are buying or selling a home, villa, apartment, or even a commercial space, you will have to pay a one-time tax. This tax, which is also called a land registry fee, amounts to 4% of the total selling price.

Since it is a percentage and all purchase prices are not the same, you may need a tax calculator to help you figure out how much is owed to the government. You can find a tax calculator at this link.

All you have to do is plug in the purchase or selling amount and you will see how much your fee will cost you. For example, on a purchase price of 2,000,000 AED, you would have to pay 84,780 AED for the tax or land registry fee.

Usually, the buyer ends up paying the whole amount even though it is supposed to be split between the buyer and the seller. The purchase price may include the seller’s half of the tax.

While there are no property taxes per se, the buyer may be overwhelmed by the numerous fees involved with the transfer of ownership.

Property Tax In Dubai For Foreigners

Aside from the purchase tax described in the previous section, there is one tax that foreign renters have to worry about. It is the 5% housing rental fee. This is paid by ex-pats only which may seem a little unfair.

However, the payment is painless in some regards as this fee is added to the monthly DEWA bill and divided over the 12-month rental period. Other than that, the lack of taxes is a very enticing reason why ex-pats come to Dubai and the UAE to invest in real estate.

With no income tax, this is a great place to live. The reason there are few taxes in this region is that Dubai and the UAE rely on the revenues that come from their oil supply.

This means that the Dubai government does not have to impose a lot of taxes to remain solvent. What it means to the ex-pat investor is that they can have more liquid income available for their personal needs and business ventures.

It is worth looking into if you are tired of paying taxes in other parts of the world. This is why Dubai has become a very popular investment opportunity for serious investors.

UAE Income Tax

There is more good news. The UAE does not tax citizens or ex-pats on their income. That means that what the ex-pat earns each month is still in his or her paycheck when they or gets their pay.

The last word that has been heard on this topic is that the government is not considering implementing an income any time soon, if ever. The government has its revenue from its oil supply to make income tax unneeded.

While the UAE has double taxation agreements with over 110 nations of the world, there may be a couple of ex-pay citizens who may see their income taxed. Those ex-pats from South Africa may see 45% of their 260,000 AED salary taxed by their own government.

The same can be said for American ex-pats. You would have to talk to the IRS concerning the threshold where the American income tax fee kicks in. But one thing is for sure the American IRS seems to have access to taxpayer details in the UAE.

It is best to check with your local government before accepting a job in Dubai or the UAE. Make sure your income is protected for while there is no income tax in this region of the world, your country may apply one.

Is Dubai Tax-Free

No. That is as simple as it gets. You have read about two of the taxes that are applied already even though they may not be labelled as a tax. But while there is no income tax, Dubai, etc., does levy taxes or fees on other activities.

  1. 10% Dubai Municipality Fee On Hotels – This also pertains to those restaurants in hotels and is many borne by ex-pats
  2. Sin Excise Tax- These include a 100% tax on tobacco, a 100% tax on energy drinks, a 50% tax on carbonated drinks, and a 30% tax on alcohol sold in stores.
  3. AED 10 Knowledge Fee + AED 10 Innovation Fee- These fees or taxes are usually levied when you use government services and do government paperwork. Those areas where you see this tax is when you get a driver’s license, visas, business license, and more.
  4. AED 35 Departure Fee When Flying Out Of Dubai Airports- This applies to all travellers.

There are other fees/taxes that will be applied to different activities as you live in this area.

Some Final Words

Instead of taking someone’s word that Dubai and the UAE are tax-free do some research before you plan to move. As you can see there are different taxes that are imposed but just do not get any media attention.

But to help you understand how the tax system works in Dubai, call our company. We have over 10 years of real estate investment experience in this region and our agents can help you navigate their tax system and make life a little better for you. Call today.

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