Tax in Dubai for foreigners is often described as a “paradise” attracting many expats with zero personal income tax and a high standard of living aspirations.
However, relocating to the UAE does not automatically make foreigners tax-free.
While the UAE offers one of the most favourable tax environments globally, expats must still navigate exit taxes, foreign residency rules, and cross-border reporting obligations to benefit fully.
Understanding how UAE tax rules interact with your home country’s system is essential before — not after — you move.
As confirmed on the UAE Government Portal under the UAE personal income tax rules section, there are no personal income tax in Dubai for foreigners.
Dubai does not levy personal income tax on individuals for:
This makes Dubai particularly attractive for high earners, entrepreneurs, and investors.
However, the absence of UAE personal income tax does not eliminate tax exposure abroad.
Since June 2023 (and applicable in 2025), the UAE has implemented a federal corporate tax regime:
Corporate tax applies to business activities, not passive personal income earned by individuals.
It applies to:
Foreigners operating businesses in Dubai — including through free zones — must carefully assess the UAE corporate tax framework.
UAE Tax Residency Certificate (TRC)
Holding a UAE residence visa alone does not make you a UAE tax resident.
To meet the UAE Tax Residency Certificate requirements, individuals generally must meet one of the following:
In practice, authorities also examine:
Applications are handled via the Tax Residency Certificate portal. |
Many countries apply their own residency tests, often considering:
Even if you qualify as a UAE tax resident, your former country may still treat you as tax resident under its domestic laws, often retrospectively.
Below is a non-exhaustive list of countries who have known anti-avoidance tax provisions which may be relevant to expats seeking zero taxation by moving to Dubai.
The US applies citizenship-based taxation:
US citizens moving abroad to the UAE therefore may find themselves being taxed in the US even after becoming non-US tax residents following a move to Dubai on income earned while physically outside of the US.
Canada departure tax rules must therefore be taken into account by those moving out of Canada to the UAE.
Moving to the UAE and a not paying tax in Dubai as a foreigner does not necessarily mean no tax at all for Australians nationals or residents.
Norway wealth exit tax rules impact anyone who has lived in Norway for a total of ten years or more before the income tax year in which they take up permanent residence in the UAE.
This effectively results in Norwegian tax residence not ceasing until after the end of the third income tax year after the year in which they took up permanent residence in Dubai.
Moreover, for Norwegian tax residence to cease, individuals must meet the following requirements in each of the three income tax years after they took up permanent residence in the UAE:
Various EU countries apply exit taxes under the Anti-Tax Avoidance Directive (ATAD), particularly when assets or businesses are moved abroad.
Although ATAD Exit Taxation (Article 5) primarily targets corporate taxpayers by taxing unrealized capital gains when assets or tax residence are moved out of an EU Member State, several EU countries have extended similar rules to individuals too via national laws.
This has effectively resulted in taxation of unrealized gains on shares at exit for individuals meeting shareholding tests:
The above country specific scenarios, all demonstrate that zero tax in Dubai for foreigners may not as realistic in practice as originally thought.
Permanent Establishment (PE) Risk
Remote work from Dubai does not automatically create a permanent establishment (PE).
Risk increases where an individual:
Where a PE exists, this may trigger:
Remote working and PE triggers are an evolving aspect of taxation as demonstrated by a recent public consultation by the OECD.
Foreigners relocating to the UAE may still owe:
This depends on home-country law and bilateral agreements.
For instance, the UK and the UAE have no social security bilateral agreement in place.
Therefore, for UK employee moving to Dubai for a couple of years on an international assignment whilst remaining on the UK payroll, UK social security contributions remain payable for the first 52 weeks after leaving the UK for the UAE.
Corporate Tax Compliance
Foreigners establishing businesses in Dubai must:
Economic Substance Regulations (ESR)
Economic Substance Regulations historically applied to certain activities. While ESR filing obligations have largely been phased out, prior compliance and information exchange remain relevant in cross-border audits.
Golden Visa Routes
Foreigners may qualify through:
UAE Golden Visas provide long-term residency (up to 10 years), but immigration status and tax status remain distinct.
Tax Impact of a Golden Visa
The UAE has in fact no bilateral social security (totalization) agreements with any countries outside the GCC (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia) framework.
Even within the GCC, UAE employers pay contributions for GCC nationals per their home country’s laws, providing limited portability for nationals only.
In short, even if there may be no tax in Dubai for foreigners, they are not shielded from the above regimes.
Establishing Real Substance
To demonstrate genuine relocation:
Avoiding “Fake Tax Residence” Red Flags
Authorities may challenge tax residence where individuals:
Dubai offers one of the most favourable tax environments globally — but only for those who structure their affairs correctly. For foreigners, the real challenge lies in managing exit taxes, severing old residency ties, and aligning personal and corporate tax positions.
Tax in Dubai for foreigners is not as simple as “zero tax” but with careful planning, it can be one of the most efficient outcomes available internationally.
Dubai does not impose personal income tax on salaries, dividends, capital gains, or interest. However, foreigners may still be subject to taxation in their home country depending on residency rules, exit taxes, and ongoing ties. In addition, business income may fall under the UAE’s federal corporate tax regime.
No. A UAE residence visa alone does not establish UAE tax residence. To be considered a UAE tax resident, individuals must meet physical presence thresholds and demonstrate genuine economic and personal ties to the UAE.
Generally, individuals must spend either:
Authorities also assess where your personal and economic life is centred.
Yes. Many countries apply their own residency tests or exit tax rules. The UK, US, Canada, Australia, Norway, and several EU countries commonly continue taxing individuals after relocation if sufficient ties remain.
A UAE Tax Residency Certificate is often required to:
It is issued by the UAE Federal Tax Authority and requires proof of physical presence and local substance.
Possibly. Since June 2023, the UAE has applied corporate tax at:
This applies to UAE companies, foreign companies with a UAE permanent establishment, and some free zone entities (subject to qualifying income rules).
Remote work does not automatically create tax exposure. However, risks arise if the individual:
In such cases, a permanent establishment may be created, triggering corporate tax and compliance obligations.
No. A Golden Visa provides long-term immigration status only. It does not automatically grant tax residency, treaty access, or protection from foreign tax obligations.
The UAE does not tax personal capital gains. However:
Timing asset disposals before or after relocation is critical.
Yes. Rental income is generally taxed in the country where the property is located, regardless of your UAE tax residence status.
No. Dubai does not impose inheritance or wealth taxes, but many foreign jurisdictions do. UK inheritance tax, US estate tax, and Norwegian wealth tax can still apply based on domicile, citizenship, or asset location.
How do tax authorities challenge “fake tax residence”?
Tax authorities may challenge residency claims where individuals:
Proper documentation and behavioural consistency are essential.
Yes. Tax outcomes depend heavily on timing, treaty access, asset structure, and residency rules in multiple jurisdictions. Advice obtained before relocation or asset disposal is often far more effective than after the move.
Use the button below to take our quick, free risk assessment based on your specific personal circumstances if you are not sure how to navigate the various complexities in relation to your move to the UAE.
Reality:
Dubai does not impose personal income tax, but this does not mean foreigners are tax-free. Home-country tax residency rules, exit taxes, and ongoing reporting obligations may still apply.
Reality:
A residence visa is an immigration status only. Tax residency depends on physical presence, local substance, and where your personal and economic life is centred.
Reality:
Many countries — including the UK, US, Canada, Australia, Norway, and several EU states — apply their own residency tests or exit tax rules that may continue taxing you after relocation.
Reality:
Free zone companies may benefit from a 0% corporate tax rate only on qualifying income. Non-qualifying activities and mainland transactions can still trigger UAE corporate tax.
Reality:
Remote work does not automatically create tax exposure, but risks arise if you manage core operations, conclude contracts, or represent a foreign business from the UAE.
Reality:
A Golden Visa grants long-term residency, not UAE tax residency. It does not guarantee treaty access or protection from foreign tax authorities.
Reality:
Many countries impose exit taxes on unrealized capital gains when individuals leave. These rules often apply before UAE residency begins.
Reality:
While the UAE does not tax personal capital gains, other countries may tax them under temporary non-residence rules, worldwide taxation systems, or exit tax regimes.
Reality:
Rental income is almost always taxable in the country where the property is located, regardless of where you live.
Reality:
Most countries assess multiple factors beyond days spent, including family ties, housing, economic interests, and habitual behaviour.
Reality:
Tax authorities increasingly exchange information through various frameworks for automatic exchange of information, FATCA, and audit cooperation agreements. Artificial or poorly documented relocations are frequently challenged.
Reality:
Tax outcomes are heavily influenced by timing. Once tax residency or exit tax events occur, options become limited. Planning before relocation is critical.
(With Real-World Examples)
What goes wrong:
Many expats secure a UAE visa and lease an apartment but fail to sever tax residency elsewhere.
Real-world example:
A UK consultant relocated to Dubai mid-year but retained a family home in London and spent several months back in the UK. HMRC treated him as UK tax resident under the Statutory Residence Test, taxing his global income for the entire year — despite living in Dubai.
Why it matters:
Residency is determined by substance. Timing and ties matter more than visas.
What goes wrong:
Expats often sell shares, businesses, or crypto either:
Real-world example:
A former UK resident sold a large shareholding two years after moving to Dubai, believing capital gains were tax-free. The gain was taxed under the UK’s temporary non-residence rules, resulting in a seven-figure tax bill.
Why it matters:
Exit taxes and “look-back” rules can apply even after relocation.
What goes wrong:
Foreigners continue working remotely for overseas employers without clarifying tax or corporate implications.
Real-world example:
A senior executive worked from Dubai for a European company and regularly negotiated contracts. The company later faced questions from tax authorities about whether a permanent establishment (PE) had been created in the UAE.
Why it matters:
Authority, decision-making, and habitual activity can trigger corporate tax exposure.
What goes wrong:
Some founders assume free zone companies are entirely tax-exempt and use them for all types of activity.
Real-world example:
A consultant operating through a UAE free zone company invoiced mainland UAE clients without assessing qualifying income rules. Portions of income became subject to UAE corporate tax.
Why it matters:
Only qualifying income benefits from the 0% rate.
What goes wrong:
Expats assume residency is self-evident and do not obtain formal documentation.
Real-world example:
A European entrepreneur faced challenges opening foreign bank accounts and defending non-resident status during a tax audit because he could not produce a UAE Tax Residency Certificate.
Why it matters:
A TRC is often required to claim treaty benefits or rebut tax residency challenges.
What goes wrong:
Individuals keep homes, cars, gym memberships, or local directorships in their former country.
Real-world example:
An Australian national moved to Dubai but kept his family home and returned frequently. The ATO treated him as an Australian tax resident despite holding a UAE visa.
Why it matters:
Personal and economic ties can override physical presence.
What goes wrong:
Expats overlook deemed disposals or exit tax filings triggered upon leaving.
Real-world example:
A Canadian founder left for Dubai without filing departure tax forms. Years later, the CRA reassessed him for unrealized capital gains dating back to his exit year, including penalties.
Why it matters:
Exit taxes apply regardless of where you move next.
What goes wrong:
Golden Visa holders assume long-term residency equals tax residency.
Real-world example:
A property investor held a UAE Golden Visa but spent limited time in the UAE. Foreign tax authorities rejected his non-residency claim due to lack of physical presence and substance.
Why it matters:
Immigration status and tax status are separate concepts.
What goes wrong:
Expats wait until after relocation to restructure assets or companies.
Real-world example:
A business owner moved to Dubai before reorganizing ownership of operating companies. Exit tax rules applied in the former country, limiting planning options.
Why it matters:
Most tax planning must occur before residency changes.
What goes wrong:
Expats follow generic advice that ignores jurisdiction-specific rules and their own unique set of circumstances.
Real-world example:
An individual relied on a YouTuber claiming “no tax in Dubai for foreigners” – a later audit revealed ongoing filing obligations in two countries.
Why it matters:
Tax outcomes depend on treaties, timing, and individual circumstances.
Most tax problems faced by foreigners in Dubai do not arise from UAE law — they arise from misunderstanding foreign tax rules and poor timing. The most successful relocations are those planned well in advance, with clear documentation and genuine substance.
If you are unsure how cross-border international rules apply to your unique set of circumstances take our quick, free risk assessment below.
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