The UAE is a benchmark in the business world thanks to, for example, the tax free Dubai and other important reasons. Business facilities and this favorable financial environment make Dubai a favorite destination for foreign investment. In addition, you will find other compelling reasons that will make you look towards one of the most modern and relevant cities today.
In this article, we will show you how you can achieve tax-free investments in Dubai through the laws and regulations. Likewise, you will learn what the environment is like in terms of taxes and the sectors that most benefit from the regulations.
Investment Opportunities in Tax free Dubai
If you want to invest in the UAE, you can do so in Dubai tax free, because this region has 0% tax zones. Below is a list of the investment opportunities that are within the tax-free lines:
The real estate market in Dubai
This option is very popular for both local and foreign investors. They have brought in great and impressive architectural projects that have contributed to the thriving real estate sector of the city. Therefore, if you invest in the real estate market of the country, you can reap multiple benefits in the UAE.
An example of this is rental income, tax-free investment returns, and capital appreciation. Similarly, with the rapid growth of the city and the number of tourists visiting it, there is great demand for properties, both commercial and residential.
Furthermore, in Dubai, the real estate market offers investors attractive options, such as luxury apartments or luxury villas. Also, you will find commercial properties that can adapt to multiple preferences and interests. Likewise, this city offers the option of having absolute ownership and leasing of the property.
All these details mean that you can find the property that best suits your requirements and needs. Thus, you can find tax-free zones in Dubai for your real estate investments.
Investment in the technological area in Dubai
Another area in which you can invest in tax free Dubai is in technology since it is one of the priorities of this Emirate. Due to its efforts to become a global leader in this area, it offers a dynamic technological ecosystem. One of the most recognized projects to promote the growth of the aforementioned sector is Dubai Smart City.
In this case, the said project consists of the creation of a connected and at the same time sustainable environment. Also, there are other attractive projects for foreign investment, such as Dubai Internet City and Dubai Silicon Oasis. This way, the authorities have witnessed sustained growth in investment in the technology sector.
In Dubai tax free, you will find many established technology companies and great opportunities for startups. In the latter case, you can focus your business on new technologies, such as Artificial Intelligence, financial technology, and machine learning, among others. On the other hand, established companies focus on e-commerce, software development, and telecommunications.
Additionally, investors in this sector reap benefits in terms of profitability, tax-free incentives, and growth opportunities. Moreover, you can partner with promising companies to keep pace with new technological advances. In contrast, you can join forces with already established companies to grow in their respective fields of work.
Other investment opportunities in tax free Dubai
Apart from the sectors mentioned, which can be very profitable, there are a few others that you should consider. Below we will show you some sectors you can invest in thanks to the UAE tax laws:
Tourism and Hospitality
If your interest is to offer a good service in the tourism sector in Dubai, the hotel and accommodation area is an excellent option. Dubai is one of the cities with a wide variety of top hotels and resorts in the world. Therefore, you can invest in already established places or locate a new complex in one of the most privileged areas.
Similarly, you can establish your business focused on entertainment, a booming sector in the UAE. Therefore, you can invest in shopping centers, cultural centers, theme parks, or other businesses in the field.
Renewable energy
Currently, Dubai contributes to stable development through renewable energy projects. For example, the so-called wind farms, and plants that work using solar energy. In the same way, if you invest in this sector you can have good advantages such as obtaining high returns by increasing energy demand.
In this way, it would give an account of the concern that exists worldwide and the initiatives of the government. Furthermore, when you invest in a renewable energy project you are collaborating in the fight against climate change. Likewise, it will be contributing to the reduction of gas emissions and the so-called greenhouse effect.
The healthcare sector
Furthermore, in tax free Dubai, you can invest in the healthcare sector where the country has a growing population. Equally, it presents great investment opportunities taking advantage of the large influx of medical tourism. Similarly, you can benefit in various ways such as by investing in private hospitals, research facilities, or specialized clinics.
Hence, it would contribute to the health infrastructure of the country and at the same time generate an essential return.
Investment Regulations in Dubai’s Tax-Free Environment
Tax-free investments in Dubai will provide you with many means of investment but you will have to comply with legal requirements and deadlines. However, Dubai has a type of tax regime that can favor it compared to other countries worldwide. Therefore, corporate tax is key for your company and is part of the compliance we talk about here.
Likewise, to demonstrate that you are eligible for the tax exemption, you must maintain all required documentation.
Tax-Free Zones for Manufacturing Investments
As we have mentioned, tax-free zones in Dubai are an opportunity, where you can prosper, with a tax regime in your favor. However, you must comply with all regulations on an ongoing basis, meaning they will not be just one time. Also, be sure to stay up to date with any changes to regulations and requirements that may arise.
When you comply with this, you will be able to be at a good level of competition in the market of the country without ceasing to comply with laws and regulations. On the other hand, the Emirates, as a whole, is a small but very powerful country located in the Middle East. In it, you will find areas where there are no taxes that can give you a great advantage and exemptions from corporate tax.
This has made the UAE an attractive investment destination for companies looking to reduce their taxes. Subsequently, your company can be in one of the most privileged locations to do business in the world. For example, DIFC (Dubai International Financial Center) is a place with excellent Dubai customs and duties costs.
This center, since its inception in 2004, offers international and local businesses a favorable environment for their operations in the UAE. In this scenario, companies can keep most of their profits because they enjoy corporate income tax exemptions. In addition, it offers foreign investors the following exemptions:
- Exemptions on corporate profits
- Capital gains tax exemptions
Thus, if you want to establish a regional hub from which to expand in the Middle East, Dubai is the ideal place.
Dubai’s VAT Policies and Tax-Free Goods
UAE tax laws also favor investors regarding the applicable VAT. The authorities introduced this Value Added Tax (VAT) in 2018 at a fixed rate of 5%. This is one of the regulations that all businesses must comply with when operating in the UAE.
To comply with these regulations, you must register for VAT and maintain accurate and truthful records in this regard. In addition, you must carry out the processes related to this standard with exact calculations and within the established time. Otherwise, you will face considerable penalties as the country is strict about compliance.
However, as a foreign investor, you can seek advice from experts on tax issues in the country. This way, you can enjoy benefits regarding taxes in the UAE, such as:
- Financial Audits
- VAT registration and presentation
- Deadlines and Sanctions
You must comply with the requirements established for financial audits so as not to have to stop your industrial operations. This way you will also avoid financial risks or even damage to the reputation of your business.
VAT Registration for Businesses in Dubai
Even if you are in a Dubai tax-free zone, you still need to register for VAT if your turnover is greater than AED 375,000. However, the registration method is very simple, as you can do it from the Federal Tax Authority website (FTA ). Said registration began to be carried out in a phased manner, according to the billing of the requesting companies.
Additionally, you must be aware of each of the details of the registration to do it correctly. This way, you can prepare the documentation and all other details necessary to comply with the regulations. This will take you one step closer to establishing your business and minimize the risk of application rejection.
Registration process for Value Added Tax
Below, we will show you the requirements to complete the VAT registration process in the UAE:
- Create an electronic service account on the FTA website.
- Then, log in to the created account.
- Fill out the form with the requested data, which contains the 8 sections that we will list below:
- About the applicant
- Applicant details
- Contact information
- Bank data
- Business relationships
- About VAT registration
- Statement
- Review and submit
- Finally, apply for VAT registration in the appropriate section.
You should know that businesses in the UAE should not have more than one Tax Registration Number (TRN). However, the UAE Executive Regulation may provide an exception for certain cases. Hence, if you have multiple branches spread across the Emirates, you only need one VAT registration.
Similarly, if two or more people are related in business, they can apply for VAT group registration. Thus, even in a tax free Dubai environment, you must register your business for UAE VAT.
VAT-Exempt Goods in Dubai: What’s Included?
As part of Tax free Dubai, there are certain supplies subject to VAT but zero-rated tax. In this case, it is not an exemption but the VAT rate applied is 0%. Therefore, companies that produce this type of goods and services must still obtain a VAT account and file declarations.
VAT Exemption in Tax free Dubai
Under the provisions of Article 45 of Federal Decree-Law no. (8) of 2017, certain items qualify for tax exemption. Thus, the categories of goods and services included in the zero-rated tax include the following:
- Investment grade precious metals, such as gold or silver, with 99% purity.
- Recently built residential properties. However, you must supply it for the first time within 3 years of building the property.
- Supplies for exports of goods and services to non-GCC countries.
- Supplies of certain means of land, air, and sea transportation.
- Supply of some relevant health services, goods, and services.
- Supplies related to international transportation.
- Some relevant educational services, goods, and services.
Sectors exempt from VAT
Likewise, as part of tax free Dubai, there are exemptions on certain additional duty-free supplies. Thus, suppliers of goods and services included in these categories do not need to register for VAT purposes. Also, they do not need to file tax returns for said goods and services.
The items exempt from VAT in Dubai are those that you can see in the following list:
- Rentals of residential units.
- Financial services, life insurance, and life insurance reinsurance. Additionally, the laws include financial services that require an explicit fee, discount, commission, refund, or similar consideration.
- Residential buildings, other than those subject to zero rate.
- Desolate land.
- Local passenger transport.
Likewise, tourists do not have to pay VAT on products they buy to take to their countries of origin. However, they must pay the VAT charge for the products they purchase and consume during their stay in the UAE.
Why Choose Dubai for Tax-Free Living?
This Emirate is one of the most taken into account for investments by foreign companies and individuals. This is due to the investment opportunities as part of the facilities it offers but not as the only reason. Another reason to enter the Emirati market is the substantial and sustained economic growth.
Similarly, Dubai has one of the best commercial infrastructures and offers business facilities. Moreover, Dubai customs and duties facilities make it attractive to foreigners who want a safe environment to settle in. Besides, Tax-free zones and exemptions allow companies to keep most of their profits.
For these and other reasons in the business world, tax free Dubai is currently the most attractive place to establish a company or branch. If you want expert support in the labor, tax, and business market in the UAE, does not hesitate to contact us.
