OWME Global Business Services

GUIDE TO TAX AND ECONOMIC SUBSTANCE IN THE UAE

GUIDES / Tax and Economic Substance

Find out more about the tax benefits of operating out of the UAE.

The main reason why Dubai has attracted so many businesses is that it is one of the few countries where there is no direct taxation: no corporate tax, no income tax, no withholding taxes, and no wage taxes.
 

The UAE has plenty of reasons to operate from quite aside from the beneficial tax regime.

However it is not as straightforward as it once was to make sure that no taxes arise in other countries. Tax treaties need to be considered and also economic substance. Economic substance refers to the fact that that there should be economic reasons, in contrast to tax reasons, for operating out of a particular country. Irrespective of tax treaties, more often than in the past, high tax countries will in practice look at whether companies set up in zero or low tax countries have economic substance. This is what sets it apart from many other low tax countries:

In 2018 VAT came into effect at a low rate of 5%. More on VAT below:

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