Tax Benefits and Incentives for UK Firms & Individuals in UAE

Q: WHY UK FIRMS SHOULD CONSIDER MOVING TO THE UAE?

1. Tax Advantages in the UAE Corporate Tax Rate: For businesses, the UAE’s corporate tax rate is highly competitive. As of June 2023, a 9% corporate tax applies to profits exceeding AED 375,000, while profits below this threshold are tax-exempt. No Capital Gains Tax: The UAE does not impose capital gains tax on the sale of assets such as shares, real estate, or other investments, making it an attractive destination for investors looking to grow and liquidate their assets. No Inheritance Tax: Unlike the UK, which imposes inheritance tax, the UAE does not charge any inheritance or estate taxes, preserving wealth for future generations. No Personal Income Tax: One of the main advantages of the UAE is its lack of personal income tax. This is a key benefit for both employees and business owners, as it allows individuals to keep 100% of their earnings. 2. Strategic Location in the Middle East Gateway to Emerging Markets: The UAE’s prime location provides easy access to markets in the Middle East, Africa, and South Asia, creating a strategic hub for UK businesses looking to expand in these regions. World-Class Infrastructure: With modern infrastructure, including airports, seaports, and telecommunications, the UAE offers logistical advantages that are crucial for international businesses. 3. Business-Friendly Environment Ease of Doing Business: The UAE’s government has created a business-friendly environment with minimal red tape. Company setup in Free Zones can be completed quickly, often within a few weeks, and is supported by simplified legal and regulatory frameworks. Attractive Free Zones: Many Free Zones in the UAE offer tax exemptions, 100% foreign ownership, and other incentives to businesses. These zones are designed to attract international companies, making the UAE a great choice for UK businesses seeking to set up in the region.

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This article has been researched and written by the Tax & Compliance Team at Creation Business Consultants. AI has not been used in generating this article.

The United Arab Emirates (UAE) offers a very attractive tax regime that is incredibly favourable for both individuals and businesses compared to the UK. With one of the lowest corporate tax rates, no capital gains tax, and no personal income tax, the UAE offers significant advantages for UK firms seeking expansion or relocation in the UAE. Moreover, the UAE has a great location, excellent infrastructure and business-friendly regulations, making it a perfect base for firms with wider markets looking to target countries in the Middle East, Africa, and South Asia. In this blog, we detail the important taxes, benefits, and incentives available to UK firms and individuals in the UAE.

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WHY UK FIRMS SHOULD CONSIDER MOVING TO THE UAE?

1. Tax Advantages in the UAE

Corporate Tax Rate: There is a first-rate regime for corporate tax rates in the UAE. As of June 2023, a corporate tax of 9% shall be imposed upon entities with a taxable income exceeding AED 375,000, while those whose taxable income stands below AED 375,000 are exempt.
Capital Gains Tax-Free: In the UAE, capital gains tax disappears on the disposal of any assets, including shares, real estate, or other investments, providing investors the freedom to profit and liquidate the assets when they set their hearts on it.
Inheritance Tax-Free: Unlike the UK, which imposes inheritance tax, the UAE imposes no inheritance or estate tax, finally providing wealth preservation for the next generation.

2. Strategic Location in the Middle East

Access to Emerging Markets: Given its position, the UAE gives entry to Middle East, African, and South Asian markets to offer a strategic exit point to UK businesses expanding into these regions.
World-Class Infrastructure: Being well equipped with the best infrastructure, the UAE presents logistical advantages that are prime requirements of global businesses.

3. Business-Friendly Environment

Easy Doing of Business: The UAE government sees the ease of business set-up as “easy”, in particular due to the absence of red tape. Establishing a business in any of the Free Zones usually takes a matter of weeks and is supported by a simplified legal and regulatory regime.
Attractive Free Zones: In exchange for tax exemption and enticing business proliferation with 100% foreign ownership, the Free Zones present suitable business environments. Free Zones are designed to attract foreign businesses; therefore, the UAE markets itself as a regionally favourable location for UK businesses wishing to go regional.

Expert advice is mandatory for analysing tax implications, and we provide tax services in the UAE that ensure compliance optimisations to your tax position.

TAX COMPARISON BETWEEN THE UK AND UAE FOR CORPORATES AND INDIVIDUALS

Tax Type	United Kingdom	United Arab Emirates
Corporate Tax	The corporate tax rate is 25%, applicable on profits that exceed £250,000. The small profits rate of 19% applies to profits less than £50,000.	As of June 2023, UAE corporate tax will apply at a rate of 9% only on profits above AED 375,000. Profits below this amount will not be subject to any tax.
VAT	The VAT rate in the UK is 20% on most goods and services.	The UAE's VAT rate of 5% is comparatively low, rendering it more attractive than a VAT rate of 20% in the UK.
Dividend Tax	As a rule, UK companies must account for tax on dividends once paid to the shareholders. UK taxpayers will pay tax on dividends ranging from 7.5% to 38.1% depending on their income band.	There is no withholding tax on dividends in the UAE, which makes it attractive for foreign investors to repatriate profits home without incurring further tax charges.
Capital Gains Tax	The UK taxes capital gains from the sale or disposal of capital assets, such as shares, property, or other capital assets. There is a maximum rate of 20% capital gains tax for individuals on the sale of property and resales of property, with tax rates ranging from 10% to 28%, depending on the nature of the property or share and the income band on a taxpayer's income.	The UAE has no capital gains tax on the sale or disposal of any assets, including shares, property or other capital assets.
Personal Income Tax	Income tax in the UK is progressive. 0% for income up to £12,570 (personal allowance) 20% on income between £12,571 and £50,270 40% on income between £50,271 and £150,000 45% on income over £150,000	There is no personal income tax levied in the UAE on wages, salaries, or any other income, meaning individuals get to keep a full 100% of their earnings.
Inheritance Tax	The UK imposes an inheritance tax of 40% on estates exceeding £325,000.	The UAE imposes no inheritance or estate tax.

CONCLUSION

The UAE offers an extremely potent tax environment for UK firms and individuals, including no personal income tax, low corporate taxes, no capital gains tax, and various business incentives. On top of that, the strategic location, modern-world infrastructure, and smooth bureaucracy in the UAE make it a super attractive place for any UK company aiming at an expansion road.

If your UK business is thinking about setting up in the UAE, we advise consulting experts to ensure compliance and make full benefits available. Creation Business Consultants helps businesses in the UAE navigate through tax laws and optimise their tax position for the growth of their business.

At Creation Business Consultants, we specialise in assisting businesses to understand tax regulations and optimise their tax position in the UAE. If you would like to know more about it, please do get in touch with our expert consultants and avail a free consultation session. They will discuss the details of regulations with you so that you are conscious of the possibilities of compliance issues.