Expat Taxes in the United Arab Emirates

The United Arab Emirates (UAE) is widely seen as a tax-friendly jurisdiction for residents and expatriates alike. This overview outlines the main UAE tax features (direct and indirect), then highlights typical US filing obligations for American citizens in the UAE (core returns and ancillary forms), along with key watchpoints (VAT, corporate tax, excise).

UAE tax landscape

Traditionally, the UAE imposes no federal personal income tax on individuals: no tax on salaries, no general withholding, no capital gains tax for individuals. However:

• A VAT of 5% has applied since 2018 (mandatory registration if taxable supplies exceed AED 375,000/year; voluntary registration possible above AED 187,500).
• A corporate tax (CT) of 9% applies for years starting in 2023, with 0% up to AED 375,000 of taxable profit and special regimes (qualifying freezone persons, sector specific rules).
• Excise taxes apply to certain products (tobacco, energy and sweetened drinks, electronic smoking devices).

Separate local rules continue for upstream hydrocarbons and branches of foreign banks.

US citizens living in the UAE

US persons remain subject to US filing obligations wherever they reside. Common filings include:

• Form1040 (US individual income tax return): due 15 April; an automatic extension to 15 June applies for expats, with a further extension to 15 October on request.
• FATCA – Form8938: required if foreign financial assets exceed thresholds, varying by marital status and residency.
• FBAR – FinCEN Form 114: if the aggregate of nonUS bank/financial accounts reaches $10,000 at any time; file electronically via the FinCEN BSA EFiling System (15 April due date with an automatic extension to 15 October).

The existence of UAE VAT and CT does not waive US filings. Foreign Tax Credits are often not applicable for UAE employment income (no local income tax), though other US regimes may help (Foreign Earned Income Exclusion, Foreign Housing).

UAE tax residency

UAE residency typically considers days of presence (e.g., 183day tests), residence permits and, in some cases, continuous presence over 12 months. Residents generally do not file a local personal income tax return; however, indirect taxes (VAT/excise) and corporate tax may apply depending on activities.

VAT: practical pointers

• Registration: mandatory if taxable supplies/imports exceed AED 375,000; voluntary between AED 187,500 and 375,000.
• Rate: 5% (with a number of 0% supplies).
• Zerorating: exports outside the GCC, international transport and related supplies, ships/aircraft, investmentgrade precious metals, newly built residential property, education and healthcare (subject to conditions).
• Refunds for visitors/foreign businesses may be available.

Corporate and other taxes

• CT: 9% (0% up to AED 375,000). Registration and annual filing via EmaraTax; special freezone regimes subject to conditions.
• Excise: on goods deemed harmful (tobacco, energy/sugary drinks, ecigarettes, etc.).

US treaties and social security

There is no USUAE income tax treaty and no totalization agreement. US employees in the UAE are not typically liable for UAE social security contributions and remain governed by US rules depending on their circumstances.

Best practice for US expats in the UAE

• Plan ahead for filing calendars (1040, FATCA, FBAR) and gather evidence (bank statements, asset records).
• Check thresholds for reporting and eligibility for regimes (e.g., Foreign Earned Income Exclusion).
• Assess business related impacts (starting a venture, company ownership) under CT and VAT rules.

For expatriates in the UAE, the local environment is attractive (no personal income tax, a 5% VAT, a structured CT regime), while US compliance remains essential. By mastering UAE rules (VAT, CT, excise) and diligently managing US filings (1040, FATCA, FBAR), you can secure a compliant, efficient crossborder tax position.

Our lawyers who are experts in tax law are available to answer all your questions and provide advice. Our meetings can be held in person or via videoconference. You can make an appointment directly online at www.agn-avocats.fr.

AGN AVOCATS – Tax Law
contact@agn-avocats.fr
09 72 34 24 72