This Muslim country has 0% income tax, then how does it earn money?
Dubai, which is part of the United Arab Emirates (UAE), is famous all over the world for its attractive tax system, especially for businesses and investors. But do you know there is no income tax on citizens living in Dubai. Then what is the source of income of the government?
That is, there is 0% tax on their salary. This makes Dubai a favorite place for people with high salary packages. Earlier, some companies in Dubai did not have to pay corporate tax. But from 2023, the UAE has implemented a 9% corporate tax for some companies.
How the company pays taxes?
This tax applies only to companies whose annual income exceeds 3,75,000 AED (approximately ₹88 lakhs). There was no VAT in Dubai before 2018, now 5% VAT is applicable. This tax is levied on the purchase of goods and services.
Some essential items like healthcare, education, and food items have low or zero VAT. Imported goods attract a custom duty of around 5%, while tobacco, energy drinks, and sugary drinks attract taxes ranging from 50% to 100%. Hotel stays attract a tax of up to 10%.
Companies in Dubai's free zone areas get huge tax exemptions. Here companies have the facility of 100% foreign ownership and 0% tax.
What is Salik Toll?
Dubai has an electronic toll road system that automatically deducts a fee of 4 dirhams when you pass through the toll gate. It was launched on 1 July 2007.
People living on rent in Dubai pay 5% (1bhk), 10% (2bhk) of the rent which is added to the water and electricity bills, which is fixed.
The rules and regulations in Dubai are very strict and if they are broken, then one has to pay a heavy penalty and pay a hefty amount. This is how Dubai earns its income.
Breaking traffic rules in Dubai can result in a fine ranging from 400 UAE Dirhams (AED) to 50,000 AED.
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