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Why Dubai is Tax Free
- aafra9
- 3 days ago
- 4 min read
Updated: 1 day ago
Why Dubai is Tax Free? A Closer Look for UK Entrepreneurs
For years, Dubai has been making headlines as a haven for entrepreneurs, investors, and ambitious professionals—and not just because of its glittering skyline. One of the biggest draws? It's an incredibly favorable tax system. So, what does “tax-free” Dubai really mean and why does it exist?
Let’s break it down, especially for our readers in the UK wondering if it’s worth making the move 👇
🌴 What Does “Tax-Free” in Dubai Really Mean?
Dubai is often called “tax-free” because it does not levy personal income tax on individuals. That means if you work or run a business there, your salary and profits are not taxed the way they are in the UK. Sounds like a dream, right?.
But there’s more nuance to it:
No personal income tax
No capital gains tax
No withholding tax
No inheritance tax
A low 9% corporate tax, only on profits over AED 375,000 (£80,000 approx.)
The reasons why Dubai is Tax Free are as follow:
1. Oil-Funded Foundations
Dubai, and the UAE more broadly, have historically relied on oil revenues to fund public services and infrastructure, allowing them to build a stable economy without needing to tax citizens heavily.
2. Business Magnet Strategy
Low taxes have helped Dubai become a global magnet for entrepreneurs, multinational corporations, and tech startups. It’s a deliberate strategy to diversify the economy away from oil.
3. World-Class Free Zones
Dubai offers over 40 Free Zones—special economic areas where businesses can enjoy:
0% corporate tax (in many cases)
100% foreign ownership
Easy repatriation of profits
Simplified setup processes
Thinking of Expanding or Moving Your Business to Dubai from the UK?
PKPI Chartered Accountants will walk you through it—and do it for you. From choosing the right Free Zone to managing compliance and setup, pkpi.uk has got your back every step of the way.
FAQs
1. Is it really 0% income tax in Dubai?
Yes! For individuals, there’s no income tax on your salary or personal income in Dubai.
2. What about corporate tax?
As of 2025, a 9% corporate tax applies only to businesses earning over AED 375,000 (£80,000) annually. Below that you are free from tax
3. Can I still live in the UK and register a business in Dubai?
You can register a company remotely in Dubai, but for tax benefits, you’ll likely need to show that your residency and operations are based there.
4. Are there taxes on dividends or capital gains?
Nope. Dubai doesn’t tax capital gains, dividends, or interest income, which is why many UK investors and property buyers are eyeing it.
5. Is VAT applicable in Dubai?
Yes, 5% VAT applies to most goods and services. However, it’s still one of the lowest VAT rates globally.
6. How Much Does It Cost to Start a Business in Dubai?
Starting a business in Dubai can cost anywhere from £1,500 to £6,000+, depending on the type of license, location (Free Zone or Mainland), visa requirements, and business activity.
But here’s the good news:
👉 PKPI Chartered Accountants offers complete company formation services for just £1,500 all-in -one of the lowest setup prices in the world. 📞 Schedule your free consultation today
That includes:
Business license
Trade name reservation
Document preparation
Local government coordination
Business setup consultation
No stress. Just expert service from a UK-chartered firm that understands both the British and UAE business environment.
️ 7. What’s Better for UK Expats? Free Zones or Mainland
Both Free Zones and the Mainland in Dubai offer great opportunities, but they cater to different needs. Let's dive into the difference
Feature | Mainland | Free Zone |
Ownership | 100% (most activities) | 100% (always) |
Market Access | UAE-wide + globally | Limited to zone + global trade |
Sponsor Needed | No (for most activities) | Never |
Setup Speed | Moderate to fast | Very fast |
Cost | Medium to high | Low to medium |
Best For | B2B/B2C, service, real estate | Tech, e-comm, startups, remote |
So, Which One Is Right for You?
Choose Mainland if you want to serve clients across the UAE or open a retail location
Choose Free Zone if you’re running a digital business, consultancy, or starting lean
Let PKPI Chartered Accountants experts decide for you
We help UK entrepreneurs like you register in both Mainland and Free Zones — and handle everything for just £1,500, the lowest price in the world
Not sure what is right for you?
🇦🇪 Do I Need a Local Sponsor in Dubai?
It depends on the type of business and where you want to register.
As of recent UAE laws, many activities no longer require a local sponsor, especially in:
Professional services
Tech, consultancy, and media sectors
Free Zones (which never required sponsors)
Mainland companies in previously restricted sectors can now be 100% foreign-owned — a huge win for UK expats.
Still confused? You’re not alone!
That’s where PKPI Chartered Accountants comes in. We’ll:
Clarify if your business type qualifies for 100% ownership
Handle the legal structuring
Set everything up for just £1,500 — the most competitive rate worldwide.
100% ownership. Zero confusion. Complete setup with PKPI.
Your Tax-Friendly Future Starts Here
With no personal income tax, generous corporate exemptions, and world-class infrastructure, Dubai is quickly becoming the go-to launchpad for UK-based entrepreneurs and professionals.
Let PKPI help you take that leap.
👉 Visit pkpi.uk and schedule a free discovery call today.
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