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10.1. Specific Incentives

The UAEs primary incentives are the general lack of corporate and other taxes, its membership in the Gulf Cooperation Council, and the UAE Free Zones. The following outlines these incentives:

Tax Free Economy

The primary incentive for the UAE is the fact that it is essentially a tax free economy, including no federal corporate tax, no income tax, no withholding tax on outward remittances, no capital gains tax, no value added tax, and no foreign exchange controls.

Only companies engaged in hydrocarbon exploration, production and refinery activities are taxed. The federal rate is 55%, but concessionary rates are usually provided by the Emirate in which a company is located. In addition, foreign banks may be taxed, but the Emirates generally do not impose tax or may provide concessionary rates.

Gulf Cooperation Council Member

The UAE a member of the Gulf Cooperation Council (GCC), providing the benefits of membership to businesses established in the UAE.

UAE Free Zones

Approved companies are allowed to establish in a one of the UAE's free zones, which are typically designated by business sectors. The zones provide several benefits, but are restricted if a company established in such zones wants to operate anywhere in the UAE outside of the zone.

The main benefits of the free zones include:

  • No foreign ownership restrictions
  • Reduced trade barriers, tariffs, and quotas
  • Exemption from taxes and duties levied on profits and production
  • Customs duty exemption
  • Commercial levies exemption
  • No  restrictions on the repatriation of capital profits
  • Depending on the Emirate, most free zones provide corporate income tax exemption for 15 to 50 years