Is Dubai (UAE) Tax-Free? Income Tax, Corporate Tax, VAT and the Japanese Taxes That Remain [2026]

The United Arab Emirates (UAE), home to Dubai, is a country where individuals pay no income tax on their salary or investment gains. On the other hand, a 9% corporate tax has applied to financial years starting on or after June 2023, and 5% VAT (value added tax) has been in place since 2018. In daily life, Dubai residents also bear costs such as a housing fee equal to 5% of their rent, a 4% registration fee when buying property, and road tolls, so it is not true that there are "no taxes at all". Even more important: living in Dubai does not automatically end your Japanese tax obligations. Whether you are a resident of Japan is judged by where the "center of your life" is; on departure, people holding JPY 100 million or more in securities are subject to exit tax; and Japanese inheritance and gift tax can reach overseas assets until 10 years have passed since leaving Japan. Based on information published by the UAE government, the UAE Federal Tax Authority (FTA) and Japan's National Tax Agency, this article explains how tax actually works in the UAE and which Japanese taxes remain.

*Amounts and rules are as of October 11, 2026. This article is an English version of our Japanese guide, adapted for foreign residents of Japan and international investors. Our office does not provide application support for UAE residence visas.

For an overview of moving to Dubai (UAE) and a list of related articles, see Moving to Dubai: requirements and costs.

Summary: taxes the UAE does not have, taxes it does have, and Japanese taxes that remain

It is true that the UAE has few taxes, but the idea that "moving your address to Dubai makes Japanese tax disappear" is wrong. To fall outside Japanese tax, you need to actually move the center of your life to the UAE and complete the procedures on the Japanese side, and for inheritance and gift tax, 10 years have to pass.

Overview of UAE taxes: no personal income tax, but corporate tax and VAT

The UAE government's official portal states clearly that the UAE does not levy income tax on individuals. The number of Japanese nationals living in the UAE was 5,300 (as of October 1, 2025, Japan's Ministry of Foreign Affairs), up 11% on the previous year. Individual income such as salary, gains from shares and deposits, and rent from property is not taxed in the UAE. For the corporate tax introduced in 2023, Cabinet Decision No. 49 of 2023 provides that individuals' wages, personal investment income and real estate investment income are not counted as business turnover, so the personal income of employees and investors is outside its scope.

The main federal taxes in the UAE are the following three (in addition, a top-up tax for large groups has applied since 2025).

On top of these, the Emirates of Dubai and Abu Dhabi charge their own fees (housing fee, tourism fees, property registration fees, etc.). The image of a "tax-free country" is correct as far as personal income tax goes; it is more accurate to understand that there is a certain burden on companies, consumption and daily life. For a comparison with other countries without income tax or that do not tax foreign income, see Low-tax countries ranking.

Corporate tax: who pays it? Individuals in business, free zones and large groups

Rate and scope

The corporate tax rate is 0% on the portion of taxable income up to AED 375,000 and 9% on the portion above it (Cabinet Decision No. 116 of 2022). According to the UAE Ministry of Finance, Federal Decree-Law No. 47 of 2022 applies to financial years starting on or after June 1, 2023. For example, for a company with a December year-end, the first taxable financial year is the one starting January 1, 2024.

An individual (natural person) who conducts business in the UAE also becomes subject to corporate tax if their business turnover in a calendar year exceeds AED 1 million. However, as explained in the previous section, salary, personal investment income and real estate investment income are not included in this turnover.

Small Business Relief

Residents (individuals and companies) with revenue of AED 3 million or less can elect "Small Business Relief", under which they are treated as having no taxable income for that tax period. The relief is available for tax periods ending on or before December 31, 2026 (Qualifying Free Zone Persons and constituent companies of large multinational groups are excluded). Revenue must be AED 3 million or less not only in the current period but in all previous tax periods; once the threshold is exceeded, the relief can no longer be used.

Free zone companies

A company set up in a free zone (special economic zone) is taxed at 0% on its qualifying income if it meets the conditions of a "Qualifying Free Zone Person". The conditions include having adequate substance in the free zone, earning qualifying income, complying with the arm's length principle for transfer pricing, and preparing audited financial statements. If non-qualifying revenue exceeds 5% of total revenue or AED 5 million, whichever is lower, the company loses its status and is subject to 9% for five tax periods. It is not as simple as "free zone means no tax".

15% minimum tax for large groups

For financial years starting on or after January 1, 2025, a "Domestic Minimum Top-up Tax" that brings the effective tax rate to at least 15% applies to multinational groups with consolidated revenue of EUR 750 million or more. It corresponds to the OECD global minimum tax (Pillar Two), and the Federal Tax Authority published a guide on its scope and registration on October 7, 2026. It does not affect small businesses or individuals, but it shows that the UAE tax system keeps changing in line with international rules.

VAT, excise tax and the "tax-like fees" of living in Dubai

VAT (value added tax) at 5%

VAT was introduced on January 1, 2018 with a standard rate of 5%. It applies to shopping, eating out and service charges, and is lower than Japan's 10% consumption tax. Businesses must register if their annual taxable supplies and imports exceed AED 375,000, and may register voluntarily above AED 187,500.

Excise tax

This tax is levied on goods harmful to health: tobacco products, e-cigarettes (devices and liquids) and energy drinks are taxed at 100%. From January 1, 2026, sweetened drinks (including carbonated drinks) moved to a volume-based tax according to sugar content, and the previous "50% on carbonated drinks" category was abolished. Drinks with 8 g or more of sugar per 100 ml are taxed at AED 1.09 per liter, those with 5 g or more but less than 8 g at AED 0.79, and those with less than 5 g or only artificial sweeteners at AED 0 (Cabinet Decision No. 197 of 2025).

Fees you pay when living in Dubai

Even if they are not called taxes, people living in Dubai bear costs such as the following.

For example, if you rent a home for AED 120,000 a year, the housing fee is AED 6,000 a year. The housing fee and property registration fee are large amounts, so they should be included from the start when estimating living or purchase costs.

Becoming a UAE tax resident, and the Tax Residency Certificate

Since the UAE has no personal income tax, becoming a UAE resident does not create any income tax burden. Even so, there are situations where you need proof that you are a UAE tax resident, such as when claiming benefits under the tax treaty with Japan, or as one piece of evidence that you are a non-resident on the Japanese side.

Cabinet Decision No. 85 of 2022 (in force from March 1, 2023) provides that an individual is a UAE tax resident if any of the following applies.

1. Their usual place of residence and the center of their financial and personal interests are in the UAE
2. They stayed in the UAE for 183 days or more in a consecutive 12-month period
3. They stayed in the UAE for 90 days or more in a consecutive 12-month period, hold a UAE residence permit (or UAE/GCC nationality), and either have a permanent place of residence in the UAE or are employed or conduct business in the UAE

The Tax Residency Certificate is issued by the Federal Tax Authority. An individual's application requires a passport, residence permit, Emirates ID, attested tenancy contract, proof of income, six months of local bank statements, entry and exit records and so on. The fee is AED 1,000 for individuals without tax registration. The Federal Tax Authority's guidance page refers to "at least 180 days of residence", which is worded differently from the legal 183-day and 90-day tests, so check the latest guidance when applying.

Japanese tax that remains (1): if you are still a Japanese "resident", your worldwide income is taxed even while living in Dubai

The most important question for Japanese income tax is whether you are a "resident" or a "non-resident" of Japan. Residents are taxed in Japan on all income from inside and outside Japan, while non-residents are taxed only on income arising in Japan (Japan-source income).

According to the National Tax Agency, a resident is "an individual who has a domicile in Japan, or who has continuously had a residence in Japan for one year or more up to the present". Domicile means "the center of the individual's life" and is judged on objective facts. It is not decided by formalities alone, such as whether you have deregistered your Japanese resident record, hold a UAE residence permit (including a Golden Visa), or have obtained a UAE Tax Residency Certificate.

A person who goes to live abroad is presumed to have no domicile in Japan in cases such as the following.

• They have an occupation abroad that normally requires living there continuously for one year or more
• They hold a foreign nationality or permanent residence, have no spouse or relatives sharing their livelihood in Japan, and there are no facts suggesting they will return to live mainly in Japan

Conversely, if your family stays in Japan, the center of your work and assets is in Japan, and you spend only a few months a year in the UAE, you may be judged a Japanese resident even if you hold a Golden Visa. If you want to reduce tax by moving to Dubai, the first thing to check is not the UAE system but whether you will actually cease to be a resident of Japan in substance.

Japanese tax that remains (2): exit tax, inhabitant tax and Japan-source income of non-residents

Exit tax (taxation on departure)

For people leaving Japan on or after July 1, 2015 who hold JPY 100 million or more in securities and similar assets (shares, investment trusts, silent partnership interests, unsettled derivative transactions, etc.) at the time of departure and who had a domicile or residence in Japan for more than 5 years within the 10 years before departure, income tax is imposed on unrealized gains at the time of departure (National Tax Agency). Assets in NISA accounts are included in the JPY 100 million test. If you appoint a tax agent and provide collateral, payment can be deferred for 5 years (10 years on application), and if you return to Japan within the deferral period while still holding the assets, the tax can be cancelled.

Many wealthy individuals considering a move to Dubai fall within the scope of this exit tax, so the departure date and how assets are held should be worked out with a tax accountant before leaving.

Inhabitant tax

Inhabitant tax is levied on people who have an address in Japan on January 1, based on the previous year's income (Ministry of Internal Affairs and Communications). Even if you leave on or after January 2, you must pay that year's inhabitant tax. For any amount that cannot be paid before departure, you appoint a tax agent and notify the municipality.

Japanese tax that remains after becoming a non-resident

Even as a non-resident, income arising in Japan is subject to Japanese tax. The main types and withholding rates are as follows (National Tax Agency).

*From 2027 onward, a special defense income tax (1% of the withholding income tax) is added and the special reconstruction income tax is reduced to 1.1%, so the combined rates (such as 20.42%) stay the same.

Japanese tax that remains (3): inheritance and gift tax reach overseas assets until 10 years after leaving Japan

The idea that "if you live in a country with no inheritance tax, you won't pay inheritance tax" often does not hold for people leaving Japan. For a list of countries without inheritance tax and the "10 years for both parent and child" condition under which overseas assets fall outside Japanese tax, see Countries with no inheritance tax and the 10-year rule.

According to the National Tax Agency, an heir without an address in Japan is in principle taxed only on assets located in Japan. However, for Japanese nationals: if the heir has Japanese nationality and had an address in Japan at any time within 10 years before the date of death, all assets in and outside Japan are taxable. In addition, even if the heir has not had an address in Japan for 10 years or more, if the deceased had an address in Japan within the past 10 years, overseas assets are still taxed.

In other words, even if a parent and child move to Dubai together, all assets, including property and deposits in the UAE, remain subject to Japanese inheritance tax until 10 years have passed since both the parent and the child left Japan. Gift tax follows the same framework: if either the donor or the recipient had an address in Japan within the past 10 years, gifts of overseas assets are also taxable. Temporary departures such as study abroad or business trips are treated as still having an address in Japan.

If you are moving to Dubai to reduce inheritance tax, the plan has to assume that the whole family actually moves their residence and that a 10-year period passes. The fact that the UAE has no inheritance tax is a separate matter from Japanese inheritance tax ceasing to apply.

The Japan–UAE tax treaty: dividend and interest rates and Japanese pensions

Japan and the UAE have a tax treaty signed in 2013 that entered into force on December 24, 2014 (Japan's Ministry of Foreign Affairs). For taxes withheld at source, it applies to payments made on or after January 1, 2015. Its main provisions are as follows.

Article 17 of the treaty provides that pensions "shall be taxable only in the State" in which the beneficial owner is resident. Read on its own, this suggests there is room for a UAE tax resident receiving a Japanese National Pension or Employees' Pension to be exempted from Japan's 20.42% withholding by submitting an "Application Form for Income Tax Convention" to the Japan Pension Service. However, pensions paid for services rendered to a government are in principle taxed in Japan under Article 18. Also, because the UAE has no personal income tax, whether an individual living in the UAE is a "resident" under Article 4 of the treaty (a person liable to tax under UAE law) is a matter of disputed interpretation, and treaty benefits may not be granted. Confirm the filing procedure and your individual treatment with the Japan Pension Service and a tax accountant. Compared with countries such as Thailand, whose treaty with Japan has no pension article, having a pension article is relatively favorable.

Note that from January 1, 2020 (for taxes withheld at source), the Multilateral Instrument (MLI) to prevent BEPS also applies to this treaty, and treaty benefits are denied for arrangements whose principal purpose is to obtain those benefits.

FAQ

If I live in Dubai, will I stop paying Japanese income tax?

If you become a non-resident of Japan, you will no longer pay Japanese income tax except on income arising in Japan. However, whether you are a non-resident is judged by "the center of your life", not by your resident registration or visa. If the center of your family or work remains in Japan, you may be judged to still be a resident.

Is tax in Dubai really zero?

Personal income tax is zero. However, there is 9% corporate tax (on taxable income above AED 375,000), 5% VAT and excise tax, and Dubai also has fees such as the housing fee of 5% of rent and the 4% property registration fee.

Does a free zone company pay no corporate tax?

A 0% rate applies to qualifying income only if the company meets the conditions of a Qualifying Free Zone Person (substance, qualifying income, transfer pricing, audited financial statements, etc.). If it fails the conditions, it becomes subject to 9% and cannot regain qualifying status for five tax periods.

If I move to Dubai, will I avoid Japanese inheritance tax?

Until 10 years have passed since both the heir and the deceased left Japan, all assets, including overseas assets, are subject to Japanese inheritance tax. The UAE having no inheritance tax is separate from Japanese inheritance tax ceasing to apply.

What happens to my Japanese pension in Dubai?

Japanese pensions can be received while living abroad. Non-residents are in principle subject to 20.42% withholding, but because the Japan–UAE tax treaty provides that pensions are taxed only in the country of residence, there is room for an exemption by filing an application. However, since the UAE has no personal income tax, whether you qualify as a "resident" under the treaty is disputed, and government service pensions are treated differently. For details, see Can you retire abroad on a Japanese pension?

From what amount does the exit tax apply?

It applies to people who hold JPY 100 million or more in securities and similar assets at the time of departure and who lived in Japan for more than 5 of the 10 years before departure. NISA holdings are included in the test. Payment can be deferred by appointing a tax agent and providing collateral.

Summary

• The UAE has no personal income tax, and no federal law imposes inheritance, gift or capital gains tax on individuals
• On the other hand, there is 9% corporate tax (for financial years from June 2023), 5% VAT and excise tax, and Dubai has costs such as the housing fee of 5% of rent and the 4% property registration fee
• Whether you fall outside Japanese tax depends on "the center of your life", not on your visa or resident registration alone
• People holding JPY 100 million or more in securities face exit tax; if you are in Japan on January 1 you pay inhabitant tax; and income from Japanese property or work in Japan is subject to withholding even for non-residents
• Inheritance and gift tax reach overseas assets until 10 years have passed since both you and your family left Japan
• The Japan–UAE tax treaty taxes pensions in the country of residence, but because the UAE has no income tax, whether you qualify as a treaty resident is disputed

Related articles: Is there permanent residence in Dubai? Golden Visa requirements and costs / Why people regret moving to Dubai / Tax and resident registration when moving abroad from Japan / Best countries to move abroad / How much residency and citizenship cost by country

References (primary sources)

• UAE Government Portal: Taxation (no income tax on individuals)
• UAE Government Portal: Other taxes (Tourism Dirham and hotel surcharges)
• UAE Ministry of Finance: Corporate Tax (effective date and free zones)
• UAE Ministry of Finance: Corporate Tax FAQ (Small Business Relief; salaries out of scope)
• UAE Ministry of Finance: Cabinet Decision No. 116 of 2022 (corporate tax rates)
• UAE Ministry of Finance: Cabinet Decision No. 49 of 2023 (business activities of natural persons and corporate tax)
• UAE Ministry of Finance: Domestic Minimum Top-up Tax
• UAE Federal Tax Authority: guide on the Top-up Tax published (October 7, 2026)
• UAE Government Portal: VAT (January 1, 2018; 5%; registration thresholds)
• UAE Ministry of Finance: Cabinet Decision No. 197 of 2025 on excise tax rates (effective January 1, 2026)
• UAE Federal Tax Authority: excise tax on sweetened drinks (volume-based from January 1, 2026)
• UAE Legislation Portal: Cabinet Decision No. 85 of 2022 (tax residency)
• UAE Federal Tax Authority: issuance of Tax Residency Certificate
• Dubai Land Department: 4% sale registration fee
• Dubai Eye 103.8: variable Salik and parking tariffs (RTA announcement, November 28, 2024)
• Khaleej Times: 5% VAT on Salik from June 1, 2026
• Bayut: Dubai Municipality housing fee (5% of rent)
• Japan's Ministry of Foreign Affairs: entry into force of the Japan–UAE tax treaty (2014)
• Japan's Ministry of Foreign Affairs: text of the Japan–UAE tax treaty
• Japan's Ministry of Finance: the Japan–UAE tax treaty and the MLI
• National Tax Agency: residents and non-residents (Tax Answer No. 2875)
• National Tax Agency: presumption of domicile (Tax Answer No. 2875 annex)
• National Tax Agency: exit tax (taxation on departure)
• National Tax Agency: when an heir lives abroad (Tax Answer No. 4138)
• National Tax Agency: when a gift recipient lives abroad (Tax Answer No. 4432)
• National Tax Agency: withholding on public pensions paid to non-residents (Tax Answer No. 2884)
• National Tax Agency: taxation of non-residents (Tax Answer No. 2873)
• Ministry of Internal Affairs and Communications: individual inhabitant tax (address on January 1)
• Japan's Ministry of Foreign Affairs: Annual Report of Statistics on Japanese Nationals Overseas (as of October 1, 2025)

Amounts and rules in this article are as of October 11, 2026.