Property Tax System

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Want to set up a Business in the UAE - Here’s what you have to do Dubai Property Tax System – Where does it stand in comparison to others?

To start with, there is absolutely no taxation on properties in Dubai.

In a report published by one of the UK’s leading property firm Knight Frank that compares property taxes in 15 countries, the results were surprising. The report showed that people buying properties in Dubai have to pay the lowest amount of taxes, which in a way makes it one of the most preferred destinations, for property-related investment.

Is Dubai“Tax-Free”?

You might find it tough to believe, but Dubai is a “No Tax” Emirate, and this is why it is popular with most of the expatriates as well as end-users.

As it generates surplus revenues from oil and other trades, it doesn’t have to rely on direct taxation to source income.

However, this doesn’t mean that you get any sort of exemption. For a change, Dubai does levy a monthly “housing fee” (commonly known as municipality tax), in addition to a transfer fee of 4%.

Most important of all, it is mandatory for the property owners to pay 5% of the average rental value in the designated area, apart from paying a nominal fee to the Dubai Land Department, upon the transfer of property.

What are the taxes that you are required to pay?

Following are the taxes that you are required to pay.

  • While selling or purchasing a property in Dubai (commercial & residential), you have to pay a one-time registration fee, which is normally 4%. 50% of the fee is to be paid by the seller and the remaining 50% by the buyer. The fee that you have to pay is calculated from the contract- sales purchase price of the property and has to be paid at the Dubai Land Department, on the day of transfer of ownership.
  • When it comes to renting a property in Dubai, there is a tax of 5% from the tenancy contract value. The tax is payable by the tenant of the property and is added automatically to the utility bill issued to the tenant and can be paid in installments along with water and electricity payments.
  • As far as commercial properties are concerned, the payable tax is 10% and the payment is processed in the same manner as that of residential properties.
  • Under the existing regulations, foreigners can buy property in Dubai and use the same for business or private purpose (depends on property type). The property can be purchase in the name of a foreigner or in the name of a company that is registered in the UAE.

Dubai – one of the cheapest destinations for property investment!

If compared to some of the other cities in the world, it is quite evident that Dubai is indeed one of the cheapest cities, in terms of property investment. Because of the simplified system of taxation, it is a favoured destination for investors, since the ROI is much higher and there is a less amount of stress. In short, Dubai is almost like tax heaven for the investors and end-users.

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