Capital Gains Taxation in the United Arab Emirates
The United Arab Emirates (UAE) has a territorial tax system, which means that only income earned within the UAE is subject to taxation. Capital gains are not taxable in the UAE, regardless of the type of asset or investment from which they arise. This includes gains from the sale of real estate, stocks, bonds, and other capital assets.
There is no distinction made between short-term and long-term capital gains in the UAE. All capital gains are treated equally and are not subject to taxation.
The UAE's tax system is designed to encourage investment and economic growth. By not taxing capital gains, the UAE makes it more attractive for individuals and businesses to invest in the country. This helps to create jobs, boost the economy, and improve the standard of living for all UAE residents.
Legal Framework
The UAE's tax system is governed by the Federal Decree-Law No. 7 of 2017 on Tax Procedures. This law does not specifically mention capital gains, but it does state that all income earned within the UAE is subject to taxation. However, the law also provides for a number of exemptions, including an exemption for capital gains.
The exemption for capital gains is found in Article 20 of the Federal Decree-Law No. 7 of 2017. This article states that the following types of income are exempt from taxation:
- Gains from the sale of real estate
- Gains from the sale of shares in a UAE company
- Gains from the sale of bonds issued by the UAE government or a UAE company
- Gains from the sale of other capital assets
This exemption applies to both individuals and businesses.
Policy Objectives
The UAE's policy of not taxing capital gains is designed to encourage investment and economic growth. By making it more attractive for individuals and businesses to invest in the UAE, the government hopes to create jobs, boost the economy, and improve the standard of living for all UAE residents.
The exemption for capital gains is also consistent with the UAE's goal of becoming a regional financial center. By making it more attractive for investors to invest in the UAE, the government hopes to attract more foreign investment and make the UAE a more competitive financial center.
Call to Action
If you are considering investing in the UAE, you should be aware of the country's tax system. The UAE's tax system is designed to encourage investment and economic growth. By not taxing capital gains, the UAE makes it more attractive for individuals and businesses to invest in the country.
If you would like to learn more about the UAE's tax system, you can visit the website of the Federal Tax Authority. You can also contact a tax advisor for more information.
