In the midst of the Indian fiscal debate, this is how Dubai generates income despite its tax free appeal

The debate on whether high taxes make wealth a burden has revived discussions on global tax models. As India Delibera on a possible tax exemption of up to ₹ 12 Lakh, many have indicated the Dubai zero personal income tax policy, which allows residents to maintain all their profits. The comparison has led to a closer look at how Dubai holds its economy without taxing individual income while maintaining one of the most luxurious lifestyles in the world.

Dubai has been known for a long time for his futuristic horizon and economic prosperity, but his tax free gains policy makes it an even more attractive destination for people. Residents, including expatriates, do not pay the personal income tax, which gives them total control over their profits. This system allows greater available income, more investment opportunities and, in some cases, allows expatriates to claim the Fiscal Residence of the EAU to optimize their tax obligations in their countries of origin.

Despite the absence of individual income tax, Dubai has established a structured tax system for specific companies and sectors. In 2023, the EAU introduced a 9% corporate tax on commercial gains that exceed 375,000 AED. Meanwhile, oil companies are imposed on rates ranging from 55%to 85%, and foreign banks are subject to a 20%fixed corporate tax.

Other sources of income include an added value tax (VAT), implemented in 2018, which applies to most goods and services. In addition, municipal taxes apply to public property and services invoices, while the tourism sector contributes through taxes imposed on hotels, restaurants and services related to travel.

Dubai maintains its appeal to entrepreneurs by providing tax exemptions for new companies and small businesses that earn less than 375,000 AED. This exemption supports business growth and attracts investors while ensuring that the largest corporations contribute to the government’s income model.

Dubai also benefits from double tax agreements (DTA) with more than 100 countries, including the main economies such as the United Kingdom, India and the United States. These agreements prevent people and companies from being taxed twice on the same income, which reinforces Dubai’s reputation as a friendly business center.

While residents enjoy a tax -free salary ecosystem, Dubai’s structured fiscal model on companies and industries guarantees constant government income, maintaining their position as a global economic power.