Capital Gains Tax in the UAE: Exemptions, Corporate Rules & Real Estate Insights

The United Arab Emirates (UAE) has long been recognised as a tax-friendly destination for investors, entrepreneurs, and expatriates. One of the key attractions is the absence of many conventional taxes found in other jurisdictions, including capital gains tax, but what exactly does this mean, and are there any exceptions? Let’s explore the capital gains tax landscape in the UAE.

What is Capital Gains Tax?

Capital gains tax (CGT) is a levy on the profit earned from selling an asset, such as real estate, shares, or a business. In many countries, individuals and corporations are required to pay this tax when they realise a gain from selling such assets.

UAE’s Position on Capital Gains Tax

As of now, the UAE does not impose capital gains tax on individuals. This means:

• Individuals can sell shares, property, or other investments without paying tax on the gains.

  
  

• There is no inheritance or estate tax, making the UAE an attractive jurisdiction for wealth preservation and succession planning.

Corporate Capital Gains Under UAE Corporate Tax Law

While individuals are exempt, corporate entities may be subject to tax on capital gains under the UAE Corporate Tax regime, introduced in June 2023:

• A 9% corporate tax applies to business profits exceeding AED 375,000.

  
  

• Capital gains realised in the ordinary course of business may be included in taxable income.

  
  

• Passive investments (such as long-term shareholdings) may be exempt under certain conditions — for instance, if the company holds at least 5% in another business and meets the participation exemption criteria.

Real Estate Capital Gains

• Individuals: Gains from selling real estate in the UAE are not taxed.

  
  

• Companies: Gains may be taxed if the company is engaged in real estate development or investment, and the profit forms part of the overall taxable business income.

Properties held for personal use by shareholders or directors are generally not subject to tax.

Capital Gains for Foreign Investors

Foreign investors benefit significantly:

• No capital gains tax on shares listed on UAE exchanges.

  
  

• No tax on exit gains from real estate or business shares, unless these are realised via a UAE-based company subject to corporate tax.

  
  

• Double Taxation Treaties (DTTs) between the UAE and other countries may provide additional relief or clarify foreign tax obligations.

Planning & Compliance Considerations

While the UAE remains a highly tax-efficient jurisdiction, companies and investors should:

• Structure their holdings and transactions in line with the new corporate tax laws.

  
  

• Be mindful of transfer pricing, economic substance requirements, and corporate residency tests.

  
  

• Engage with qualified tax advisers to ensure full compliance and optimise their tax position.

Conclusion

The UAE continues to support investment and business growth through its tax-friendly framework. With zero capital gains tax for individuals and a competitive system for corporates, it remains a global hub for wealth and opportunity. However, with the introduction of corporate tax, businesses must stay informed and compliant regarding tax implications on disposals and gains.

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GTAG is your trusted, award-winning adviser for tax strategy, international structuring, and corporate compliance in the UAE.

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At GTAG, we understand the allure of the UAE and the complexities of navigating a new business landscape. We offer a comprehensive suite of services to help you establish yourself and flourish:

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