Dubai has long been recognized as a strategic business hub with a tax-friendly system for entrepreneurs. For Indonesian businesses seeking international expansion, Dubai offers favorable tax benefits, rapidly growing infrastructure, and opportunities to reach a global market.
In this article, we’ll discuss the types of taxes applicable in Dubai and how Indonesian entrepreneurs can leverage them for business growth.
Read Also: Business Guide in Dubai: Expansion Opportunities for Indonesian Entrepreneurs
Tax System Benefits for Entrepreneurs in Dubai
One key attraction for entrepreneurs is the absence of personal income tax in Dubai. Residents are not subject to income tax, making it an appealing destination for international professionals. However, certain business taxes do apply, though they remain relatively low compared to other countries.
Dubai imposes a Corporate Tax (CT) of 9% on net profits of companies operating on the mainland, with a minimum annual income threshold of AED 375,000 (around IDR 1.6 billion) before taxes are applied. This means smaller businesses with income below this threshold are exempt from Corporate Tax.
Additionally, businesses operating in free zones are not subject to Corporate Tax, provided they comply with regulations specific to these areas. This benefit allows entrepreneurs to save on taxes and allocate resources for business expansion.
Beyond Corporate Tax, a Value Added Tax (VAT) of 5% also applies in Dubai. This tax is levied on goods and services, with certain exceptions. Businesses with an annual turnover exceeding AED 375,000 must register as VAT collectors. However, some free zones have designated areas called “Designated Zones”, where transactions of goods within these zones are VAT-free, creating an attractive tax-saving opportunity for entrepreneurs.
Read Also: Business Opportunities in Dubai and Potential Sectors
Additional Tax Policies
Dubai also follows Transfer Pricing (TP) guidelines in line with OECD standards, which regulate pricing for goods and services sold between divisions or subsidiaries within the same business group. TP rules require related-party transactions to adhere to the “arm’s length” principle, or fair market price, ensuring transparency and fairness in intercompany transactions.
Moreover, a Real Estate Transfer Fee of 4% is imposed on each property sale transaction in Dubai. This fee is typically borne by the buyer, though it may be negotiated between the buyer and seller. For Indonesian entrepreneurs planning to invest in property as part of their expansion, this fee should be considered in the budget.
Opportunities for Indonesian Entrepreneurs in Dubai
With a straightforward tax system and a vast market potential, Dubai is an ideal destination for Indonesian entrepreneurs looking to expand internationally. As a global business center, Dubai provides extensive business networks, access to global markets, and ease in establishing enterprises. Additionally, with tax-free benefits in some free zones, entrepreneurs can maximize their profits with ease.
However, it’s crucial for all businesses to observe legal requirements when establishing a business in Dubai. Strict regulations and tax compliance are necessary to ensure smooth business operations.
Also read: Complete Guide to Register a Business in Dubai
Business Expansion to Dubai with vOffice
To assist Indonesian entrepreneurs in managing all legal requirements in Dubai, vOffice is here as a trusted partner. vOffice offers comprehensive services, from business entity establishment to virtual office provisioning and legal consultation, helping streamline your business setup process.
As the first Indonesian office service provider to expand into Dubai, vOffice also collaborates with the Dubai Chamber through the Global Partnership Programme launched as the Dubai Global Gateway Forum. This forum aims to simplify investment and business establishment for Indonesian entrepreneurs in Dubai.
With over 50,000 clients served in Indonesia, ISO 9001 certification, and a Customer Satisfaction Guarantee, vOffice is the right partner for Indonesian entrepreneurs entering Dubai’s market. Whether you need assistance with documentation or legal compliance, vOffice provides reliable solutions at every step of your business expansion into Dubai.
Dubai is your gateway to the global market, and with vOffice support, Indonesian entrepreneurs can achieve success in this competitive international market.
Check the vOffice Dubai page for complete details.
Contact the vOffice Dubai team now and get special offers!
Reference:
investindubai.gov.ae – Dubai Department of Economy and Tourism
