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Banks & Taxes in the UAE
A Comprehensive Guide about Opening a Bank Account and Managing Your Taxes
As an expat, managing your finances in the UAE is a top priority. Essentially a series of oil boom towns and home to an ultra-progressive business sector, the UAE banking sector hosts individuals with a significant capital gain. A UAE residence visa will allow you to open a personal or business bank account. Expats without a residence visa can only open a saving account, but many banks will issue an ATM card that allows you to withdraw money.
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Thanks to its reputation as a “tax-free” country, the UAE has become nearly synonymous with wealth, bank accounts, and tax systems. Expats from around the globe flock to the desert country to either work for a UAE-based company or set up an enterprise of their own and it is no surprise why: without income tax, individuals working in the UAE are able to save more than they would in most of their home countries.
While understanding the few tax schemes that do exist in the UAE can be complicated, opening a bank account in the UAE is not. For most banks, you will only need to present your passport, visa, and letter from your employer stating your salary. There are several different types of banks to choose from, but keep in mind that many require a high minimum deposit. Account holders may incur a steep fine if they drop below that balance, so it is best to move to the UAE with a decent amount of savings to get you started.
How to Open a Bank Account in the UAE
If you want to know how to open a bank account in the UAE for non-residents, you must first be in the country. UAE law dictates that account holders must physically present themselves at the bank in order to confirm their identity and sign documents. The only way to open account and not be physically present is by banking with a large international institution that operates in the UAE, such as HSBC or CitiBank, and visiting your local branch. Dubai also allows the hiring of financial officers to be present in your behalf, but this is not accepted at every bank.
There are 4 types of banks in UAE:
- commercial: locally established banks and branches of foreign banks that offer commercial banking services; provides money for commercial activity, distributing loans, and managing accounts of individuals and enterprises
- industrial: provides loans to individuals and businesses specifically for development purposes; can include a loan needed to start a business
- merchant/investment: engaged in the buying and selling of stocks
- Islamic: banks that adhere to Sharia laws and practices
Can I Open a Bank Account in the UAE?
Once you are in the UAE, opening a bank account as a non-resident is simple. There are few documents required and the process is straightforward. The most important document is your residence visa, which can take several weeks to obtain. Until you receive your residence visa, however, you can open a savings account.
Requirements to Open a Bank Account as a Non-Resident
The UAE allows expats without residence visas to open only a savings account. It is uncommon to receive a check book with this account. Instead, most banks will issue an ATM card so that users can withdraw money while they wait for their residency visa.
Requirements to open a bank account as a non-resident vary from bank to bank, but in general these are the documents you will need to provide:
- passport with the UAE entry stamp (original and copy);
- passport photo;
- completed application form;
- proof that your residency visa, or Emirate ID card, is being processed;
- document stating your employer’s name and salary details;
- letter of recommendation from previous bank;
- letter of No Objection from either your sponsor or employer.
As a non-resident, you may be subject to a minimum or maximum balance. Be extra aware of this as the amount is often high and the penalties for dipping below the balance are stiff.
The process of opening a savings account will take longer than opening a bank account with a residency visa. Do not expect to have access to your savings account right away.
Requirements to Open a Bank Account with a Residency Visa
Once you have your residency visa, you can open a personal bank account or a business bank account. A personal bank account is also called a current account. Like with the savings account, requirements vary from bank to bank, but the standard required documents to open a bank account are:
- your passport with your UAE residency visa (original and copy);
- your Emirates ID card (original and copy);
- documentation of residency in the UAE (this can be a rental agreement, utility bill, or letter of employment);
- and either a salary letter from your employer, an original trade license if you are self-employed, or your spouse’s labor card/work ID (original and copy) if you are on their sponsorship.
In addition to these documents, banks also require you to deposit a certain amount to open an account. On average, banks in the UAE will require between 3,000–5,000 AED (820–1,360 USD).
Setting up a UAE bank account is quick and easy. You should have access to the account within a few hours. If you do not want to leave your home, it is common for banks to provide financial representatives to make house calls in Dubai. Check with your intended bank if this is a service that interests you.
Requirements to Open a Business Bank Account
You can also open a business bank account in the UAE. This is required if you plan to open an onshore or offshore company. Be aware that some banks may require a high minimum balance and the account will be treated as ‘non-resident,’ and therefore have certain limitations. A bank account opened for a local company or a company from a free zone provides you all the benefits and can be opened in any UAE bank.
To open a business bank account in the UAE you must provide the following required documents:
- passport (with residency visa) of the company’s shareholder representative
- copy of the Emirates ID card of the shareholder representative
- passport copy of the company director
- information about the type of activities on the account
- disclosure of the source of funds
- existing contracts
- reference letters from business partners
- business plan
- full set of certified company incorporation documents:
- memorandum and articles
- certificate of incorporation
- shareholders registry
- company extract (from the official company’s registry)
- certificate of good standing
The director of the company or a major shareholder must be physically present when opening the business bank account. It is possible for a lawyer to do this on their client’s behalf, but not always.
Top Banks in the UAE
- Abu Dhabi Commercial Bank
- Dubai Islamic Bank
- Emirates National Bank of Dubai (NBD)
- RAK Bank
Best International Banks in the UAE
- Standard Chartered
Best Online Banks in the UAE
Although opening a UAE bank account online as a non-resident is not possible because of the need to physically go into the bank, these are the best UAE online banking options and apps:
- Abu Dhabi Commercial Bank
- Dubai Islamic Bank
- Emirates NBD
- RAK Bank
Best Savings Account in the UAE
Abu Dhabi Commercial Bank
- Interest rate: up to 2%
- No minimum balance
- Can open account in AED or USD
- E-savings account
- No minimum balance required
- Interest rate: 0.75 – 2%
- Can open the account in AED or USD
- Minimum balance: 1,500 AED (408 USD)
- Interest rate: 2%
- Minimum balance required: 3,000 AED (817 USD)
- Offers: free withdrawal.
- Interest rate: 1%
- Can open the account in AED, EUR, GBP, and USD
United Arab Bank
- Minimum balance required: 3,000 AED (817 USD)
- Interest rate: 2%
- Can open the account in all major currencies
Things to Know
- Some banks include both a bank fee and a minimum deposit. While minimum deposit are usually high, monthly maintenance fees are not. You can expect to pay around 25 AED (7 USD) per month if you choose to bank with a company that charges fees.
- Some no fee bank accounts in the UAE are only options for expats with a certain salary. Expats who earn more than 5,000 AED (1,361 USD) per month can sometimes expect no fees with their bank accounts, while expats making less than that amount may incur a monthly fee. Check with your specific bank for more details.
- You may be charged a fee to use an ATM not associated with your bank. Check with your bank for more details.
- All UAE banks offer Sharia-based accounts that follow Islamic laws and banking principles. These accounts earn no interest and have complicated arrangements for mortgages and loans.
- Keep in mind that many transactions can only be done in person at the bank. Expats may want to choose a bank that is near to their home or workplace. Some banks charge high fees for electronic transfers.
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What is the Tax System in the UAE?
You cannot think about the UAE without thinking about tax. The UAE’s promise of a “tax-free” life is what drives many expats to relocate to the Gulf country. But what does “tax-free” really mean? What is the tax system like in the UAE?
Here, we explain the ins and outs of taxation in the UAE, specifically focusing on the popular expat destinations of Dubai and Abu Dhabi. Expats may want to consult a tax advisor for specific questions on what the tax rate is for their specific emirate and/or job.
Explaining the Tax System in the UAE
The first thing you must know about taxation within the UAE is that there is no federal tax. The UAE is made up of seven autonomous emirates, meaning each emirate state has its own specific government. As a whole country, the UAE does not impose a singular, overarching federal tax. Instead, each emirate enacts its own income tax scheme. That being said, most emirates follow the same tax rules and regulations, with a few minor changes.
Expat versus Emirati National
Whether you are an expat resident or Emirati national, the seven emirates do not levy any personal or capital tax. Expat workers are treated the exact same as Emirati workers and therefore are not subject to any special expat schemes.
Types of Taxes in the UAE and Their Tax Rate
Taxes will apply when renting in any of the emirate states. In Dubai, expats can expect to pay around 5% annually for any property that they rent. In Abu Dhabi, expats will pay 3%.
Corporate taxes in the UAE largely apply only to gas and oil companies and foreign banks. Gas and oil companies are subject to a 55% tax rate applied to their profits. Branches of foreign banks must pay 20% of their taxable income.
Value Added Tax (VAT)
As of 2018 the UAE has imposed a Value Added Tax of 5%. This tax will go towards public services in the UAE. It will also help the country lessen its dependence on oil and other hydrocarbons as a primary source of revenue.
The excise tax taxes goods that are considered harmful to human health. For example, in Dubai, carbonated drinks receive excise tax rates of 50% and tobacco receives 100%. Dubai businesses can pay the excise tax online.
What is the Income Tax Rate in the UAE?
Perhaps the biggest factor making the UAE one of the most popular expat relocation destinations is income tax. The UAE does not levy taxes on individuals. Whether you are an Emirati national or an expat resident, there is no salary tax within the UAE. This is standard across all seven emirates.
Where expats may face income tax is with their home country. The UAE has tried to avoid this by entering into the Avoidance of Double Taxation Agreements (DTA) with several other countries. Double taxation is when similar taxes are imposed on an individual from two countries (i.e., the UAE and your home country). By entering into this agreement, the UAE attempts to help its individuals avoid paying extra taxes on money they earn, spend, or trade within the UAE.
The countries involved with the DTA are:
|Antigua and Barbuda||Czech||Jersey||Morocco||Sri Lanka|
|Bosnia and Herzegovina||Germany||Lithuania||Romania||United Kingdom|
|Brunei Darussalam||Greece||Luxembourg||Russia||United Mexican States|
|Burundi||Holland||Magnolia||Saint Kitts and Nevis||Uzbekistan|
If you are still unsure whether double taxation will affect you, consult a tax advisor for more information.
What is the Tax Rate in the UAE?
Tax rates differ from emirate to emirate. As stated earlier, rental tax rates for expats are 5% in Dubai and 3% in Abu Dhabi. In Sharjah, it is 2%. The UAE also does not impose a social security tax on foreign workers.
For more specific information about the tax rates of each emirate, see the government tax authority website for the emirate where you will be moving:
- Abu Dhabi Department of Finance
- Ajman Department of Finance
- Dubai Department of Finance
- Fujairah Government Finance Department
- Ras Al Khaimah Finance Department
- Umm Al Quwain Department of Financial & Administrative Affairs
- Sharjah Finance Department
Part of the UAE’s tax-free scheme comes from free zones. Free zones are sector-specific business areas governed their own regulatory authorities. These zones were created to make the UAE more attractive to foreign investors and offer wealthy benefits to those who choose to set up their business within the Gulf nation. Business owners within these free zones enjoy such benefits as:
- 100% ownership;
- 100% exemption from import and export tax;
- 0% corporate tax;
- 0% income tax.
As stated before, outside of a free zone there is still no income tax within the UAE. However, depending on your business there may be corporate tax.
Self-Employed Taxes in the UAE
Because there is no income tax in the UAE, there is no self-employment tax either. However, depending on your line of work, as a self-employed person you are also considered a business and this business may be subject to a tax if you are not within a free zone.
Do you want to relocate? If you have never moved abroad, the process will be overwhelming, and if you have, you know the burden that lies ahead. Whatever stage you are at, InterNations GO! can help you with a complete set of relocation services, such as home finding, school search, visa solutions, and even pet relocation. Our expert expat team is ready to get your relocation going, so why not jump-start your move abroad and contact us today? Best to start early!
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