"Move to Dubai and pay zero tax" — this line, seen everywhere on social media, is only half true. The UAE (United Arab Emirates) still has no personal income tax, but in June 2023 it introduced its first-ever federal corporate tax (9% on profits above 375,000 dirhams, roughly 15 million yen), and from 2025 it even started a 15% top-up tax (DMTT) on large companies. Behind this lies the OECD's 15% global minimum tax, agreed by about 140 countries and jurisdictions. The business model of being a "country with no taxes" is coming to an end worldwide. This article uses primary sources to sort out what the UAE's tax system actually looks like — and the reality that Japanese residents caught up in the Dubai relocation boom tend to overlook: Japanese taxation does not end just because you deregister your residence.
How it works: individuals still pay zero, companies pay 9% — the UAE's current tax system
The UAE's tax system has gradually shifted from "nothing at all" to "selective taxation." As of August 2026, the overall picture looks like this.
| Tax | Details | Introduced |
|---|---|---|
| Personal income tax | None (no tax on salaries or investment gains) | — |
| Corporate tax | 0% up to taxable income of 375,000 dirhams (about 15 million yen), 9% on the excess | Financial years starting on or after June 1, 2023 |
| Free zones | Qualifying income of a "Qualifying Free Zone Person" that meets the conditions stays at 0% (non-qualifying income is taxed at 9%) | Same time as corporate tax |
| Top-up tax (DMTT) | Multinationals with consolidated revenue of 750 million euros (about 135 billion yen) or more are topped up until the effective rate reaches 15% | Financial years starting on or after January 1, 2025 |
| Value-added tax (VAT) | 5% (equivalent to Japan's consumption tax) | January 2018 |
- The corporate tax is based on Federal Decree-Law No. 47 of 2022. It has two brackets, 0% and 9%, and the 9% level is among the lowest in the world (Japan's effective corporate tax rate is about 29.74%)
- Free zones (special economic zones), typified by Dubai's Jebel Ali Free Zone, remain the UAE's trump card for attracting foreign capital through tax breaks. But the 0% rate applies only if conditions are met: real substance (offices and staff) inside the zone, earning qualifying income, complying with transfer pricing rules, and so on. Income from transactions with the UAE mainland is, in principle, subject to the 9% rate
- Even with zero personal income tax, daily life carries 5% VAT and excise taxes on tobacco, energy drinks and the like. Rather than a "tax-free country," it is more accurate to call it "a country that does not tax income"
Why taxation began: life after oil, and adapting to international rules
"No taxes, so companies and people flock here" was the UAE's formula for success. There are two reasons it gave that up on its own initiative.
- Building revenue that does not depend on oil — the UAE has made breaking away from oil dependence a national strategy. Following the introduction of VAT in 2018, the corporate tax is positioned as a pillar of "stable non-oil revenue." Even within this oil-producing federation, the Emirate of Dubai itself already earns little from oil, having shifted to an economy driven by trade, finance and tourism
- Adapting to the international minimum tax rules — in October 2021, about 140 countries and jurisdictions in the OECD/G20 "BEPS Inclusive Framework" agreed that large companies should pay at least 15% tax wherever they operate (the global minimum tax). If the UAE stayed at zero, the tax it left uncollected could simply be collected by other countries instead. If someone is going to tax it anyway, better to tax it at home — that is the direct motive for the 9% rate and the subsequent 15% DMTT
The clever part is the number "9%." Kept below the 15% international standard, it preserves competitiveness in attracting business, yet because it is not zero, it deflects the "tax haven" label. And the gap up to 15% is recovered domestically via the DMTT, but only from the giant companies in scope. It is a calculated design: adapting to the rules while staying attractive.
The result: the end of the "country with no taxes" business model
- Since the global minimum tax agreement, countries and jurisdictions that built their brand on low rates have introduced 15% domestic top-up taxes (QDMTT/DMTT) one after another. Besides the UAE, Bermuda (a 15% corporate income tax from 2025) and Switzerland, Singapore, Hong Kong and others have responded or are responding — a world where "large companies pay 15% wherever they go" is becoming an established fact
- Leave a loophole open, and the tax revenue simply flows to another country — that logic changed the behavior of the tax havens themselves. The axis of competition has moved from "zero tax rates" to speed of procedures, visas, the regulatory environment and quality of life
- Incidentally, neighboring Saudi Arabia has a separate lineage of "tax" called zakat (alms). An institutionalized form of Islamic almsgiving, it levies 2.5% per Hijri-calendar year (about 354 days) on a net-asset-based base for the ownership shares of Saudi and GCC investors. Foreign-owned shares are subject to the ordinary 20% corporate tax, and VAT is 15%. In making "a religious obligation into a state collection system," its intellectual lineage differs fundamentally from income-tax-centered Japan
Comparison with Japan: a 30% country, a 9% country, and the 15% net
| UAE | Japan | |
|---|---|---|
| Personal income tax | None | Progressive 5–45% plus 10% resident tax |
| Corporate taxation | 0% / 9% (large companies topped up to 15% via DMTT) | Corporate tax 23.2%; effective rate about 29.74% |
| Consumption taxation | VAT 5% | Consumption tax 10% (reduced rate 8%) |
| Inheritance tax | None | Up to 55% |
| Global minimum tax | DMTT (from 2025) | IIR (from April 2024), UTPR and QDMTT (from April 2026) |
The gap looks stark, but Japan is also on the side casting the 15% net. The fiscal 2023 tax reform enacted the Income Inclusion Rule (IIR), applying to fiscal years starting on or after April 2024. If a multinational with a Japanese parent (consolidated revenue of 750 million euros or more) has a subsidiary in a low-tax jurisdiction, the shortfall below 15% is taxed at the Japanese parent. The fiscal 2025 tax reform then enacted the remaining two rules (UTPR and the domestic minimum tax), which took effect for fiscal years starting on or after April 2026.
Japan also has another regime, in place since 1978: the anti-tax-haven rules (Controlled Foreign Company rules). When a foreign subsidiary effectively controlled by Japanese residents or domestic corporations bears a low tax burden (below 27% for paper companies and the like; below 20% for others lacking real economic activity, among other tests), the subsidiary's income is aggregated into the Japanese shareholder's income and taxed. Since the UAE's 9% is far below 20%, shifting profits to a Dubai company with no substance still gets taxed on the Japanese side by design. Note that the pros, cons and timing of incorporating in Japan is a question that involves not just tax rates but social insurance premiums too — an entirely separate topic from foreign companies.
Cases that concern Japanese residents: the pitfalls of "moving to Dubai to save tax"
Stories of people who made large gains from crypto assets or business "moving to Dubai" go viral on social media again and again. If you genuinely move your base of life there, the UAE indeed levies no personal income tax — but Japanese taxation does not disappear that easily.
- Deregistering your residence certificate is not enough to become a non-resident — under the Income Tax Act, "resident" status is determined not by the residence register but by objective facts about where your "base of life" is (National Tax Agency Tax Answer No. 2875). If your family, home or business base stays in Japan while you spend part of the year in Dubai, you may well continue to be taxed as a Japanese resident on your worldwide income
- The "exit tax" on departure — a person holding securities and similar assets worth 100 million yen or more at market value who leaves Japan is taxed on the unrealized gains even without selling (introduced in 2015). Incidentally, the similarly nicknamed "departure tax" — the International Tourist Tax, raised to 3,000 yen from July 2026 — is a different tax altogether
- Inheritance tax follows you for up to 10 years after leaving — for Japanese nationals, unless both the deceased and the heir have been outside Japan for more than 10 years, Japanese inheritance tax reaches foreign assets too (Tax Answer No. 4138). "Moving to Dubai because it has no inheritance tax" only means something after living there for 10 years
- Setting up only a Dubai company while staying in Japan can be the worst move of all — the anti-tax-haven rules mentioned above apply not just to corporations but to individual shareholders as well. Profits of a foreign company with no substance are aggregated and taxed in Japan, and unreported amounts attract penalty and delinquency taxes on top
For the reverse direction — the tax rules when wealthy foreigners move to Japan — see wealthy foreigners relocating to Japan and taxes. Cross-border tax involves residency determination, tax treaties and exit taxation — a specialist field — so always consult a tax accountant or other professional versed in international taxation before acting. This article does not recommend emigrating or setting up a foreign company.
What to do today
What to do today
- When you see "save tax by moving abroad" content, check whether it explains all three of: (1) residency determination (base of life), (2) the exit tax on unrealized gains, and (3) the 10-year inheritance tax rule (be wary of sources that skip them)
- If you or your company hold foreign subsidiaries or investments, write down whether that country's tax rate (tax burden ratio) is below 20%, and check whether the anti-tax-haven rules could apply
- If a cross-border tax decision is needed, do not judge it yourself — consult a tax accountant experienced in international taxation or the tax office
FAQ
Q. Is Dubai (the UAE) still a "zero-tax country" today?
A. Personal income tax is still zero, but a corporate tax (9% on profits above 375,000 dirhams) began in June 2023, and a 15% top-up tax (DMTT) on large multinationals started in 2025. There has also been a 5% VAT since 2018. Rather than a "tax-free country," the accurate description is "a country that does not tax personal income."
Q. Do free zone companies still pay 0% corporate tax?
A. Conditionally. The 0% rate continues only for the qualifying income of a "Qualifying Free Zone Person" that meets requirements such as having substance in the free zone, earning qualifying income, and complying with transfer pricing rules. Income from transactions with the UAE mainland is, in principle, subject to 9%, and filing obligations apply.
Q. If a Japanese person moves to Dubai, do Japanese taxes stop applying?
A. Deregistering your residence certificate is not enough. Resident status is determined by objective facts about your "base of life," so if your family, home or business remains in Japan, you may continue to be taxed as a Japanese resident. On departure, the exit tax hits unrealized gains on securities worth 100 million yen or more, and for up to 10 years after leaving, Japanese inheritance tax still reaches foreign assets. Consulting a specialist before acting is essential.
Q. Does the global minimum tax affect small businesses too?
A. It applies only to multinational groups with consolidated revenue of 750 million euros (about 135 billion yen) or more, so it does not directly concern small businesses. However, if you hold a subsidiary in a low-tax country, the anti-tax-haven rules (CFC rules) can apply regardless of size, so that is the check that matters.
References (sources)
* Figures are based on materials published as of August 2026. Yen conversions use approximate rates of 1 dirham = 40 yen and 1 euro = 180 yen. Foreign tax systems change, and application depends on individual facts. This article is general information; for individual decisions on relocation, company formation or international taxation, consult a tax office or a tax accountant versed in international tax.