UAE secures first place in global tax index

The UAE has ranked first in a new global tax optimisation index assessing 48 jurisdictions for internationally mobile individuals, driven by its lack of personal income, wealth and inheritance taxes and a 5 per cent value-added tax.

The study by Global Citizen Solutions’ Global Intelligence Unit gave the UAE a composite score of 82.7 out of 100, narrowly ahead of Antigua and Barbuda on 82.2. Paraguay ranked third with 77.2, followed by Hong Kong at 76.9 and the Bahamas at 76.2.

Researchers assessed jurisdictions across 11 indicators grouped under tax burden, tax structure and investment migration. Tax burden and tax structure each carried a 42.5 per cent weighting, while investment migration accounted for the remaining 15 per cent.

The UAE received a perfect 100 score for tax burden, 64 for tax structure and 86 for investment migration. The report said its position reflected the absence of personal income tax, net wealth tax and inheritance tax, alongside a relatively low consumption tax and no general exit charge when tax residence ends.

The findings underline how tax treatment can influence relocation decisions for entrepreneurs, investors, retirees and remote professionals, but the study cautioned that headline rates alone do not determine whether a jurisdiction is suitable for a particular individual.

Global Citizen Solutions said the index was designed to capture how countries treat foreign-sourced income, capital gains, wealth, inheritance and departure, rather than simply comparing top statutory income-tax rates. It also considered whether jurisdictions offer formal investment migration pathways that can help individuals establish residence or citizenship.

Malta placed sixth overall with a score of 74.4, while Cyprus was 10th, Uruguay 12th and Portugal 23rd. The study highlighted those jurisdictions, together with Costa Rica, Mauritius and Switzerland, as examples of places that combined a position in the upper half of the tax ranking with a place among the world’s top 50 for quality of life under the report’s separate benchmark.

That comparison exposed a broader trade-off identified by the researchers. Several of the strongest performers on tax scored much lower on living conditions, while some countries with high quality-of-life rankings imposed heavier taxes on income, capital, inheritance or departure.

The UAE ranked 124th globally on the study’s living-conditions measure, compared with Portugal at 11th, Malta at 28th and Uruguay at 30th. The authors said this did not invalidate the UAE’s tax advantage, but illustrated why internationally mobile people may weigh fiscal considerations against healthcare, education, infrastructure, social protections and other factors.

Departure taxes were another important dividing line. Of the 48 jurisdictions assessed, 31 imposed no exit tax, while 17 applied some form of charge when tax residence ended. The report said broader exit-tax systems were used in countries including Australia, Canada, Denmark, Germany, Norway, Spain, France and Switzerland, while several others used narrower arrangements.

Inheritance taxation produced a similarly sharp difference. None of the top 13 jurisdictions in the index imposed inheritance tax, according to the study. Germany ranked last with a score of 28.7, behind Denmark at 30.4 and the United States at 33.5.

The UAE’s favourable treatment of personal income exists alongside a federal corporate tax regime introduced for financial years beginning on or after June 1, 2023. The Ministry of Finance says taxable business income above Dh375,000 is generally subject to a 9 per cent corporate tax rate, while qualifying income up to that threshold is taxed at zero per cent.

For natural persons, corporate tax applies only when they conduct a business or business activity in the UAE and annual turnover from those activities exceeds Dh1 million. Wages, personal investment income and qualifying real-estate investment income are outside that test, according to Cabinet rules.