Photo: BSEINDIA / Wikimedia Commons, CC BY-SA 3.0, cropped

Capital gains tax in the UAE: the basics explained simply

By FastBuySale Newsroom · 9 Nov 2026 · 1h ago · AR EN

What this guide covers

The United Arab Emirates is well known as one of the few countries that does not levy income tax on individuals. Many investors and residents still ask about capital gains, meaning the profit made when an asset such as shares, property or a stake in a company is sold for more than it cost. Since federal corporate tax started in 2023 the picture has become more detailed, because some capital gains are now taxed when they are earned by companies or by business activities. This guide explains the basics in plain language, shows the difference between individuals and companies, works through practical examples and highlights points that expat residents should keep in mind.

What a capital gain is

A capital gain is the difference between the sale price of an asset and its purchase cost, after deducting related costs such as commissions and registration fees. If you buy shares for AED 100,000 and later sell them for AED 130,000, your capital gain is AED 30,000 before commissions. If you sell for less than you paid, you have a capital loss. Many countries apply a separate tax to such gains, often at rates of 20% or more, but the position in the UAE is different.

Individuals: no tax on personal investing

The UAE does not levy personal income tax and has no separate capital gains tax for individuals. An employee or resident who buys shares through a brokerage account, or owns an apartment in their own name and later sells it at a profit, pays no federal tax on that gain. The Cabinet Decision on natural persons under corporate tax also states that personal investment income, such as gains from shares and securities held in a personal capacity, does not count as business turnover. The same applies to real estate investment income that does not require a commercial licence, such as selling or renting out a property owned personally.

Worked example: an individual share investor

Ahmed is an engineer in Abu Dhabi. He bought listed shares for AED 200,000 and sold them three years later for AED 260,000, paying AED 1,000 in commissions. His net capital gain is AED 59,000. Because he invests his own money and does not run a licensed securities trading business, there is no federal tax on this gain in the UAE. Ahmed can use the percentage calculator on this site to see that his total return was about 29.5% over three years.

When an individual falls under corporate tax

A natural person becomes subject to corporate tax if they carry on a business or business activity in the UAE and their total turnover from that activity exceeds AED 1 million in a calendar year. In that case they must register with the Federal Tax Authority. Examples include sole establishment owners and freelancers whose revenue passes that threshold. Even then, wage income, personal investment income and unlicensed real estate investment income stay outside the scope of the tax. What matters is not only the type of asset but the nature of the activity: is it personal investing or a business?

Worked example: a freelancer with a share portfolio

Sara is a licensed freelance designer whose design revenue reached AED 1,200,000 in one year, above the AED 1 million threshold, so the profit of her business is subject to corporate tax. At the same time she holds a personal share portfolio on which she made a capital gain of AED 80,000. That gain counts as personal investment income and is not part of her business tax calculation, provided the portfolio is kept separate from the business and is not run as a licensed trade. It helps her to use separate bank accounts and keep clear records that show this separation if ever asked.

Companies: capital gains are part of taxable income

Under Federal Decree-Law No. 47 of 2022 on the taxation of corporations and businesses, companies pay 0% on taxable income up to AED 375,000 and 9% on income above that. The tax applies to financial years starting on or after 1 June 2023. There is no separate capital gains regime: gains are simply included in the company's ordinary taxable income, alongside sales and service revenue. If a company sells shares, property or equipment at a profit, that profit is added to its taxable income.

Worked example: a company sells a property

A trading company in Dubai owns a warehouse bought for AED 3,000,000 and sells it for AED 3,600,000, a capital gain of AED 600,000. Its profit from normal operations in the same year is AED 400,000. Taxable income is therefore AED 1,000,000. The first AED 375,000 is taxed at 0% and the remaining AED 625,000 at 9%, giving tax of AED 56,250. This is simplified: special rules on valuation, depreciation and transitional adjustments for assets held before corporate tax began may apply.

The participation exemption

To avoid double taxation within groups, the law includes a participation exemption. If a company holds at least 5% of another company for at least 12 continuous months, or intends to, and the subsidiary is subject to corporate tax of at least 9% in its own country, along with other conditions, dividends and capital gains from that holding may be exempt. The aim is that the same profits are not taxed twice, once in the subsidiary and again in the parent.

Worked example: participation exemption

A UAE holding company owns 20% of an operating company in a country with a 25% corporate tax rate and has held the stake for four years. When it sells the stake, it makes a capital gain of AED 5,000,000. If all participation exemption conditions are met, that gain is left out of its UAE taxable income. If the stake were only 3%, the exemption would not normally apply. Assuming no other income or deductible losses, the first AED 375,000 would be taxed at 0% and the remaining AED 4,625,000 at 9%, giving tax of about AED 416,250.

Small business relief and free zones

Resident businesses with revenue of no more than AED 3 million can elect small business relief and be treated as having no taxable income for tax periods ending on or before 31 December 2026, subject to conditions. A qualifying free zone person can also benefit from 0% on qualifying income if it meets substance and other requirements. These rules are complex, so it is wise to read the official guides before relying on them.

Property, VAT and fees

Even without a capital gains tax for individuals, buying and selling property involves other costs. In Dubai, for example, the land department transfer fee is usually 4% of the property value, alongside broker commission and registration fees. VAT at 5% does not normally apply to sales of residential property after the first supply, while commercial property is generally standard-rated. These costs reduce the net profit an investor makes.

Worked example: net profit on an apartment

Layla bought an apartment in Dubai for AED 1,500,000 and paid about AED 95,000 in transfer, registration and broker fees. Five years later she sold it for AED 1,900,000 and paid a 2% selling commission of AED 38,000. Her gross gain before costs is AED 400,000, but her net gain after costs is about AED 267,000. She pays no UAE tax on it because she owns the apartment personally and does not run a licensed property trading business.

Expat residents and their home countries

No tax in the UAE does not always mean no tax at all. Some countries, such as the United States, tax their citizens on worldwide income wherever they live. Others may treat a person as tax resident if they keep a home, family or economic interests there, or may tax the sale of property located in their territory. Expat residents should therefore check their position at home and make use of the double tax agreements the UAE has signed with many countries. A tax residency certificate can be requested from the Federal Tax Authority to prove UAE residence when needed.

Digital assets

The same principles apply to cryptocurrencies and other virtual assets. An individual who buys and sells them in a personal capacity pays no UAE tax on the gains. Companies that trade or hold them include the gains in taxable income for corporate tax. Firms active in this field are also subject to specific regulation, for example by the virtual assets regulator in Dubai.

Keeping records

Even when no tax is due, keeping organised records of purchases and sales is useful. It helps show that an investment is personal rather than a business, supports you when dealing with tax authorities in another country, and makes it easier to work out your real return. Keep purchase and sale contracts, brokerage statements, fee receipts and bank correspondence.

Common mistakes

Common mistakes include believing the UAE has no taxes at all, ignoring corporate tax on business activities, mixing personal money with business funds and forgetting home-country obligations. Some people also misjudge their activity, trading property or shares so frequently that it may be treated as a business without realising it.

Reader questions

Do you have a question about tax on investments in the UAE? Send it through the questions page on this site.

Disclaimer

This article is for general educational purposes only and is not tax, financial or legal advice. Laws and decisions can change; the official guides of the Federal Tax Authority and the Ministry of Finance are the reference. Consult a licensed professional before making any decision.

💬 Join the discussion on this article →

More in Finance · Trending News · Browse local deals