Understanding Capital Gains Tax Implications for UAE Investors

“Synopsis”

The UAE is known for its investor-friendly tax regime, and one of its biggest draws is the absence of personal capital gains tax. Whether you’re selling property, shares, or other assets, understanding how capital gains are treated—especially under the new corporate tax law—is essential for both individuals and businesses. This guide breaks down the current landscape and what investors need to know in 2025.

1. What Is Capital Gains Tax (CGT)?

Capital gains tax is a levy on the profit earned from selling an asset—like real estate, stocks, or a business. In most countries, CGT applies to both individuals and corporations. But the UAE takes a different approach.

2. Do Individuals Pay Capital Gains Tax in the UAE?

No. As of 2025, individuals are exempt from capital gains tax in the UAE. This means:

• You can sell shares, property, or other investments without paying tax on the profit
• There’s no inheritance or estate tax
• No tax on short-term or long-term gains

This makes the UAE a top destination for wealth preservation and succession planning2.

3. What About Real Estate Capital Gains?

For individuals:

• No capital gains tax on the sale of residential or commercial property
• No tax on rental income (though municipal fees may apply)
• No property tax or stamp duty on transfers

For companies:

• Gains may be taxed if the property is held as part of a business activity
• If the company is subject to corporate tax, real estate profits may be included in taxable income2

4. Corporate Capital Gains: What’s Taxable?

Under the UAE’s Corporate Tax Law (effective June 2023):

• A 9% tax applies to business profits exceeding AED 375,000
• Capital gains realized in the ordinary course of business may be taxable
• Passive investments (like long-term shareholdings) may be exempt if participation exemption criteria are met

This means companies must carefully structure asset disposals to avoid unnecessary tax exposure3.

5. Capital Gains for Foreign Investors

Foreign investors benefit from:

• No CGT on UAE-listed shares or property
• No exit tax when selling UAE assets
• Relief under Double Taxation Avoidance Agreements (DTAAs) with 193 countries

However, investors may still be taxed in their home country. For example:

• U.S. citizens must report and pay CGT on UAE gains to the IRS
• Other countries may require reporting under FBAR or Form 8938

6. Planning Strategies for UAE Investors

To optimize capital gains:

• Structure investments smartly: Use holding companies or trusts where applicable
• Claim deductions: For corporates, expenses like depreciation, maintenance, and interest may reduce taxable gains
• Time your exits: Long-term holding may offer better tax treatment abroad
• Consult cross-border advisors: Especially if you’re a U.S. citizen or investing via offshore entities

Conclusion

In 2025, the UAE remains one of the most tax-efficient jurisdictions for capital gains—especially for individuals. But with corporate tax now in play, businesses must plan disposals and asset strategies carefully. Whether you’re selling shares, property, or a business stake, understanding the tax implications is key to maximizing returns and staying compliant.

Capital gains may be tax-free in the UAE—but they’re not risk-free. Smart structuring and proactive planning make all the difference.