Everything You Should Know as an Australian Working in Dubai: Tax Implications and Residency Rules

However, understanding the tax implications of living and earning income in Dubai as an expat is critical for effective asset management and cross-border tax compliance.

As an Australian working in Dubai, tax planning and reporting can be complex as they involve navigating the differing taxation regimes in the UAE and Australia.

This guide will provide an overview of the residency rules and applicable taxes in both jurisdictions to help you understand and optimise your tax liability as an Australian expat in Dubai.

Are Australians Working in Dubai Liable for Tax?

The UAE is a highly tax-efficient jurisdiction that imposes no tax on most types of income and gains generated within the country by both residents and non-residents.

Therefore, as an Australian working in Dubai, your salary, capital gains, and estate will effectively be exempt from taxation in the Emirates.

Despite the UAE’s zero-tax policy, you may still be liable for Australian tax while earning income in Dubai, depending on your tax residency status in Australia. Unlike the UAE, Australia levies taxes on the worldwide income of its tax residents, while taxing only the Australian-sourced income of its non-residents.

Consequently, determining your tax residency status as an Australian working in Dubai is crucial for understanding and optimising your tax obligations while avoiding penalties and legal consequences.

What Are the Tax Residency Rules in Australia?

The Australian Taxation Office (ATO) applies a series of tests to determine your tax residency status.

Even if you effectively live and work in Dubai, you may still be considered an Australian tax resident, consequently subject to Australian tax on your Dubai-sourced income.

To qualify as an Australian tax resident, you have to meet any of the following conditions:

1. You physically reside in Australia or continue to maintain assets, family ties, living and social arrangements, or business and employment connections in the country while living abroad.
2. You have spent at least 183 cumulative or consecutive days in Australia within a 12-month period. However, even if this threshold is met, you may still be considered a non-resident if you can demonstrate that your usual place of abode is outside Australia and that you have no intention of residing there permanently.
3. You are allowed to contribute to a Commonwealth or public sector superannuation scheme, and your employer is legally required to contribute to your superannuation even though you’re working outside Australia.
4. You are domiciled in Australia and treat it as your permanent place of abode even though you reside overseas. To fail this test, you must prove that you’ve established permanent residence elsewhere by:
   • Severing all ties to Australia.
   • Relocating your family.
   • Securing a fixed residence in a new country.
   • Disposing of or renting out your Australian residence.
   • Intending to stay in another country permanently for at least two years.

Failure to meet any of the above criteria will qualify you as a non-resident or foreign resident for tax purposes, meaning you will be liable for Australian tax only on the income sourced within the country.

What Are the Tax Residency Rules in the UAE?

Unlike in Australia, your tax residency status in the UAE will not impact your tax obligations in the country—you will still be exempt from taxation on most types of income.

However, as a UAE resident, you may be required to report your worldwide income to the UAE’s Federal Tax Authority (FTA), as you may be liable for Emirati corporate tax or value-added tax (VAT) based on your commercial activities.

While UAE tax residency does not impact your liability to Emirati taxes, it may support your claim of non-residency for Australian tax purposes by evidencing economic and habitual ties outside Australia. This documentation is particularly important in the absence of a double tax treaty.

To qualify as a tax resident in the UAE, you must meet one of the following conditions:

1. Your primary place of residence is in the UAE, and you maintain strong financial, social, and familial ties to the country.
2. You have been physically present in the UAE for at least 90 days within a consecutive 12-month period, hold a valid residence permit, and have a permanent residence, employment, or business activity in the country.
3. You have spent 183 days or more in the UAE within a single calendar year.

What Types of Taxes Does the UAE Impose?

Although the UAE maintains a zero-tax policy on personal income, capital gains, and inheritance, you may still be subject to specific types of taxes, most notably:

• Corporate tax
• Value-added tax
• Excise tax
• Property tax

Corporate Tax

Businesses registered and operating in the UAE are subject to the Emirati corporate tax on business profits generated both within the country and outside of it, provided they meet certain conditions.

Depending on your business income and the type of business, you may be liable for corporate tax at the following rates:

• If your business generates income over AED 375,000, your corporate tax rate will be 9%.
• If your company engages in oil and gas exploration and production, you may be subject to a progressive tax rate of up to 55%.
• If your company is a branch of a foreign bank, you’ll be liable for a flat 20% tax rate.

Value Added Tax (VAT)

The UAE levies a 5% value-added tax (VAT) on most goods and services sold or purchased within the country, except for:

• Supply of certain healthcare services.
• Supply of certain educational services.
• Public transportation and related supplies.
• Newly constructed residential properties.
• Investment metals, such as silver and gold.
• Products exported to countries outside the Gulf Cooperation Council (GCC) area.

Australian expats operating businesses in the UAE with an annual turnover exceeding AED 375,000 are required to register for VAT, submit regular VAT returns, remit the applicable VAT amounts, and maintain accurate financial records to demonstrate compliance.

Registering for VAT is voluntary if your business’s turnover exceeds AED 187,500 but is less than AED 375,000.

Excise Tax

As an Australian living in Dubai, you will be subject to excise taxes on specific products the UAE government deems detrimental to personal health or the environment. Purchasing such goods can incur tax rates of up to 100% of their retail price.

The following table outlines the products subject to excise taxes, along with their corresponding rates:

Property Tax

Although Dubai—and the UAE in general—does not impose traditional property or rental income taxes, you may be liable for other property-related charges, including:

• Buyer registration fees: They range from AED 2,000 to AED 4,000, depending on the property’s value.
• Municipal fees for rental properties: 5% of the annual rental value for residential properties and 2.5% for commercial properties.
• Dubai Land Department (DLD) fee: Amounts to 4% of the property’s purchase price. If the property is financed through a loan, an additional 0.25% fee applies to the loan amount.
• Annual real estate maintenance charges: These fees vary based on your location and utility meter readings. They typically range from AED 55 to AED 220.

What Types of Taxes Does Australia Impose?

Australia is considered a high-tax jurisdiction due to its comprehensive taxation of various income sources and capital gains. As an Australian tax resident employed in Dubai, you may be liable for the following types of taxes, levied both on the income sourced in Australia and in Dubai:

• Personal income tax
• Capital gains tax
• Corporate tax
• Medicare levy

Personal Income Tax

As an Australian tax resident, all income earned from employment or investments in the UAE or any other foreign jurisdiction must be declared as part of your foreign income.

This includes wages, salaries, dividends, allowances, commissions, pensions, rental income, and even earnings that may be tax-exempt in the source country.

Australia employs a progressive income tax system with a tax-free threshold on the first $18,200 of your earnings. The table below outlines the 2025 income tax rates for Australian residents based on taxable income:

For non-residents, income derived from employment or the provision of services within Australia is subject to taxation at the following rates:

Capital Gains Tax

The Australian capital gains tax (CGT) is not a distinct tax but rather a part of the broader personal income tax framework. As an Australian tax resident, any capital gains derived from assets such as real estate, stocks, collectables, or intellectual property owned in the UAE, Australia, or elsewhere are added to your taxable earnings and charged at your marginal personal income tax rate.

A 50% capital gains discount may apply if you hold an asset for longer than 12 months before disposing of it, meaning only half of the capital gain will be subject to tax. CGT won’t apply if the asset sold is:

• Your primary residence
• An employee stock option disposed of within 30 days of the deferred taxing point
• A property acquired before 19 September 1985

Important Note on Main Residence CGT Exemption

As a non-resident for Australian tax purposes, you are generally not eligible for the CGT main residence exemption when selling your former home in Australia – even if it was your primary residence before moving abroad.

This rule applies unless limited exceptions apply, such as terminal illness or death.

If you dispose of Australian property while classified as a non-resident, the capital gain will be added to your assessable income and taxed at your marginal rate. In addition, you may lose access to other tax concessions, including the 50% CGT discount and the tax-free threshold.

Expats should carefully consider the timing and structure of the disposal and seek specialist advice to minimise avoidable tax liabilities.

Corporate Tax

You may be liable for corporate income tax in Australia if you have a business that’s:

• Registered in Australia
• Registered abroad but conducts business in Australia, as long as the board of directors consists mainly of Australian tax residents

Australia applies a flat 30% corporate tax rate to taxable income from all qualifying businesses, except base rate entities, which are taxed at a lower rate of 25%. To qualify for reduced taxation as a base rate entity, your company has to meet the following conditions:

• Its total turnover for the income year must be less than the total turnover threshold for the income year ($50 million in 2025)
• Its passive income, such as rent, interests, dividends, and capital gains, must amount to no more than 80% of its assessable income for the income year.

Medicare Levy

Even while living in Dubai, Australian tax residents are generally required to contribute to the country’s national healthcare system through the Medicare Levy, which is calculated at 2% of their taxable income.

An additional surcharge of 1% to 1.5% may apply to high-income earners who do not maintain adequate private health insurance coverage.

Non-residents are not liable for paying the Medicare Levy.

Does the UAE Have a Double Tax Treaty With Australia?

The UAE and Australia don’t have a formal double taxation treaty that would protect their residents from being taxed on the same income in both jurisdictions.

However, since the UAE does not impose personal income tax, Australians working in Dubai are not at risk of being taxed twice on the same income. Still, in the absence of a formal double tax agreement, no automatic relief is available.

As a result, your tax obligations will primarily depend on your Australian tax residency status. If you are deemed an Australian tax resident, you may still be liable for tax on income earned in the UAE.