Once considered a discreet sanctuary for offshore wealth, the UAE has undergone a dramatic shift in global tax perception. For years, zero personal income tax, bank confidentiality, and relaxed regulatory oversight positioned it high on the radar of high-net-worth individuals and international entrepreneurs seeking financial privacy. But in 2025, the landscape is vastly different, thanks to the introduction of the Common Reporting Standard (CRS).
CRS, with global tax authorities now automatically exchange financial account data across borders. The UAE, once accused of secrecy, has aligned itself with this standard. We examine whether the UAE remains a tax haven and what the CRS means for founders, investors, and business owners utilising UAE structures today.
What Is a Tax Haven, and Does the UAE Still Meet the Criteria?
Definition of a Tax Haven in 2025
Tax havens are jurisdictions with very low or no taxes, often combined with financial secrecy and minimal cooperation with international tax authorities. However, modern definitions go beyond low tax rates. A true tax haven today blocks transparency, fails to share information, and enables harmful profit shifting.
How The UAE Matched Past Tax Haven Traits
The UAE has historically ticked several boxes of a tax haven: no personal or corporate income tax (until 2023), minimal reporting obligations, and high levels of banking privacy. Until 2017, it had few mechanisms to share financial data with foreign governments.
Why Low Tax Alone No Longer Defines a Tax Haven
In the current global system, low tax regimes are accepted—provided they follow transparency standards like CRS, implement economic substance rules, and maintain beneficial ownership registries. The UAE has adopted these reforms, which have significantly reshaped its international standing.
Why the UAE Was Seen as a Tax Haven in the Past
The UAE’s appeal was straightforward: no income tax, no capital gains tax, and an open-door policy to foreign investors. Free zones across Dubai and the Northern Emirates allowed entrepreneurs to establish 100% foreign-owned companies with zero tax obligations. The real estate and banking sectors flourished as international funds poured in.
But secrecy played a key role. Before CRS, a non-resident could open a UAE bank account without notifying any foreign tax authority. Individuals and companies used UAE entities to obscure ownership, park profits, and legally reduce or even avoid taxes in their home countries.
What Is the Common Reporting Standard (CRS)?
CRS is a global initiative developed by the OECD that mandates the automatic exchange of financial account information between countries. Participating jurisdictions collect data from their financial institutions and share it annually with other governments to help prevent tax evasion.
Over 110 countries have signed on, including the UAE. CRS applies to individuals and entities with accounts outside their tax residence and has become the global benchmark for financial transparency.
When Did the UAE Join the CRS and What Changes Did It Bring?
Timeline of the UAE’s CRS Adoption
The UAE joined the CRS framework in 2017 and began exchanging data in 2018. This marked a significant policy shift, aligning the country with international efforts to promote transparency and accountability.
Key Reforms Alongside CRS
The UAE introduced:
- Economic Substance Regulations (2019) to ensure companies have real activities onshore
- A beneficial ownership registry (2020) to track who ultimately controls UAE entities
- Corporate income tax (9%) from June 2023
These reforms collectively moved the UAE away from being perceived as a secrecy-based jurisdiction.
How CRS Affects Foreign Business Owners in the UAE
No More Anonymous UAE Bank Accounts
Foreign residents with UAE bank accounts are now subject to CRS disclosures. Financial institutions report account balances, interest, dividends, and ownership structures to the UAE Federal Tax Authority, which passes this information to the tax authority of the individual’s home country.
For example, a British national living in the UK with an account in Dubai will have that account reported to HMRC. The same applies to nationals of India, Germany, France, and other countries that are members of the CRS.
Increased Scrutiny and Reduced Privacy
CRS has significantly reduced the scope for offshore anonymity. Individuals attempting to hide foreign assets via UAE structures are now at risk of penalties and investigation by their home authorities.
What Counts as UAE Tax Residency Under CRS?
To avoid reporting to another jurisdiction, individuals must demonstrate genuine UAE tax residency. As of Cabinet Decision No. 85 of 2022, individuals are tax residents if they:
- Spend 183 or more days in the UAE in 12 months, or
- Spend 90 or more days in the UAE with a permanent home, job, or business, and hold UAE nationality or a valid residency permit
Businesses are considered tax residents if they are incorporated in the UAE or if they are effectively managed and controlled from the UAE.
How the UAE’s Corporate Tax and ESR Rules Affect Business Owners
Corporate tax is now in effect at a rate of 9% for mainland companies and free zone businesses that earn non-qualifying income. Qualifying free zone income remains tax-exempt, but companies must:
- Demonstrate real economic substance (physical office, staff, operations)
- Maintain audited financial records
- Comply with ESR filings
These rules aim to eliminate shell entities used solely for tax avoidance.
Does the UAE Still Offer Tax Advantages?
Absolutely—but now within a framework of compliance and transparency. Key benefits include:
- No personal income tax for UAE residents
- 0% capital gains tax
- Generous double tax treaty network
- Modern infrastructure and investor-friendly regulations
Entrepreneurs who base themselves genuinely in the UAE can still enjoy significant tax optimisation opportunities, without the risk of CRS-triggered enforcement.
Why Some Experts Still Call the UAE a Tax Haven
Despite reforms, the UAE ranked 13th in the Tax Justice Network’s Financial Secrecy Index (2022). Critics point to lingering gaps:
- CRS does not cover real estate holdings or crypto assets
- Enforcement varies between financial institutions
- Property ownership and golden visa schemes can still obscure asset origins
However, the UAE is no longer on the EU tax haven blacklist and has been removed from the FATF grey list as of 2024, recognising its progress.
What New Rules Should UAE-Based Entrepreneurs Expect Next?
The OECD is now pushing for a Crypto-Asset Reporting Framework (CARF), which the UAE is expected to adopt. Real estate registries may also become more transparent. In addition, the UAE is preparing to implement a domestic top-up tax to align with the global 15% minimum corporate tax for large multinationals.
Business owners should also watch for changes in beneficial ownership transparency, bank due diligence procedures, and data sharing protocols.
How Business Owners Can Stay Compliant in the UAE
- Understand and meet UAE tax residency thresholds
- File all relevant ESR and UBO declarations on time
- Ensure bank account disclosures and residency claims are accurate
- Use tax advisors familiar with UAE regulations and CRS implications
Doing business in the UAE remains highly advantageous—but only when structured effectively.
The UAE Is Transparent, Not Tax-Free, And Still Business-Friendly
The UAE is no longer a tax haven in the traditional sense. The implementation of CRS and related reforms has closed the door on offshore secrecy. But for entrepreneurs seeking a compliant, low-tax jurisdiction to build and scale, the UAE remains a leading choice.
DUQE supports founders in setting up with clarity, compliance, and confidence. If you’re looking to benefit from the UAE’s tax advantages the right way, speak to our team about company formation, tax residency planning, and PRO services.
FAQs
What is CRS and How Does it Impact UAE Businesses?
CRS is a global standard for the automatic exchange of financial account information. UAE financial institutions must identify and report accounts held by non-residents to the Federal Tax Authority, which then shares the data with the relevant country. This affects how businesses manage banking, ownership structures, and tax residency declarations.
Can Foreign Residents Open Private Bank Accounts in The UAE?
Yes, but accounts held by non-UAE tax residents are subject to CRS reporting. This means that if you’re a tax resident in another CRS-participating country, your account details may be shared with that country’s tax authority.
What are the CRS Reporting Rules in The UAE?
Banks and financial institutions must:
- Identify the tax residency of account holders
- Collect and verify foreign tax identification numbers (TINs)
- Report relevant account data annually to the Federal Tax Authority
This applies to individuals and entities, including those with indirect ownership or control.
Does The UAE Share Tax Information with Other Countries?
Yes. Since 2018, the UAE has participated in CRS, automatically exchanging financial data with over 100 other jurisdictions. The data includes account balances, dividends, interest, and details of beneficial ownership.
How do I qualify as a UAE Tax Resident under CRS?
You must meet either:
- 183 days of physical presence in the UAE in 12 months, or
- 90 days with strong ties (home, business, job) and a valid UAE residence permit
You can apply for a UAE tax residency certificate if you meet these criteria.