Taxes and cost of living: Insights into daily life in Dubai

This blog post offers insights into daily life in Dubai, focusing on taxes and the cost of living. The city of Dubai , a dazzling jewel of the United Arab Emirates , attracts many expats and investors with its tax-friendly policies and luxurious lifestyle  . A key draw is the absence of individual income tax in Dubai, making it an attractive destination for those seeking to maximize their net income.

Despite the advantage of a tax-free environment, potential residents must consider the cost of living, which can be comparatively high in Dubai. Housing costs, in particular, vary depending on location and type of accommodation, ranging from luxurious beachfront villas to more affordable apartments in the city center. Utility costs, such as water and electricity, should also be factored in, although these are kept relatively moderate by the city's efficient infrastructure. Petrol prices in Dubai are inexpensive compared to many other countries. This is partly due to the low taxes on petroleum products that apply throughout the UAE . Consequently, driving and transportation within the city are relatively affordable.

Dubai boasts a high quality of life, characterized by excellent healthcare facilities, cosmopolitan educational institutions, and a wide range of entertainment options. This metropolis fascinatingly blends traditional Arabian culture with contemporary luxury, creating an attractive environment. For those considering relocating to Dubai, the city offers a wealth of opportunities that can align with their financial goals and aspirations. It is advisable to familiarize yourself with the various aspects of the cost of living to fully realize the potential of living in this dynamic metropolis.

For a long time, Dubai was one of the few countries without a corporate income tax. However, this changed in 2022 when the UAE announced the introduction of a federal corporate income tax. As of June 1, 2023, a 9% tax is levied on corporate income. Both residents and non-residents can be liable for this tax. This change is intended to comply with international requirements for tax transparency while ensuring Dubai's competitiveness as a global business hub. There is a tax-free allowance of AED 375,000, which is approximately EUR 95,000. Small businesses in the Free Trade Area can apply for Small Business Relief (SBR). If the application is approved, the taxpayer is treated as if they have no taxable income. However, their turnover must not exceed AED 3 million (approximately EUR 750,000). It is now mandatory for all businesses to maintain accurate accounting records. Companies must fully document all financial transactions. This includes income, expenses, investments, and other relevant business transactions. The challenge lies in accurately documenting this data and preparing it for tax returns. Another important aspect is the retention of receipts and documents. Companies must ensure that all relevant records are available and accessible for a defined period. This requirement serves to ensure the traceability and verifiability of accounting data.

Dubai offers a diverse residential landscape, ranging from traditional neighborhoods to modern high-rise complexes. The housing options in Dubai are as varied as the city itself. In Dubai, you can live in luxury villas on the beach, chic apartments in the city center, or more affordable apartments on the outskirts. For those seeking the ultimate in luxury, areas like Palm Jumeirah or Dubai Marina offer exclusive properties with breathtaking sea views. Families often prefer areas like Jumeirah, Al Barsha, Dubai Hills, and Arabian Ranges because of their spacious homes and excellent schools. The real estate market is constantly growing, resulting in a steady stream of new and attractive developments.

Apartments and houses are referred to differently in the United Arab Emirates ( UAE ) than in Germany. Here are some of the terms used:

In 2023, the Dubai real estate market presents a dynamic picture, particularly regarding rental prices. Rental prices vary depending on the neighborhood, size, and features of the property. Here is an overview of average rental prices for various housing options in Dubai in 2023:

Please note that these figures represent averages and may vary depending on the exact location, proximity to central amenities, and the property's standard of finish. Popular residential areas such as Dubai Marina, Downtown Dubai, or Palm Jumeirah tend to be more expensive, while areas like Jumeirah Village Circle, Deira, or Damac Hills 2 may offer more affordable options.

Groceries are a significant part of monthly expenses. Costs can vary depending on lifestyle, dietary habits, and preferred shopping locations. Here is an overview of average prices for some common groceries and household items in Dubai:

Dubai boasts a wide variety of supermarkets, ranging from local chains to international brands. These supermarkets offer a broad selection of products, including many imported goods, and differ in some aspects from typical supermarkets in Germany.

Besides food, services such as electricity, water, internet, and mobile phone service are significant items in household expenses. Here is a table with average values:

In Dubai, electricity and water costs are calculated and billed by the Dubai Electricity and Water Authority (DEWA). Electricity and water bills are based on actual consumption. In addition to this consumption-based rate, there is a fixed charge, regardless of usage. This covers the provision and maintenance of the infrastructure. The fixed charge is typically 5% of the monthly rent. In a "chiller-free" rental property, the landlord or property management company covers the costs of operating the central air conditioning system. This means tenants don't have to worry about separate billing or additional costs for cooling their apartments. This can be a particularly attractive feature during Dubai's hot summer months and can significantly reduce overall housing costs. 

Leisure activities in Dubai, from budget-friendly fun to exclusive experiences. Here's a general overview with estimated price ranges for various activities. Please note that these prices are only guidelines and may vary depending on the provider, season, and specific offers.

For families emigrating to or living in Dubai, the education system offers a variety of opportunities that meet international standards.

• Development of the education system:
• In recent years, Dubai has made significant progress in the field of education. The education system is compulsory for children between the ages of 4 and 18 and aims to provide all children, regardless of their background, with access to quality education.
• Early childhood education:
• Children can attend a crèche from the age of six weeks and kindergarten from the age of three. These facilities usually offer international curricula and are tailored to the needs and age of the children. Many kindergartens also offer bilingual programs.
• Primary and secondary education:
• Primary school usually begins at age 6 and lays the foundation for further learning. Most primary schools teach in English, but there are also schools that offer instruction in other languages.
• After primary school comes secondary school, which includes both academic and technical educational pathways and prepares students for their future.
• Higher education:
• Dubai is home to a wide range of colleges and universities offering diverse curricula such as the Indian CBSE, the International Baccalaureate (IB), and British programs. These institutions have become important educational centers.
• Education costs:
• School costs in Dubai vary. Public schools are usually free, while private schools can cost between AED 5,000 and AED 100,000 per year, depending on the institution and program. For example, fees for a German school in Dubai range from AED 38,600 for preschool to AED 72,000 for upper secondary school.

Overview of the monthly cost of living for a family of three in Dubai:

These values ​​are average estimates and may vary depending on place of residence, educational institution and personal lifestyle.