Taxes, costs and life in Dubai: What is myth and what is reality?
Dubai has for years been a destination of major interest for entrepreneurs, freelancers, investors and expats from all over the world. Its attractiveness is tied to zero income tax, spectacular economic development and a high quality of life. However, a lot of myths and erroneous perceptions circulate around Dubai, especially in the Romanian environment.
In this article, we will discuss the most popular myths related to taxes, costs and everyday life in Dubai, giving a clear and correct picture for those who are thinking about relocating, investing or opening a business in the UAE.
Myth 1: “There is no tax or tax in Dubai”
The truth:Dubai does not charge personal income tax, but it is not completely tax-free.
It is true that in the UAE there is no personal income tax, but there are other forms of taxation that must be considered:
• VAT (VAT)— 5% applied to most products and services;
• Corporate profit tax— from June 2023, a 9% tax has been introduced on corporate profits exceeding AED 375,000 (approximately USD 100,000);
• Municipal taxes— applied to rents, hotels and restaurants;
• Excise— on harmful products (carbonated drinks, energy drinks, tobacco).
So, even though Dubai is still a tax haven compared to other states, the idea of “zero taxes” is incomplete and often misunderstood.
Myth 2: “The cost of living in Dubai is extremely high”
The truth:The cost of living can be high, but it is scalable and varies greatly depending on lifestyle.
Dubai offers options for all pockets — from luxury apartments with rents of tens of thousands of euros per month to studio apartments for moderate budgets. Here is a general picture:
Estimated monthly costs (for a single expat, average lifestyle):
• Rent 1 bedroom apartment: 4,000 — 7,000 AED
• Utilities + Internet: 500 — 800 AED
• Transportation: 300 — 600 AED (public transport + taxi)
• Food and basic products: 1,000 — 1,500 AED
• Other (outings, subscriptions, clothing, etc.): 1,000 — 2,000 AED
The cost can vary considerably depending on:
• The area where you live (Burj Khalifa vs. Dubai Silicon Oasis);
• If you have your own car or use public transport;
• Lifestyle (local or Western).
Myth 3: “You have to be a millionaire to live in Dubai”
The truth:Dubai is an affordable city for the global middle class.
Another common myth is that only the “rich” can afford to live in Dubai. The reality is that tens of thousands of expats live and work in Dubai with decent, but not at all extravagant incomes. You can make a good living with a salary of AED 4,000—6,000 (1,000—1,500 EUR), if you budget correctly.
Moreover, Dubai offers clear tax advantages:
• Wages are not taxed;
• There are no social contributions such as CAS, CASS or pensions;
• You have greater financial freedom even with a lower income than in Europe.
Myth 4: “Dubai is only for tourists and luxury businesses”
The truth:Dubai is a cosmopolitan city with residential neighborhoods, schools, hospitals and an extensive expat community.
Although the external image of Dubai is associated with skyscrapers, luxury cars and giant malls, in reality the city has a mature urban and residential infrastructure:
• Quiet areas for families (ex: Mirdif, Al Barsha, Jumeirah Village);
• International schools (British, American, Indian, etc.) ;
• High quality private and public hospitals;
• Communities of Romanian, European, Asian expatriates, etc.
Dubai is one of the safest cities in the world, has an extremely low crime rate and offers a high quality of life.
Myth 5: “It's complicated to become a resident of Dubai”
The truth:The procedure is relatively simple, especially for entrepreneurs or freelancers.
Dubai allows obtaining legal residency by several methods:
• Opening a company (the most popular way for entrepreneurs/freelancers);
• Employment in a local company;
• Acquisition of property (investor visa);
• Digital nomad visa (for those who work remotely).
Visas are valid for 1—3 years and can be renewed. The main steps are:
1. The choice of the method of application (firm, labor, investment);
2. Obtaining a visa and Emirates ID;
3. Opening a local bank account;
4. Application for tax residency certificate, if necessary.
Myth 6: “In Dubai you have no freedom or social life”
The truth:Dubai is an open, multicultural and tolerant city — within the law.
Many mistakenly believe that life in Dubai is extremely restrictive. In reality:
• The average expat has religious, dress and social freedom, as long as they comply with local laws;
• Restaurants, cultural events, nightlife and fitness centers are very active;
• Dubai hosts dozens of international festivals, conferences and exhibitions annually.
But it is important to keep in mind:
• Rules of public decency (avoid indecent gestures or behavior in public);
• Strict legislation on alcohol and drugs;
• Respect for local culture.
Dubai is much more nuanced than the image promoted on social media or rumors circulating online. It's not a tax-free paradise altogether, but it offers tax advantages and opportunities that few other cities equal. The cost of living is variable, and lifestyle can be adapted according to budget and preferences.
