Introduction

In a world where global professionals, entrepreneurs and high-net-worth individuals increasingly seek locations that offer tax efficiency, legal stability, and future-proof living, the emirates of Abu Dhabi and Dubai have emerged decisively at the top. According to the 2025 Tax Friendly Cities Index from Multipolitan, Abu Dhabi ranks #1 with a score of 637.1, and Dubai follows closely at #2 with a score of 635.1.

For anyone exploring a second-home in the UAE, global mobility, wealth preservation or relocation strategy, the rise of these tax-friendly destinations in 2025 is a game-changer. This blog dives deep into the factors behind the ranking, what it means for residents and investors, how the tax-regime works in practical terms, and why the My 2nd Home Dubai portfolio makes sense in this context.

Why Abu Dhabi & Dubai Rank So Highly as Tax-Friendly Cities

1. Zero Personal Income Tax

One of the cornerstone advantages: both Abu Dhabi and Dubai (and the wider UAE) impose no personal income tax on salaries, wages and bonuses. This remains a major draw for professionals and expatriates.

2. Low Corporate Tax and Business-Friendly Regime

Since June 2023 the UAE introduced a federal corporate tax of 9 % on taxable profits above AED 375,000. For many companies, especially small to medium-sized enterprises or those located within free-zones, the effective tax burden remains very low.

3. Broad Double Tax Treaty Network & International Connectivity

The UAE has an extensive treaty network (more than 140 double tax treaties) which supports global business and cross-border finance. The ranking methodology includes these treaty factors plus governance, legal stability and property-related costs.

4. Low Property-Related Fees and Legal Predictability

Specifically, Abu Dhabi secured its #1 ranking because it pairs the zero income tax regime with lower property-transfer and municipal fees than many comparable cities, combined with strong regulatory stability.

5. Region-Wide Shift: GCC Leading Global Wealth Mobility

Seven cities from the Gulf region (GCC) made the top 20 of the Tax Friendly Cities Index in 2025, illustrating the broader trend of the region becoming a global hub for mobile wealth, investment and relocation.

Key Tax-Friendly Features & Practical Considerations (2025)

Below we outline the substantive features of the tax-regimes in Abu Dhabi & Dubai, along with practical considerations for expats, business owners, investors and second-home seekers.

A. Personal Income Tax – Nil

• No tax on personal salary or wages in the UAE.

• No tax on dividends or capital gains for most private individuals.

• You’ll still want to check home-country obligations (residency, exit tax, etc).

B. Corporate Tax – 9 % for Profits Above Threshold

• From June 2023: a UAE corporate tax of 9 % applies on taxable profits above AED 375,000.

• Many free-zone entities (meeting qualifying conditions) may benefit from 0 % or low tax regimes.

• Note: For very large multinationals, from 2024-25 there’s a “15 % minimum top-up tax” (pursuant to OECD Pillar 2) for entities with consolidated global revenue over €750m.

C. Value Added Tax (VAT) and Indirect Taxes

• The UAE applies a VAT of 5 % on most goods and services.

• There are also municipal property/rental taxes in some cases (e.g., rental tax in Dubai) and registration fees. These are relatively modest compared to many other global hubs.

D. Property-Related Fees & Real Estate Considerations

• Property transfer fees, registration fees and municipal levies exist, but are competitively low in Abu Dhabi and Dubai. These costs won’t overwhelm the tax advantages.

• When acquiring a second home via My 2nd Home Dubai, you’ll want to factor in these fees (e.g., Dubai property registration fee, yearly maintenance, service charges) but you benefit from minimal tax-drag on rental income and capital gain.

E. Double Taxation Treaties & Cross-Border Wealth Planning

• The UAE’s treaty network enables cross-border tax planning, reduces tax leakage and supports global relocation/investment strategies.

• If you are a non-resident or part-time resident, you’ll still need to align with domicile/residency rules in your home country.

F. Governance, Legal Stability & Wealth Preservation

• What sets Abu Dhabi and Dubai apart is not just low taxes, but predictability, rule of law, regulatory clarity and treaty coverage — all counted in the index.

• For high-net-worth individuals and investors, that matters as much as the nominal tax rate.

G. Relocation & Residency Considerations

• If you are considering relocation, second residence or property ownership, the tax-friendly regime means you could structure your income, investment returns and business interests to benefit.

• However, ensure you comply with local residency rules, visa requirements, and home-country tax obligations (exit tax, worldwide income, CGT, inheritance tax etc).

Potential Risks and Things to Watch

While the tax-friendly headline is powerful, you should also be aware of some caveats and planning-requirements to ensure you maximise benefits:

Home-country tax residency: Your home country may treat you as tax-resident even if you live abroad part-time. Ensure you manage split residency, exit tax issues, worldwide income and double taxation.

Corporate compliance: If you operate a business from the UAE, be sure to understand the corporate tax rules, free zone conditions, substance requirements and transfer pricing implications.

Large-corporate top-up tax: If you are part of a multinational earning above the €750 million threshold globally, the 15 % minimum top up tax applies.

Indirect taxes & fees: While personal income tax is zero, indirect taxes (VAT), property fees, service charges, and local levies still apply. These need to be budgeted.

Changing global tax norms: The global tax-landscape is evolving (OECD Pillar 2, digital taxes, transparency). Even tax-friendly jurisdictions are adapting. But the UAE’s proactive reform agenda is a plus.

Due-diligence and structuring: To fully benefit, you should work with tax advisers, legal counsel, property specialists (like My 2nd Home Dubai) to structure ownership, residency, business operations and wealth planning correctly.

2025 Outlook: Why Now is a Good Time

• The 2025 index reinforces the position of Abu Dhabi and Dubai as top ­tax-friendly cities globally — giving you confidence.

• The UAE is expanding its free-zone incentives, launching smart-city/regulatory reforms, upgrading infrastructure and drawing global capital.

• As global tax and regulatory pressures mount in other jurisdictions (higher personal income tax, wealth taxes, digital-services taxes), the appeal of low-tax, stable hubs strengthens.

• For property and second-home acquisition, acting sooner rather than later can capture favorable pricing, residency windows and structural benefits before potential regulatory shifts.

• With My 2nd Home Dubai’s guidance, you can align your property choice with tax-planning strategy, lifestyle goals and investment horizon — optimising both short-term benefit and long-term value.

How to Leverage This Tax-Friendly Opportunity via My 2nd Home Dubai

Step 1: Define your goal — Is it a second home, rental investment, relocation, business base, wealth-preservation hub?
Step 2: Select your property type and location — Dubai has multiple zones; Free-Zones for business.
Step 3: Ensure you structure your residency and tax position correctly — Consult with UAE-tax and international-tax advisers.
Step 4: Consider the business component (if any) — Company setup, free-zone benefits, corporate tax implications.
Step 5: Ongoing compliance — Staying aware of UAE developments (VAT, corporate tax, global minimum tax, treaty developments) to ensure you remain within the favourable regime.
Step 6: Review your home country tax status — Ensure you remain compliant and utilise any treaty benefits or exit/entry planning as required.
Step 7: Monitor global tax-environment shifts — Use the UAE’s tax-friendly base as part of your global wealth-mobility strategy.

Summary & Final Thoughts

In 2025, the tax-friendliness of Abu Dhabi and Dubai is not just a headline — it’s a deeply structural advantage. From zero personal income tax and low corporate tax, to robust treaty networks, favourable property-transfer fees and stable governance — they offer a compelling base for relocation, investment, business and lifestyle.

For clients of My 2nd Home Dubai, this creates a rare intersection: high-quality second-home opportunity plus strategic tax-planning benefit. Whether you are an entrepreneur, professional, investor or retiree, aligning a second residence or investment in the UAE with a well-planned tax and mobility strategy can deliver long-term value.

If you’re ready to explore the possibility of securing property in Dubai (or Abu Dhabi), aligning with residency and tax-planning, My 2nd Home Dubai stands ready to support your journey — from property selection, structuring, legal/tax advice and integration.