How do I register and pay taxes on my short-term rental income?
In Dubai, registering and paying taxes on your short-term rental income involves a few key steps, starting with obtaining the necessary permits and ensuring compliance with local regulations. Here's a detailed guide to help you navigate the process:
Obtain a Holiday Home Permit
To legally operate a short-term rental in Dubai, you must first obtain a Holiday Home Permit from the Department of Tourism and Commerce Marketing (DTCM). This permit is mandatory for both individual homeowners and tenants who wish to sublet properties for short-term stays. The process can be completed online through the DTCM portal and typically requires the following documents:
Title deed or proof of ownership.
Passport or Emirates ID of the owner or tenant.
DEWA (Dubai Electricity and Water Authority) bill.
NOC (No Objection Certificate) from the property developer (if applicable)
The cost for a one-bedroom property is AED 370, with renewal fees potentially reaching up to AED 1,200 per year depending on the size of the property.
Pay the Tourism Dirham Fee
In Dubai, short-term rental income is not subject to traditional income tax, but property owners must pay a Tourism Dirham Fee. This fee is charged per room per night and varies based on the classification of the property:
Standard accommodations: AED 10 per room per night.
Deluxe properties: AED 15 per room per night.
This fee must be collected from your guests and submitted monthly to the DTCM, with payments due by the 15th of the following month.
VAT and Other Fees
While Dubai does not levy income tax on short-term rental earnings, you may still need to register for VAT (Value-Added Tax) with the Federal Tax Authority (FTA) if your income exceeds the VAT threshold (AED 375,000 annually). In this case, you will need to obtain a tax registration number and file VAT returns periodically.
Maintain Compliance
In addition to the Tourism Dirham Fee, it’s important to comply with DTCM regulations regarding property standards, guest registration, and occupancy limits. Fines for non-compliance, such as operating without a permit, can range from AED 5,000 upwards.
By following these steps, you can ensure your short-term rental operates legally in Dubai while maximizing your potential income.
