The UAE's 0% personal income tax makes it the best place in the world to be a funded trader. But there are thresholds, caveats, and things most guides skip. Here's the full picture.
Individual traders in the UAE pay zero personal income tax on trading profits. There is no capital gains tax, no dividend tax, and no withholding tax on money earned from prop firm payouts. Whether you make AED 10,000 or AED 1,000,000 from prop trading, if you're operating as an individual (not a registered business entity), you keep 100% of what the prop firm pays you.
This applies to all Emirates — Dubai, Abu Dhabi, Sharjah, Ajman, Ras Al Khaimah, Fujairah, and Umm Al Quwain. It applies to UAE nationals and expatriate residents alike. If you hold a valid UAE residence visa, your worldwide income is not taxed by the UAE government.
Since June 2023, the UAE has implemented a 9% corporate tax on business profits exceeding AED 375,000 (approximately $102,000). This is relevant for prop traders in one specific scenario:
If your total annual revenue from all sources exceeds AED 1,000,000 (approximately $272,000), you may be required to register as a taxable entity under the UAE's corporate tax framework. At that point, your profits above AED 375,000 would be taxed at 9%.
Let's break down what this looks like for a prop trader:
| Annual Prop Trading Profit | Registration Required? | Tax Owed | Effective Rate | You Keep |
|---|---|---|---|---|
| AED 200,000 ($54K) | No | AED 0 | 0% | 100% |
| AED 500,000 ($136K) | No | AED 0 | 0% | 100% |
| AED 900,000 ($245K) | No | AED 0 | 0% | 100% |
| AED 1,200,000 ($327K) | Yes | AED 74,250 | 6.2% | 93.8% |
| AED 2,000,000 ($545K) | Yes | AED 146,250 | 7.3% | 92.7% |
The UAE dirham is pegged to the US dollar at a fixed rate of approximately 3.6725 AED per 1 USD. This peg has been in place since 1997 and is backed by the UAE Central Bank's massive foreign reserves.
For prop traders, this means:
Traders in India (INR), Poland (PLN), or the UK (GBP) face real currency risk — a 5% move in their currency against USD directly impacts their effective cost and earnings. Dubai traders don't have this problem.
No. Prop trading through overseas firms like Lucid Trading, Topstep, or Apex does not require a UAE trade licence. You are not providing financial services within the UAE — you are participating in a performance assessment programme operated by a foreign entity.
However, if you scale to a point where prop trading becomes a formal business (hiring employees, registering an entity, invoicing), you would need to set up through a free zone or the Dubai Department of Economy. Common options include DMCC, DAFZA, or IFZA, which offer trading-related licences starting from approximately AED 15,000-25,000 per year.
The UAE charges 5% VAT on goods and services. However, prop firm evaluation fees are paid to overseas companies and are not subject to UAE VAT. Similarly, prop firm payouts are not VAT-applicable — they are profit-sharing distributions, not taxable supplies.
If you do register a business entity, you would only need to register for VAT if your taxable supplies exceed AED 375,000 per year. Again, most individual traders won't reach this threshold.
| Country | Income Tax on Trading | Capital Gains Tax | Effective Keep (on $100K profit) |
|---|---|---|---|
| UAE (Dubai) | 0% | 0% | $90,000 (after 90% split) |
| United Kingdom | 20-45% | 10-20% CGT | ~$54,000 |
| United States | 22-37% | 15-20% | ~$59,400 |
| India | 30%+ | 15-20% STCG | ~$57,600 |
| Germany | 26.4% | 26.4% | ~$57,240 |
| Poland | 19% | 19% | ~$64,800 |
The difference is stark. Over a year earning $100K in prop trading profits, a Dubai-based trader takes home roughly $30,000-$36,000 more than a UK or Indian trader doing the exact same work with the exact same results. Over 5 years, that's $150,000-$180,000 in additional retained earnings.
Lucid Trading: 90% profit split + 0% UAE tax = you keep 90% of every dollar. Currently 50% off.
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