UAE Free Zone and Australian Taxes — Complete Guide for Australian Entrepreneurs
Australian entrepreneurs increasingly set up UAE companies. Here is the complete guide to UAE-Australia tax implications in 2026.
In this guide:
Australia Worldwide Taxation
- Australian resident: Taxed on worldwide income; 45% top marginal rate for income over AUD 180,000
- Australian company tax: 25% (base rate entities); 30% (others)
- UAE vs. Australia: Significant potential saving via UAE structure IF Australian tax residency is properly terminated
Australia-UAE Double Tax Treaty
- Australia-UAE DTAA: In force; reduces double taxation
- Dividend withholding: Dividends from UAE company to Australian shareholder: UAE charges 0% withholding
- Capital gains: UAE has no capital gains tax; capital gains in Australia on UAE company shares may be subject to Australian CGT
Australian CFC Rules
- Australia CFC rules: If an Australian-resident taxpayer controls a foreign company with passive income, Australia may attribute and tax those foreign profits
- Passive income: Interest, royalties, rent, dividends from a UAE company may trigger Australian attribution
- Active income: Generally exempt from Australian CFC attribution if it is genuine business income
Breaking Australian Tax Residency — Key Steps
- Permanent departure: Must establish a permanent home abroad; severe ties with Australia removed
- ATO individual 183-day test: Secondary test; main test is domicile and permanent place of abode
- 183 days in UAE: Necessary but not always sufficient to become UAE tax resident
- UAE tax residency certificate: Obtainable after 183 days in UAE; helpful for demonstrating non-Australian residency