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Moving to the UAE · 15 September 2026 · 4 min read

US citizens setting up a company in Dubai: what do you still owe the IRS?

The IRS taxes US citizens on worldwide income wherever they live. The exclusion figures for 2025 and 2026, the forms a Dubai company can trigger and what UAE banks report.

The short answer

A US citizen who sets up a company in Dubai stays within the US tax system. The IRS taxes US citizens and resident aliens on worldwide income wherever they live. The Foreign Earned Income Exclusion is $130,000 for tax year 2025 and $132,900 for 2026. Owning a UAE company can require Form 5471, and UAE accounts can require an FBAR and Form 8938. The US and the UAE have no income tax treaty.

  • US citizens and resident aliens are taxed on worldwide income, wherever they live.
  • Foreign Earned Income Exclusion: $130,000 for 2025 and $132,900 for 2026.
  • A UAE company and UAE accounts can bring Form 5471, the FBAR and Form 8938.
  • UAE banks report US account holders under a FATCA agreement signed in 2015.
  • The UAE is not on the IRS list of US income tax treaties.

Do US citizens still pay US tax when they live in Dubai?

They stay within the US tax system. The IRS states that US citizens and resident aliens abroad are taxed on their worldwide income and must file under the same rules as those living in the United States.

Taxpayers abroad get an automatic two month extension to file, to 15 June. Interest still accrues on any unpaid tax.

Moving to Dubai, or setting up a company there, does not by itself end US tax obligations.

How much is the Foreign Earned Income Exclusion for 2025 and 2026?

The exclusion is $130,000 for tax year 2025 and $132,900 for tax year 2026, for each qualifying person. The figure differs between the two years, so any figure you read should name its tax year.

To claim it, your tax home must be in a foreign country and you must meet either the bona fide residence test or the physical presence test, which requires 330 full days in 12 consecutive months. The exclusion is claimed on Form 2555.

The exclusion reduces regular income tax. The IRS states that it does not reduce self employment tax.

Foreign Earned Income Exclusion, per qualifying person
Tax yearMaximum exclusion
2025$130,000
2026$132,900

Good to knowThe research behind this article did not cover how the exclusion applies to income a founder takes from their own company. Ask a US tax adviser.

Which US forms apply if you own a Dubai company?

Owning a UAE company and holding UAE bank accounts can bring several US information returns. The IRS describes them as follows.

US filings that a UAE company or UAE account can trigger
FilingWho filesFigure or deadline
Form 5471Certain US citizens and residents who are officers, directors or shareholders in certain foreign corporationsAn information return
FBAR, FinCEN Form 114A US person whose foreign financial accounts exceeded $10,000 in aggregate at any time in the yearDue 15 April, with an automatic extension to 15 October
Form 8938Those with specified foreign financial assets above the thresholdsThresholds apply. Check the current form instructions
Form 2555Taxpayers claiming the Foreign Earned Income Exclusion$130,000 for 2025, $132,900 for 2026

Good to knowHow the profits of a foreign company owned by a US person are taxed was not covered by this research. Only the existence of Form 5471 was verified.

Will your UAE bank report your account to the US?

The UAE and the US have a FATCA Model 1B intergovernmental agreement, signed on 17 June 2015. Under it, UAE financial institutions report US account holders through the UAE Ministry of Finance.

UAE financial institutions report this information annually. The FBAR and Form 8938 are separate filings made by the US person.

Is there a tax treaty between the US and the UAE?

The United Arab Emirates does not appear on the IRS list of US income tax treaties, a page the IRS reviewed on 3 January 2026. The United States does not appear on the UAE Ministry of Finance list of double taxation agreements, a 2023 document.

The UK, by comparison, has a double taxation convention with the UAE, in force since 25 December 2016. The same Ministry of Finance list shows France, the Netherlands, Italy, Spain and Ireland.

Can a US citizen own 100% of a Dubai company?

The Ministry of Economy and Tourism states that investors of all nationalities can establish and fully own companies. The UAE government portal lists up to 100% foreign ownership in free zones.

On the mainland, Cabinet Resolution No. 55 of 2021 lists seven activities with a strategic impact. For six of them the sector regulator sets the permitted foreign shareholding, and services related to fisheries must be 100% nationally owned.

What tax does the UAE charge?

The UAE charges corporate tax on the company and no income tax on the individual. Corporate tax is 0% on taxable income up to AED 375,000 and 9% above it, from the first financial year that starts on or after 1 June 2023.

The UAE government portal states that the UAE does not levy income tax on individuals. That is a statement about UAE tax only. It has no effect on what the IRS taxes.

This article states what the IRS and the UAE authorities publish. It is not tax advice: confirm your own position with a qualified US tax adviser before you set up.

Common questions

Common questions.

Answered from the official sources listed below.

I am a US citizen. Do I stop paying US tax if I live in Dubai?

Living in Dubai does not by itself end US tax obligations. The IRS states that US citizens and resident aliens abroad are taxed on their worldwide income and must file under the same rules as those living in the United States. Taxpayers abroad get an automatic two month extension to file, to 15 June, but interest still accrues on unpaid tax.

What is the Foreign Earned Income Exclusion for 2026?

It is $132,900 for tax year 2026, up from $130,000 for tax year 2025, for each qualifying person. Your tax home must be in a foreign country and you must meet the bona fide residence test or the physical presence test of 330 full days in 12 consecutive months. It is claimed on Form 2555.

What is Form 5471 and who files it?

Form 5471 is the information return filed by certain US citizens and residents who are officers, directors or shareholders in certain foreign corporations. A US founder of a UAE company should ask a US tax adviser whether the filing applies to them.

When do I have to file an FBAR?

A US person must file FinCEN Form 114, known as the FBAR, if the aggregate value of their foreign financial accounts exceeded $10,000 at any time in the year. It is due on 15 April, with an automatic extension to 15 October.

Does the US have a tax treaty with the UAE?

No income tax treaty appears on the IRS list. The United Arab Emirates is not on the IRS list of US income tax treaties, a page the IRS reviewed on 3 January 2026. The two countries do have a FATCA intergovernmental agreement, signed on 17 June 2015, which covers reporting.

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