If you spend any time on social media, you must have seen giant skyscrapers, luxury cars, and people claiming you can live a ‘tax-free’ life in the UAE. For a young person watching the global economy, it’s natural to be skeptical. You might wonder whether this is a real boom or just a bubble waiting to burst?
The answer isn’t just about oil or fancy marketing. It’s about how the country actually runs. In a conversation on YouTuber Raj Shamani’s podcast, UAE Ambassador to India Dr Abdul Nasir Alshali explained the mechanics behind the country’s success.
How Dubai makes money without income tax
The first thing people notice about Dubai is that there is no income tax. But a city still needs money to build roads, run the metro, and keep the streets safe. Dr Alshali explained during the podcast that instead of taking a piece of your paycheck, the government generates revenue through services.
“Some of the money obviously is coming from oil and gas, and there’s a federal budget, and there’s local budgets… and then those federal entities, for example, they generate their own revenues,” said Dr Abdul Nasir Alshali in the podcast.
“If you look at the Ministry of Foreign Affairs, we get so much revenue from attestations of commercial documents and other personal documents,” Dr Alshali added. He explained that this money goes to the Ministry of Finance, which then decides the allocation for each ministry when it comes to their budgets.
Paying for ‘top-notch’ safety and service
For someone buying a home or starting a business, this system is actually a good thing. In many countries, you pay high taxes but still deal with bad roads or crime. In the UAE, the fees you pay go directly into making the city better.
“You have to pay, for example, for setting up a trading license. You have to pay certain fees to get certain services connected or certain services provided,” he further said in the podcast.
Dr Alshali even used his own experience as an example, mentioning that when he needed a property valuation, he had to pay for that specific service. “That also goes into that kind of budget versus expenditure kind of thing,” he said.
Because of this model, the government can afford to keep the infrastructure great and ensure that safety is top-notch.
It’s not just about oil
A common mistake is thinking the UAE only survives on oil. While oil is important, the country has moved toward “income-generating activities” to stay stable.
“Correct that all of this is at a cost, but this kind of money is also being generated from other kinds of sources, and they pay for that,” he said.
By charging for licenses and services, the government has a steady stream of money that doesn’t change just because the price of oil goes up or down. This gives the real estate market a solid foundation.
So, is the boom real? According to Dr Alshali, the growth is backed by a real economic engine. The UAE has replaced the traditional tax collector with a modern service model.
“We’re talking about income-generating activities… talking about revenue sources,” Dr Abdul Nasir Alshali further said on the podcast.