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Double Tax Treaties in Dubai

Double Tax Treaties in Dubai

Updated on Tuesday 17th September 2019

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Company-Due-Diligence-in-Dubai-refacut.jpgDubai has an attractive taxation regime and foreign investors who choose to open companies in Dubai also benefit from the double tax treaties signed between UAE and other countries with the purpose of avoiding double taxation for companies that have operating offices in Dubai and abroad. If you are a foreign investor, it is helpful to know if there are any double tax avoidance treaties between UAE and your country. Our lawyers in Dubai can give you complete information about the double taxation treaties signed by the United Arab Emirates. Also, our team can help foreign investors set up their businesses in the UAE.
 

Double taxation treaties and agreements in Dubai and the UAE

 

The first double taxation avoidance agreement was signed between the United Arab Emirates and France. Since then, the Emirates, including Dubai, have signed 92 double taxation treaties with countries across the world.

The list of double taxation avoidance agreements includes: Albania, Algeria, Armenia, Austria, Azerbaijan, Andorra, Belarus, Benin, Belize, Bangladesh, Bermuda, Barbados, Bosnia and Herzegovina, Belgium, Mauritius, Canada, Bulgaria, China, the Czech Republic, Egypt, Estonia, Ethiopia, Cyprus, Finland, Fiji, Georgia, Gambia, New Guinea, Germany, Greece, Hong Kong, Italy, India, Ireland, Japan, Kazakhstan, Kyrgystan, Kenya, Indonesia, Lebanon, Luxembourg, Latvia, Liechtenstein, Lithuania, Malaysia, Macedonia, Malta, Mongolia, Montenegro, Morocco, Mauritius, Mauritania, Mozambique, Mexico, the Netherlands, New Zealand, Nigeria, Pakistan, Philippines, Poland, Portugal, Palestine, Panama, Romania, Russia, Seychelles, Singapore, Senegal, Switzerland, Spain, Serbia, Slovenia, Slovakia, Sri Lanka, South Korea, South Africa, Sudan, Syria, Tajikistan, Thailand, Turkmenistan, Tunisia, Turkey, New Zealand, Ukraine, Uzbekistan, Uruguay, Uganda, Venezuela, Vietnam, Yemen. 

 

 What do the double tax treaties in the UAE contain?

 

Even if personalized, most of Dubai’s agreements for the avoidance of double taxation will contain provisions about the following:

  • the taxation of income of individuals and companies, as most agreements cover the income taxes applies by the contracting states;
  • methods of elimination of double taxation which are usually different for each country;
  • reduced tax rates for certain types of incomes ( capital gains for example);
  • tax reductions for investments made by the governments of the contracting states;
  • exemptions for the taxes levied on air transportation and shipping.
 
All double taxation agreements are created so that Dubai has a better international relation with its economic partners. For in-depth information, please address your inquiries to our Dubai attorneys at any time.

 

What are the incomes covered by the DTTs signed by the UAE?

 
Among the incomes protected by the double taxation agreements signed by the UAE with the above-mentioned countries, the following are the most important:
 
  • the dividends, the royalties, and the interests are covered by DTTs in Dubai;
  • the air transport and the shipping revenues are covered by the double tax treaties;
  • the registered incomes from the immovable properties or property alienation are part of the DTTs provisions;
  • the revenues derived from personal services are protected by the double tax agreements in the UAE.
 
For a better understanding of the provisions stipulated by the double taxation conventions in the UAE, please feel free to get in touch with our team of lawyers in Dubai.
 

Are DTTs available for Dubai’s free zones?

 
Yes, companies with establishments and activities in the free zones of Dubai can benefit from the provisions of the double taxation treaties signed by the UAE. We remind that in Dubai’s free zones foreign investors can have 100% ownership for their established businesses. We are at your disposal with complete details about how you can perform your activities in Dubai’s free trade zones.
 

Information about Dubai’s double taxation treaties

 

Foreign investors should know that the taxes paid in Dubai can be solicited in the home country of the foreign company as a credit against the tax paid in the UAE, depending on the provisions of the double taxation treaty and the applicable laws in the native country. Our Dubai lawyers can give you specific information about the provisions of each double taxation treaty if you want to know more about the effective agreement signed between Dubai and your country.

 

The provisions of DTT signed with Canada

 
The double taxation agreement signed by UAE with Canada protects the residents and the companies with origins in these countries when it comes to the taxation of incomes, if a permanent establishment is registered. The royalties, the capital gains and the dividends can be taxed in the UAE or in Canada, depending from case to case. As an example in this sense, if a company from Canada has activities in the UAE, generates profits in this country, for which taxes are imposed, this company can claim the amount of taxes in the form of a credit in the country of origins. The UAE and Canada have solid economic relations for many years, and a double taxation agreement came to strengthen the business ties between the two countries. We remind that if you need clarifications for a better understanding of the double taxation agreement signed by Canada and the UAE, you can get in touch with one of our Dubai lawyers and ask for legal support.
 

The provisions of DTT signed by UAE with China

 
Another important and strategic partner for UAE is China, for which a double taxation agreement was needed and therefore implemented. The double taxation treaty was signed in 2014 with the purpose of protecting the incomes and deduce specific taxes. The elimination of tax evasion is another reason for which the DTT was signed by the UAE and China. For instance, a tax credit can be offered to the Chinese company which paid the taxes in the UAE. It is important to know that tax reliefs apply to resident companies in the UAE and refer to revenues for dividends, interest and royalties. The elimination of tax evasion has always been in the attention of the UAE authorities, so the double taxation arrangements play a major role in the business environment, where the one signed with China makes no exception. If you are an investor from China and need to know more about the provisions of the double taxation signed with UAE, we invite you to get in touch with our attorneys in Dubai.
 

What are the provisions of DTT signed with India?

 
India is another important business partner to UAE, so the double taxation agreement signed in 1993 plays a major role in the business direction of both countries. As for the provisions of the double taxation treaty signed by UAE and India, companies with establishments in one of these countries can pay the taxes only in one of these two states. In the case the companies pay the taxes in both countries, a tax credit can be offered in the home country, in this case in India. It is important to know that any change in the taxation system whether in the UAE or India, must be mentioned in time, as stated by the double tax convention signed by the above-mentioned countries. We remind that the royalties, the interests, the dividends, the incomes derived from immovable properties and the personal incomes are protected by the provisions of the double tax treaty signed between UAE and India.
 

DTT signed by UAE with Turkey

 
The economic collaborations between UAE and Turkey date back in history, and the need of signing a double taxation agreement came naturally. In 1994, both countries signed a convention for the avoidance of paying the taxes twice, mentioning that new provisions were added a few years later. Among the taxes covered by the double taxation treaty signed by UAE with Turkey we refer to dividends, royalties, interests, retirement funds, personal incomes and incomes resulted from immovable properties. For a better understanding of the provisions of the double tax treaty signed by UAE and Turkey. Feel free to solicit the support and the legal advice from our Dubai lawyers.
 

Why make investments in Dubai

 
The excellent business conditions and the multitude of investment opportunities in the UAE and particularly in Dubai stand at the decision of creating a company and thriving in a healthy and appreciated business destination. The appealing tax structure, the possibility of making investments in most of the sectors and the high standards of living are also reasons to place Dubai on top destinations for business. Here are also facts, information and statistics about business in the UAE:
 
  1. According to the report offered by Dubai Investment Development Agency, India is about to turn into the second largest investor in the UAE.
  2. According to The “2019 Doing Business” report, UAE ranks 11th out of 190 economies worldwide.
  3. USD 10,385 million is the FDI inward flow registered by UAE in 2018.
  4. Approximately 378 of Greenfield Investments have been recorded in 2018 in the UAE.

 

If you want to know more about investing in Dubai, please contact our law firm in Dubai.