UAE Tax Treaties with other countries

UAE has signed Double Taxation Agreements (DTA) with 114 countries.

Generally, treaties entered into by the UAE follow the OECD model treaty provisions and are interpreted in accordance with the OECD guidelines accompanying the model treaty.

Given the limited enforcement of the tax decrees in the UAE, the definition has very little practical significance for companies looking to operate within the UAE.

There are currently no withholding taxes applicable in the UAE, hence claiming relief under double tax treaties may not be relevant.

UAE Tax Treaties with Taiwan
UAE Tax Treaties with China

Email: dxb4ww@evershinecpa.com
The Engaging Manager from Headquarter
Ms. Anna Wang, Speak German English, and Chinese.
skype: burlinna

We set up below judgment criteria on Treaty application:

Scenario:

If you are not a UAE legal resident, and if your resident country has DTA with UAE, and if you are without PE (Permanent Establishment), please go to section Ａ.
If you are not a UAE legal resident, and if your resident country has DTA with UAE, and if you are with PE (Permanent Establishment) please go to section Ｂ.
If you are not a UAE legal resident, and if your resident country has not DTA with UAE, please go to Section Ｃ.

Section Ａ:
Scenario:

If you are not a UAE legal resident, and if your resident country has DTA with UAE, and if you are without PE (Permanent Establishment), it will be deemed as “non-UAE Domestic Sourced Income”.
That means UAE will levy zero-tax.
However, your still need to send zero-tax application to UAE Tax Bureau for being approved.

Below, we will let you understand through Q&A.

DTA-Q-10:        

In UAE, which foreign legal resident company can apply for zero tax rate without PE under DTA?

DTA-A-10:
UAE has signed DTAs with the following 114 countries:

DTA-Q-20:         

Why does the Country’s foreign capital without a permanent establishment (PE) in UAE, under the DTA enjoy zero tax rate?

DTA-A-20:

It follows Article 5 and Articles 7 in the DTA Treaty. Articles define if foreign entity having PE in UAE. Article 7 regulate if no PE, non-UAE domestic sourced income will not be levied tax in UAE.

DTA-Q-30:        

Under what circumstances are deemed to have no PE, and will the establishment of a foreign-funded subsidiary in UAE be regarded as a foreign-funded subsidiary in UAE?

DTA-A-30:

According to DTA Article 5 item 7, A Wholly Foreign Owned subsidiary in UAE will not be treated as PE because it is a separate legal entity.
That means if a UAE Subsidiary pay service fee to non- UAE Parent Company through service contract signed between subsidiary and non – UAE Parent company
as an investor, non- UAE Parent Company can apply zero tax.
As for if paid amount being reasonable, it will get involved TP (Transfer Pricing) judgement by UAE Tax Bureau.
Please see UAE Transfer Pricing webpage.

DTA-Q-40:

If foreign company establishes a branch or office in UAE, can the zero-tax rate without PE be applied?

DTA-A-40:

According to DTA Article 5 item 2, If foreign company set up a branch or Office in UAE, then will be considered as UAE domestic Income.

But According to DTA Article 5 item 4, if an Office is only doing preparatory or auxiliary activity, will apply zero-tax rate.

DTA-Q-50:        

What is the procedure for UAE to apply for zero tax rate under DTA without PE?

DTA-A-50:

There are currently no withholding taxes applicable in the UAE, hence claiming relief under double tax treaties may not be relevant.

Section Ｂ:

Scenario:

If you are not a UAE legal resident, and if your resident country has DTA with UAE, and if you are with PE (Permanent Establishment), your income will be considered as UAE domestic sourced income.
As for levying Tax Rate, please be aware:
if UAE Tax rate > DTA Rate, adopt DTA Rate; if UAE Tax rate < DTA Rate, adopt UAE Rate.

Below, we will let you understand through Q&A

DTA-Q-60:        

What are the factors that deemed to be the country’s domestic source income?

DTA-A-60:

Given the limited enforcement of the tax decrees and the limited guidance as to the definition of a PE for domestic purposes, it is not clear exactly whether and to what degree of service activity in the country would constitute a PE.

DTA-Q-70:

Does Article 5 and Article 7 in the DTA take precedence over the UAE determination factors on UAE domestic sourced income?

DTA-A-70:

When DTA is applied, in the event of a different PE definition between UAE domestic tax laws and Article 5 in the DTA, the definition under the DTA shall prevail the domestic regulations.

When DTA is applied, if foreign company being defined as without PE (Permanent Establishment) in UAE, then will be considered non-UAE domestic sourced income, in the event business profit is relevant to this issue, the clause in Article 7 in the DTA zero-rate tax can be applied accordingly.

In this scenario, please see section A.

DTA-Q-80:
When non-tax residents of UAE having UAE domestic sourced income ，what is the withholding tax rate according to UAE tax regulations excluding DTA?

DTA-A-80:

Non-resident persons that do not have a Permanent Establishment in the UAE or that earn UAE-sourced income that is not related to their Permanent Establishment may be subject to Withholding Tax (at the rate of 0%).

DTA-Q-90:        

If DTA Tax Rate is higher than UAE tax rate, apply which tax rate?

DTA-A-90

As for levying Tax Rate, please be aware:
if UAE Tax rate > DTA Rate, adopt DTA Rate; if UAE Tax rate < DTA Rate, adopt UAE Rate.

DTA-Q-A0:        

When non-tax residents of UAE having UAE domestic sourced income, what is UAE’s application procedure based on the DTA preferential tax rate?

DTA-A-A0:

There are currently no withholding taxes applicable in the UAE, hence claiming relief under double tax treaties may not be relevant.

Section Ｃ:

DTA-Q-B0: 

As an investor, if your country has not signed DTA with UAE, what kinds of tax rates when you have UAE relevant income?

DTA-A-Q0:

The withholding tax rates under domestic law are:

Business Profits – 0% (Note 1)

Dividend – 0% (Note 2)

Interest (General loan) – 0% (Note 2)

Royalties fee – 0% (Note 2)

Technical services – 0% (Note 1)

Professional services – 0% (Note 1)

Note:

1. The United Arab Emirates do not impose withholding on payments for services of any kind, either at the federation level or in any of the individual emirates.
2. There is no withholding tax on dividends, interest, and royalties.

Please be aware of below Warning:
The above contents are digested by Evershine R&D  and Education Center in December 2022.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Dubai Evershine BPO Service Limited Corp.
Email: dxb4ww@evershinecpa.com
The Engaging Manager from Headquarter
Ms. Anna Wang, Speak German, English and Chinese.
skype: burlinna

or
For how to exchange data files between your Finance Accounting System and Evershine Cloud Accounting Information System, please send an email to HQ4dxb@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable for your case.
LinkedIn address:Dale Chen

Additional Information

Evershine CPAs Firm Headquarters
6th Floor 378 Chang Chun Rd., Taipei City, Taiwan ROC
Partner Kerry Chen, USA Graduate School and a well-English speaker
Tel No.: +886-2-27170515 ext. 105
Mobile: +886-939357000
Email: kerrychen@evershinecpa.com
Skype: oklahomekerry

Evershine has 100% affiliates in the following cities:
Headquarter, Taipei, Xiamen, Beijing, Shanghai, Shanghai,
Shenzhen, New York, San Francisco, Houston, Phoenix Tokyo,
Seoul, Hanoi, Ho Chi Minh, Bangkok, Singapore, Kuala Lumpur,
Manila, Dubai, New Delhi, Mumbai, Dhaka, Jakarta, Frankfurt,
Paris, London, Amsterdam, Milan, Barcelona, Bucharest,
Melbourne, Sydney, Toronto, Mexico

Other cities with existent clients:
Miami, Atlanta, Oklahoma, Michigan, Seattle, Delaware;
Berlin, Stuttgart; Prague; Czech Republic; Bangalore; Surabaya;
Kaohsiung, Hong Kong, Shenzhen, Donguan, Guangzhou, Qingyuan, Yongkang, Hangzhou, Suzhou, Kunshan, Nanjing, Chongqing, Xuchang, Qingdao, Tianjin.

Evershine Potential Serviceable City (2 months preparatory period):
Evershine CPAs Firm is an IAPA member firm headquartered in London, with 300 member offices worldwide and approximately 10,000 employees.
Evershine CPAs Firm is a LEA member headquartered in Chicago, USA, it has 600 member offices worldwide and employs approximately 28,000 people.
Besides, Evershine is Taiwan local Partner of ADP Streamline ®.
(version: 2024/07)

Please send an email to HQ4dxb@evershinecpa.com

More City and More Services please click Sitemap