The United Arab Emirates have not sign a double taxation agreement with the United States of America yet, but the two countries have strong economic relations based on bilateral investment treaties. The reason the two states have not concluded a double taxation treaty yet is because no personal income and corporate taxes are levied in the Emirates’ free zones where full foreign ownership of companies is allowed. Dubai is one of the Emirates not withholding any taxes on the incomes earned by foreign investors. However, Dubai has signed different double taxation treaties in order to become a more attractive territory to foreign enterprisers. UAE’s double taxation treaties are meant to reduce the withholding taxes applied in the home countries of foreign companies operating in the Emirates.
For a complete list of all UAE’s double taxation agreements, you can ask our agents in company registration in Dubai.
Table of Contents
Tax decrees in the UAE
Even if there is no double tax treaty between the UAE and the US, the UAE Government has issued several tax decrees that cover the taxation of foreign citizens living, working or owning companies in the country. Each tax authority in the Emirates imposes an income tax that can reach 50% on the taxable income of companies, no matter their country of incorporation. However, this tax is only imposed to companies exporting oil and foreign banks. It must also be taken into account that the tax rate will vary as it is calculated based on rates agreed upon by a company and the Emirate’s tax authorities, therefore it is personalized.
Taxation under double tax agreements in the UAE
The agreements for avoidance of double taxation signed by the UAE are not very relevant when it comes to the taxes levied in the Emirates because taxation is subject to the determination of tax liability. All the taxes paid by a foreign company operating in the UAE can be credited in the company’s home country based on the double taxation agreement and the domestic tax laws.
Recently the UAE and the US have signed an agreement for international tax compliance. For complete information about the UAE taxation system, please contact our company registration agents in Dubai.