UAE Withholding Tax

What is Withholding Tax?

Withholding tax is a tax collected at the source of income, typically on payments made to non-residents. The payer deducts the tax from the payment and remits it to the tax authority. Common payments subject to withholding tax in other jurisdictions include dividends, interest, royalties, and service fees.

UAE Withholding Tax Rate

No Withholding Tax

The UAE does not impose withholding tax on payments made to non-residents. This applies to dividends, interest, royalties, and service fees.

Key Points About UAE Withholding Tax

No Withholding on Dividends: Dividend payments to foreign shareholders are not subject to withholding tax
No Withholding on Interest: Interest payments to non-residents are made gross without deduction
No Withholding on Royalties: Royalty payments for intellectual property use are not subject to deduction
No Withholding on Service Fees: Payments for services to non-resident providers are made without deduction

Benefits of 0% Withholding Tax

1 Simplified Payments: No need to calculate, deduct, or remit withholding tax on cross-border payments
2 Attractive for Investment: Foreign investors receive full dividend returns without local tax deduction
3 No Compliance Burden: No withholding tax certificates, filings, or refund claims required
4 Treaty Benefits: UAE's tax treaties may further enhance benefits for specific countries

Comparison with Other Jurisdictions

Payment Type	UAE	UK	USA	India
Dividends	0%	0%	30%	20%
Interest	0%	20%	30%	20%
Royalties	0%	20%	30%	10%
Service Fees	0%	0%	30%	10%

* Rates shown are general statutory rates; treaty rates may apply.

Important Considerations

Home Country Tax: Recipients may still owe tax in their country of residence on income received from the UAE
Transfer Pricing: Payments to related parties must be at arm's length prices
Documentation: Maintain proper records of cross-border payments for corporate tax compliance