Russia and UAE agree on a draft Double Taxation Avoidance Agreement

Jan, 29 2025

Negotiations between delegations of the Ministries of Finance of Russia and the UAE have been finalised in Dubai, resulting in the signing of a new draft Agreement on Avoidance of Double Taxation of Income and Capital and Prevention of Tax Evasion.

 On the Russian side, the agreement was initialled by Alexey Sazanov, State Secretary – Deputy Minister of Finance, and on the UAE side by Younis Haji Al Khouri, Deputy Minister of Finance.

The agreement will also apply to the private sector and individuals, not just state-owned companies.

What problems are addressed by the new agreement

The move demonstrates the countries’ interest in strengthening economic and fiscal partnership, facilitating trade and mutual investment, creating a more favourable environment for businesses and citizens.

Further prospects

Co-operation between Russia and the UAE is expanding and the agreement on tax issues will be an important step towards developing mutual economic relations.

Now that the Agreement has been agreed in its final version, it is to be signed by the Heads of State of Russia and the UAE.

The parties have expressed their desire to sign the agreement as soon as possible and take all necessary actions for its entry into force on 1 January 2026.

Consequences for tax residents of the Russian Federation

  • Paragraph 2 of Article 275 of the Russian Tax Code does not allow Russian taxpayers to deduct taxes paid on dividends in the UAE in the absence of an international treaty. Thus, with the emergence of an agreement, taxes of Emirati origin will be able to be deducted when calculating taxes on dividends in Russia.

There is no withholding tax in the UAE yet, which is relevant only for:

Permanent representative offices of Russian companies in the UAE receiving dividends through these structures;

Russian companies with a place of effective management in the Emirates.

This will only be relevant if the dividends are not received from Emirati companies, as in this case corporate tax exemptions apply.

  • Paragraph 3 of Article 311 of the Tax Code allows deduction of tax withheld in a foreign country, regardless of the existence of a SIDN, except for dividends. For tax resident individuals, the deduction is possible only if they have a LEDN.
  • From 2024, income tax withheld on payments to UAE interdependent persons will be 15% for settlements with UAE interdependent persons, but thanks to SIDN this measure is cancelled.
  • Emirati CFCs that are banks or insurance companies will be able to take advantage of the profit tax exemption that was previously not possible without SIDN.
  • Profit of Emirati CFCs will be determined on the basis of financial statements with an auditor’s report, rather than according to the standards of the Tax Code of the Russian Federation.
  • Emirati banks will not be required to provide a tax residency certificate to Russian tax agents.
Author of the article
Russia and UAE agree on a draft Double Taxation Avoidance Agreement
Irina Girgushkina
Head of legal, head of corporate law practice
0 0 votes
Рейтинг статьи
0 комментариев
Inline Feedbacks
View all comments
Send Request
By clicking on the button "Submit", you give your consent to the processing of your personal data and agree to the privacy policy.