The double taxation treaty with the UAE ratified

On July 7, 2025, a law was signed ratifying the Double Taxation Agreement with the UAE, which was entered into as early as February 17, 2025 (the “Agreement”). The national procedures necessary for the Agreement to take effect have been completed.

For the Agreement to take effect on a full-scale basis, the states must also exchange notifications of completion of these national procedures. In this case, the Agreement will take effect on the date of receipt of the last such notification and will apply to all taxes starting from January 1 of the next calendar year. This will almost certainly happen from January 1., 2026.

The Agreement on Taxation of Income from Investments of the Contracting States or their Financial and Investment Institutions dated December 7, 2011, which is currently in effect between the countries, will cease to apply on the same date. Although this agreement allocated taxation rights between Russia and the UAE, it focused on state agencies, thereby leaving businesses without tax preferences.

The Agreement is drawn up according to the classical DTT model. It applies to all residents of the contracting states, and limits to 10% the withholding tax on the most common passive income, such as dividends, interest, and royalties.

The Agreement also stipulates that the income from the hire of ordinary employees is taxable at the place of their residence, unless they actually perform work in another country under a contract with a resident company of that country or for a long time (more than 183 days in any 12-month period). In any case, directors may be taxable at the place of residence of the company they manage.

The Agreement deals with income from sea transportation activities separately. Profits from the operation of ships or aircraft in international traffic will be taxable only in the state of residence of the company operating these ships or aircraft. This rule will apply to a time charter and a bare boat charter if this activity is auxiliary to the direct operation of ships or aircraft. The property of a company operating ships in international traffic, whether movable or represented directly by ships, will also be taxable at the place of residence. In addition, the income of the crew of ships operated in international traffic will be taxable only in the state of residence.

As a way to eliminate double taxation, for Russian residents, the Agreement provides for the deduction of the amount of tax paid in the UAE from the Russian tax levied on such a resident.

The Agreement also contains other provisions defining the rights of Russia and the UAE to tax specific income. We will be happy to advise you on any matters related to the application of the Agreement.

Please send an email to Anton Kabakov or Nadezhda Danilenko for more information.