UAE applies 0% withholding tax on domestic and cross‑border payments under Federal Decree‑Law No.47 of 2022, effective for financial years starting on or after 1 June 2023. In practice, no tax is withheld on dividends, interest, royalties, or service fees payable from the UAE, though treaty and foreign counterparty rules still matter.
| Topic | UAE Position |
| Statutory WHT rate | 0% on domestic and cross‑border payments; in practice, no deduction at source |
| CT go‑live | Financial years started on/after 1 June 2023 |
| Dividends/Interest/Royalties paid from UAE | No UAE WHT deducted |
| Treaties | Large network; apply abroad to reduce foreign WHT on payments to UAE residents |
The statutory UAE withholding tax rate is 0% on UAE‑sourced payments to non‑residents, so payers do not deduct any amount at source in practice. The corporate tax in UAE took effect for financial years beginning on or after 1 June 2023, without introducing any domestic withholding on routine payments. Ministry of Finance guidance states a 0% withholding may apply to certain UAE‑sourced income paid to non‑residents; operationally this results in no deduction at payment.
UAE’s Federal Tax Authority confirms the CT regime start date and framework, with no domestic WHT introduced. Corporate tax applies at 9% above AED375,000 taxable profits, but that is a net income tax at entity level, not a withholding at payment source.
UAE corporate tax may still apply at the recipient entity level if the income is UAE‑sourced and a permanent establishment or other nexus exists; however, the act of paying itself does not trigger WHT. Foreign jurisdictions may impose their own withholding on payments going into the UAE; UAE’s 0% does not override a foreign payer’s domestic or treaty‑based WHT. In addition, transfer pricing, deductibility, and anti‑avoidance rules still apply under CT law even without WHT.
UAE has an extensive treaty network that can reduce foreign countries’ WHT on outbound payments to UAE residents and clarify taxing rights. Many counterpart countries still levy treaty‑reduced rates on dividends, interest, and royalties paid to UAE residents; treaty relief depends on beneficial ownership and limitation‑on‑benefits conditions.
Practical takeaway: obtain residency/tax certificates and apply treaty procedures abroad to cut foreign WHT on inbound receipts to UAE entities.
UAE free zone companies that meet qualifying conditions benefit from 0% corporate tax on qualifying income; distributions such as dividends remain free of UAE WHT to mainland or foreign shareholders. Conditions and “qualifying income” tests are separate from WHT; failure to meet free zone conditions impacts corporate tax status but does not introduce WHT.
Also Read: Are Free Zone Companies Exempted from Corporate Tax in UAE
Bank on 0% domestic withholding, but do not assume zero friction. Treaty mechanics, foreign WHT, and documentation win or lose cash. Build a standing treaty/WHT matrix by counterparty country, refresh residency proofs every year, and hard‑code gross‑up language in key contracts. That quiet admin work preserves margins more than any tax headline.
No. UAE law sets withholding at 0%, so payers do not deduct tax on these payments in practice; confirm treaty and foreign country rules where the recipient is resident.
No. Corporate tax applies on profits from 1 June 2023 financial years, but it did not add domestic WHT on payments; the WHT rate remains 0%.
No. UAE does not impose WHT on such distributions; free zone conditions affect corporate tax status, not withholding.
Treaties reduce foreign WHT on payments into the UAE; tax residency proof is often required by foreign tax authorities to apply treaty rates.
Yes. Foreign WHT may apply under that country’s law unless reduced by treaty; UAE’s 0% does not control foreign WHT.
No. UAE applies 0% WHT; ensure transfer pricing and PE analyses are addressed separately under corporate tax rules.
Abrar Ahmad holds a Master’s as well as an MPhil in Finance and has an extensive experience of 10+ years in managing all aspects of Taxation, VAT Consulting and Accounting. He also carries with him a working knowledge of corporate tax and has helped drive value and growth to the businesses of numerous clients.