Many expats in the UAE enjoy its tax-free benefits. But there’s a catch. Some countries still expect their citizens to pay taxes on income earned abroad. This means you could end up paying tax twice, once in your home country and again in the country where the income was made.
To fix this, the UAE has signed tax treaties with many countries. These agreements protect your income and give you relief from paying tax twice. Whether you’re running a business or managing personal investments, understanding how these treaties work can save you a lot.
Let Tax Gian, one of the top tax agents in the UAE, help you understand the UAE’s DTAs (Double Taxation Agreements) with other countries and foreign tax reliefs available for you.
What Are Tax Treaties and Why Do They Matter?
A tax treaty (also called a Double Taxation Agreement or DTA) is a deal between two countries. Its main goal is to make sure people or companies aren’t taxed twice on the same income.
These agreements decide which country has the main right to tax your income. They cover various types of income, like profits, dividends, interest, and royalties. They also allow tax reductions or full exemptions in some cases.
Although the UAE doesn’t charge tax on most personal income like salaries, rent, or inheritance, things have started to shift. Since June 2023, a 9% corporate tax applies on business profits above AED 375,000. This makes tax treaties more important than ever for companies and some individuals. Learn from tax agents in Dubai about how your income can be taxed in the UAE.
What’s Included in UAE’s Tax Treaties?
Each tax treaty is a bit different depending on the country. But most of them include:
- Clear rules about which country can tax what income
- Ways to avoid or reduce tax in one of the countries
- Special rules for international business income, air transport, and shipping
- Guidelines for taxing dividends, royalties, and interest
- Rules for taxing profits from property sales or capital gains
For companies or consultants working across borders, these treaties also define how income earned through entities like branches or service companies should be taxed.
How Do You Claim Tax Relief?
There are three main ways to get tax relief under a treaty:
- Tax Credit:You subtract the tax paid in one country from the amount owed in another.
- Tax Exemption:Certain types of income may be completely excluded from tax in one country.
- Withholding Tax Relief:If another country deducts tax at the source (like Portugal does on royalties), the UAE company may be able to claim that amount under the treaty, if it’s eligible under local rules.
The UAE itself doesn’t charge withholding tax on outbound payments. But countries like Switzerland or Portugal do. So if a UAE company earns money from these countries, tax may be withheld there, but a treaty can help reduce or refund it. Get deeper insights on the matter from tax agents in the UAE.
Which Countries Have Tax Treaties with the UAE?
As of June 2025, the UAE has signed more than 140 double taxation treaties with countries in:
- Europe (UK, France, Portugal, Germany, etc.)
- Asia (India, China, Japan, etc.)
- Africa (Nigeria, Kenya, Egypt, etc.)
- The Americas (Canada, Mexico, Argentina, etc.)
- The Middle East (Saudi Arabia, Jordan, etc.)
But not every major country is on the list. For example, there is no tax treaty between the UAE and the United States. This means US citizens living in the UAE still need to pay taxes to the US on their worldwide income.
However, the UAE has a Model 1 IGA under FATCA with the US. This allows local banks to report American account holders to US authorities. It helps with compliance but does not provide any tax relief.
How Tax Treaties Vary Between Countries?
Not all treaties are the same. Differences usually appear in how dividends, royalties, and interest are taxed. Here’s a quick comparison:
UAE companies benefit from zero local withholding tax. So, these treaty rates mostly apply to income coming into the UAE. Learn comprehensively about tax treaties with the help of tax agents in Dubai.
How can Tax Gian Assist?
Double taxation can drain your income and profits. The UAE’s network of tax treaties offers a shield against this problem. With Tax Gian’s smart planning and the right advice, you can protect your money, comply with international rules, and make the most of living or doing business in the UAE. Our tax agents guide you with their expertise, qualifications, and extensive experience.
