Русский
The Russian State Duma has ratified an agreement with the United Arab Emirates to avoid double taxation of income and capital and prevent tax evasion. The government introduced the bill, No. 930586-8, on May 29.
This new agreement replaces an earlier 2011 agreement which applied only to the income of state-owned investment funds.
An explanatory note to the bill says that the new agreement aims to ensure that the same profit of an individual or an entity from Russia and the UAE is taxed only once, and states “For the purpose of ensuring stable development of the economy of the Russian Federation, the development and expansion of external trade, economic and investment ties, an active process is under way today to redirect Russian business to the markets of Asia and Middle East countries. The UAE plays a particular role in broadening economic ties of the Russian Federation in the Middle East region.”
The agreement applies to profit tax, personal income tax and corporate and individual property tax in Russia, and to income and corporate taxes in the UAE. The mechanism for avoiding double taxation is based on mutual offset, where taxes paid in one country will be taken into account when calculating tax liabilities in the other country, but they cannot be higher than the tax paid in the country of tax residency under national legislation.
Dividends, interest and royalties will be taxed at 10% and will be exempt from tax if paid to the other country or its financial and investment institutions.
The agreement also paves the way for expanded exchanges of information on taxes, including bank information. A special point of the agreement does restrict the sides’ rights to apply their own national legislation to hydrocarbon revenues.
The new agreement will enter into force on January 1, 2026 following ratification by both countries with the UAE parliament still to vote on the issue. The 2011 agreement will cease to apply once the new one goes into effect.
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