WITHHOLDING
TAX IN THE UAE
& THE GCC

WITHHOLDING
TAX IN DUBAI,
ABU DHABI &
THE UAE

Domestic Withholding Tax (WHT) of 0% is applicable on domestic and cross-border payments but there is no obligation to file WHT returns.

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WITHHOLDING TAX IN THE GCC REGION

Within the GCC region, withholding tax is not applicable in the United Arab Emirates and Bahrain. Furthermore, in the UAE, no withholding taxes will be applicable on domestic and cross-border payments under the new UAE corporate tax regime.

Withholding tax is imposed in Saudi Arabia, Qatar, Kuwait, and Oman.

WHAT IS THE WITHHOLDING TAX RATE IN GCC COUNTRIES?

Country	Withholding Tax Rate
Saudi Arabia	- 5% on technical fees, interest & dividends - 15% on royalties, commissions, related party payments, and other services - 20% on management fees
Qatar	5% on fees, interests, royalties, commissions & other services
Kuwait	5% of all payments
Oman	10% of gross payments

WHAT ARE THE RISKS RELATED TO WITHHOLDING TAX SERVICES IN THE UAE?

Through careful planning and professional advice, the minimal risks connected to Taxes in the UAE can be reduced. You can handle the Tax legislations and procedures easily with the assistance of professional consultants, ensuring adherence to legislations and reducing potential risks.

For an expert consultation, contact Creation Business Consultants via email [email protected] or call +971 4 878 6240 today.

WITHHOLDING TAX FAQs

WHAT IS THE CURRENT WITHHOLDING TAX RATE IN THE UAE?

In the UAE, the withholding tax rate is 0% for both domestic and cross-border payments. This policy makes the UAE an attractive destination for businesses looking to minimize their tax liabilities. For more information on how this benefits your business, contact Creation Business Consultants today.

ARE THERE ANY FILING REQUIREMENTS FOR WITHHOLDING TAX IN THE UAE?

There are no filing requirements for withholding tax in the UAE, as the rate is 0%. Businesses do not need to submit withholding tax returns. However, staying informed about regulatory changes is crucial. For expert advice on compliance, reach out to Creation Business Consultants at [email protected] or call +971 4 878 6240.

HOW DOES THE UAE’S 0% WITHHOLDING TAX RATE COMPARE TO OTHER GCC COUNTRIES?

The UAE’s 0% withholding tax rate is notably lower than many other GCC countries. For instance, Saudi Arabia imposes withholding tax rates ranging from 5% to 20%, while Qatar and Kuwait have rates of 5%. This favorable tax environment in the UAE can significantly reduce your business’s tax burden. Contact us to learn more about how this impacts your operations.

DO FOREIGN COMPANIES NEED TO PAY WITHHOLDING TAX ON INCOME DERIVED FROM THE UAE?

No, foreign companies do not need to pay withholding tax on income earned from the UAE. This 0% rate applies to all types of payments, including dividends, interest, and royalties. For detailed guidance on managing international transactions, consult Creation Business Consultants.

IS WITHHOLDING TAX APPLICABLE ON DIVIDENDS AND INTEREST PAYMENTS IN THE UAE?

No, there is no withholding tax on dividends or interest payments in the UAE. This tax-free policy helps businesses and investors maximize their returns. For tailored advice on leveraging this benefit, contact us at [email protected] or call +971 4 878 6240.

HOW CAN BUSINESSES ENSURE COMPLIANCE WITH TAX REGULATIONS IN THE UAE?

Businesses can ensure compliance by staying updated on tax laws and consulting with tax professionals. Although the withholding tax rate is 0%, understanding other tax obligations is essential. For expert support in navigating tax regulations, contact Creation Business Consultants.

ARE THERE ANY RISKS ASSOCIATED WITH WITHHOLDING TAX IN THE UAE?

Given that the UAE has a 0% withholding tax rate, the primary risk is staying informed about potential future changes in tax legislation. Regular consultations with tax experts can help mitigate any unforeseen risks. For expert advice, reach out to us today.

CAN THE WITHHOLDING TAX RATE CHANGE UNDER THE UAE CORPORATE TAX REGIME?

Currently, the withholding tax rate remains at 0%. However, tax policies can evolve. Businesses should monitor any legislative changes to ensure compliance. For up-to-date information and strategic advice, contact Creation Business Consultants.

WHAT ARE THE ADVANTAGES OF THE UAE’S 0% WITHHOLDING TAX FOR CROSS-BORDER TRANSACTIONS?

The 0% withholding tax rate in the UAE benefits cross-border transactions by eliminating tax-related barriers and reducing overall tax expenses. This favorable tax regime enhances the UAE’s appeal as a global business hub. For more insights into how this can benefit your business, consult with our experts.

HOW DOES THE UAE'S TAX POLICY BENEFIT FOREIGN INVESTORS?

The UAE’s 0% withholding tax policy provides a favorable environment for foreign investors, allowing them to enjoy tax-free income from their investments. This policy is a key factor in attracting international business. For personalized investment advice, contact Creation Business Consultants.

WHAT DIFFERENCES EXIST BETWEEN UAE AND SAUDI ARABIA'S WITHHOLDING TAX REGULATIONS?

The UAE has a 0% withholding tax rate, while Saudi Arabia imposes varying rates: 5% on technical fees and dividends, 15% on royalties and commissions, and 20% on management fees. Understanding these differences is crucial for businesses operating across borders. For more information, reach out to us.

COULD WITHHOLDING TAX BE INTRODUCED IN THE UAE IN THE FUTURE?

While there is currently no withholding tax in the UAE, changes in tax laws could occur. It is important to stay informed and consult with experts to adapt to any future changes. For proactive tax planning, contact Creation Business Consultants.

HOW SHOULD BUSINESSES MANAGE WITHHOLDING TAX OBLIGATIONS IF LAWS CHANGE IN THE UAE?

If withholding tax laws change, businesses should seek immediate advice from tax professionals to update their compliance strategies. Staying informed and adaptable is key to managing new obligations effectively. For expert guidance, contact us today.

ARE THERE ANY EXEMPTIONS FROM WITHHOLDING TAX IN THE UAE?

Since the UAE does not impose withholding tax, there are no specific exemptions to consider. However, businesses should remain aware of other tax obligations and potential future changes. For detailed advice, consult with our experts.

WHAT ROLE DOES THE UAE’S TAX-FREE ENVIRONMENT PLAY IN ATTRACTING FOREIGN INVESTMENTS?

The UAE’s 0% withholding tax rate and overall tax-friendly environment make it an attractive location for foreign investments, enhancing business profitability and investment opportunities. For more details on leveraging these benefits, reach out to Creation Business Consultants.

WHAT SHOULD BUSINESSES KNOW ABOUT WITHHOLDING TAX IN OMAN COMPARED TO THE UAE?

Oman imposes a 10% withholding tax on payments to foreign companies without a permanent establishment, unlike the UAE’s 0% rate. Understanding these differences can help in strategic planning for businesses operating in both regions. For personalized advice, contact us.

DOES THE UAE HAVE ANY DOUBLE TAXATION AGREEMENTS THAT AFFECT WITHHOLDING TAX?

While the UAE has numerous double taxation agreements, the 0% withholding tax rate generally means there is no direct impact. However, businesses should review these agreements for comprehensive tax planning. For detailed information, consult Creation Business Consultants.

HOW CAN CONSULTING A WITHHOLDING TAX EXPERT BENEFIT UAE BUSINESSES?

Consulting a tax expert helps businesses navigate the complexities of tax laws, ensuring compliance and optimizing tax strategies. Even with a 0% withholding tax rate, professional advice is valuable for effective tax management. Contact Creation Business Consultants for expert support.

WHY IS IT IMPORTANT FOR BUSINESSES IN THE UAE TO STAY UPDATED ON TAX LAWS?

Staying updated on tax laws ensures that businesses remain compliant and can adapt to any regulatory changes. With the UAE’s current 0% withholding tax rate, this vigilance helps in effective tax management and strategic planning. For ongoing support, reach out to Creation Business Consultants.

WHAT SHOULD BUSINESSES DO IF THEY ANTICIPATE CHANGES IN WITHHOLDING TAX LAWS?

Businesses should proactively seek expert advice and update their tax strategies in anticipation of any changes in withholding tax laws. Staying ahead of regulatory developments is crucial. For assistance with tax planning, contact Creation Business Consultants.

WITHHOLDING TAX IN OMAN

WHO IS SUBJECT TO WITHHOLDING TAX?

Foreign companies which do not have a permanent establishment in Oman and yet realize their income from Oman are subject to a 10% Withholding Tax.

WHAT ARE THE OBLIGATIONS OF THE ENTITY CHARGED WITH WITHHOLDING TAX?

The Omani-based entity is required to file the tax return for withholding within 14 (fourteen) days from the end of the month in which the amount was paid or payment is due to the non-resident service provider. The statement of remittance is to be submitted electronically only through the Oman Tax Portal of the Secretariat General.

WHAT ARE THE SOURCES OF INCOME SUBJECT TO WITHHOLDING TAX?

Dividends and interest (suspended until May 5th, 2024, under the Economic Stimulus Plan – Oman Vision 2040).
Royalties.
Management Fees.
Consideration for research & development services.
Consideration for the use of or right to use computer software.
Provision of services (excluding exempts).

WHO IS EXEMPT FROM WITHHOLDING TAX?

Dividends paid by a limited liability company are exempt from Withholding Tax; as profit distributions from ownership in a limited liability company are not considered as dividends of shares.
Payments related to the provision of the following services: freight charges and related insurance, air ticket and accommodation costs abroad, board of directors meeting, participation in training, conferences, seminars & exhibitions, reinsurance payments, and services provided to businesses or property located outside Oman.
Distributions paid by governmental authorities and banks on issued bonds and sukuk.
Interest payable on bank-to-bank facilities for liquidity management purposes.
Interest payable on bank deposits in Oman.

WITHHOLDING TAX IN QATAR

WHO IS SUBJECT TO WITHHOLDING TAX IN QATAR?

Non-resident and non-registered individual or company in Qatar who derives its income from an activity, carried out wholly or partially in Qatar is subject to a Withholding Tax at a rate of 5%.

WHAT ARE THE OBLIGATIONS OF THE ENTITY CHARGED WITH WITHHOLDING TAX?

The taxpayer is requested required to file the Withholding Tax return for withholding electronically to the “Dariba” platform before the 16th day of the month following the month in which the tax was withheld.

Failure to submit the Withholding Tax imposes a financial penalty equivalent to the Withholding Tax amount and a penalty of 2% of the tax per month on delays in remitting tax withheld subject to full amount of the withholding tax Withholding Tax due.

WHAT ARE THE SOURCES OF INCOME SUBJECT TO WITHHOLDING TAX?

Interests Interest.
Royalties.
Fees and other service payments.

RETENTION SYSTEM

A retention tax of 3% of the contract value or the final contractual payment (whichever is higher) applies to payments made to a temporary branch in Qatar by the Qatar government or government agency for a particular project contract.

The retention is released when the temporary branch completes its contract and submits a No Objection Letter issued by the General Tax Authority. The retention system is not applicable to resident companies in Qatar or permanent branches.

WITHHOLDING TAX IN KUWAIT

The tax law in Kuwait does not impose withholding tax, rather, it imposes a somehow a Retention System in which all public and private entities operating in Kuwait are required to retain 5% from the contract value or payment made to a service provider; until the latter submits a tax clearance certificate from the Ministry of Finance (“MoF”). All operational entities in Kuwait are obliged to inform the MoF of the companies they have contracts, agreements, or transactions with and provide a copy of the related contracts.