Is there withholding tax in the UAE?

Article 45 – Withholding Tax 4 1. The State Sourced Income of a Non-Resident Person shall be subject to tax at a rate of (0%) zero percent in the form of Withholding Tax or any other rate of Withholding Tax determined by a decision issued by the Cabinet at the suggestion of the Minister, to the extent that such income is not attributable to a Permanent Establishment or nexus pursuant to Paragraph (a) or Paragraph (c) of Clause 3 of Article 12 of this Decree-Law. 2. As an exception to Clause 1 of this Article, the Cabinet may, at the suggestion of the Minister, issue a decision determining categories of State Sourced Income that will be subject to Withholding Tax at rates specified in such decision. 3. The Cabinet, may, at the suggestion of the Minister, issue a decision determining any other income that is subject to Withholding Tax at rates specified in such decision. 4. The Withholding Tax payable under this Article shall be deducted from the gross amount of the payment and remitted to the Authority in the form and manner and within the timeline as prescribed by the Authority, and the Authority may add controls or conditions for the implementation of the provisions of this Clause.

Article 46 – Withholding Tax Credit 5 1. If a Person becomes a Taxable Person in a Tax Period, the Person’s Corporate Tax due under Article 3 of this Decree-Law can be reduced by the amount of Withholding Tax Credit for that Tax Period. 2. The maximum Withholding Tax Credit under this Decree-Law is the lower of: a) The amount of Withholding Tax deducted under Clause 4 of Article 45 of this Decree-Law. b) The Corporate Tax due under this Decree-Law. 3. Any excess Withholding Tax Credit for a Tax Period as a result of Clause 2 of this Article shall be refunded to the Taxable Person in accordance with Article 49 of this Decree-Law. 4 Article replaced as per Federal Decree-Law No. 40 of 2024. 5 Article replaced as per Federal Decree-Law No. 40 of 2024. Federal Decree-Law No. 47 of 2022 and its amendments – Unofficial translation (as published by the Ministry of Finance) 51

who have had Withholding Tax deducted from payments to them. (See Section 9.3.1 for more information on Withholding Tax Credit). As the rate of Withholding Tax is currently 0%, this means that, currently, no tax needs to be withheld. Tax credits In some cases, Taxable Persons may be entitled to credits which they can use to offset against their Corporate Tax liability. These credits arise if they have paid tax on the same income already, either in the UAE or in a foreign country. 9.3.1. Requirements for the Withholding Tax Credit Withholding taxes are a common form of collecting income tax on cross-border transactions. Under these regimes, tax is deducted at the source when certain payments are made to, for example, overseas Persons. Sometimes withholding taxes are also levied on domestic transactions. Typically, the payor of the income is charged with the task of deducting the tax from certain kinds of payments and remitting that amount to the tax administration. Withholding taxes usually apply to certain types of activities by foreign parties, or activities that do not typically require a Person to register for tax, for example, dividends and interest payments in certain countries. As part of the introduction of Corporate Tax, the UAE has introduced a Withholding Tax that applies to certain categories of income paid to a Non-Resident Person to the extent the income is not attributed to a Permanent Establishment in the UAE. 352 However, the rate of this tax is 0% meaning that, currently, no tax will need to be withheld. If the rate is changed in future, a Non-Resident Person who becomes subject to Corporate Tax would be able to reduce their Corporate Tax Payable by any Withholding Tax that has already been deducted in the same Tax Period. 353 This is known as Withholding Tax Credit. Any excess Withholding Tax Credit will be refunded.354 352 Article 45(1) of the Corporate Tax Law. 353 Article 46(1) of the Corporate Tax Law. 354 Article 46(3) of the Corporate Tax Law. General Corporate Tax Guide | Corporate Tax | CTGGCT1 112

Article 44 – Calculation and Settlement of Corporate Tax The Corporate Tax due under this Decree-Law is settled in the following order: 1. First, by using the Taxable Person’s available Withholding Tax Credit, as determined under Article 46 of this Decree-Law. 2. To the extent there is a residual amount after Clause 1 of this Article, by using the Taxable Person’s available Foreign Tax Credit as determined under Article 47 of this Decree-Law. 3. To the extent there is a residual amount after Clause 2 of this Article, by using any credits or other forms of relief as specified in a decision issued by the Cabinet at the suggestion of the Minister. 4. To the extent there is a residual amount after Clause 3 of this Article, this amount of Corporate Tax Payable must be settled in accordance with Article 48 of this Decree-Law. Federal Decree-Law No. 47 of 2022 and its amendments – Unofficial translation (as published by the Ministry of Finance) 50