Russia and UAE Ratify Comprehensive Double Taxation Avoidance Agreement

Moscow, July 11, 2025 – The President of the Russian Federation has signed Federal Law No. 189-FZ dated July 7, 2025, ratifying an agreement with the United Arab Emirates (UAE) aimed at eliminating double taxation on income and capital taxes, as well as preventing tax evasion. The document, signed in Abu Dhabi on February 17, 2025, during the Russian-Emirati financial dialogue, received approval from the State Duma (June 24) and the Federation Council (July 2).

Key Provisions of the Agreement:

1. Scope of Application:
Applies to residents of both states and covers all taxes on income and capital (including Russian corporate profit tax, personal income tax, organizational/property taxes; UAE income and corporate taxes), regardless of collection method.

2. Key Tax Rates:

• Dividends, interest, royalties: Unified 10% rate in the source country.
• Tax exemption: Applies to payments to state structures and development institutions (for Russia: the Government, Central Bank, federal subjects, VEB.RF, RDIF, Rostec, Rosatom, Roscosmos, and other state enterprises).

3. Taxation Principles:

• Corporate profits are taxed only in the country of residence unless activities in the other state are conducted through a permanent establishment (PE).
• If a PE exists, only profits attributable to it are taxable (with the right to deduct related expenses).
• International transport income (maritime/air) is taxed only in the carrier’s country of residence.
• Individual income (salaries, remuneration) is typically taxed in the country of residence, except for employment in the other state exceeding 183 days within any 12-month period.

4. Elimination of Double Taxation:

o When calculating the tax, UAE residents can offset the Russian tax paid on income/capital in the Russian Federation (within the amount of the Emirati tax on this income).

o When calculating the tax, Russian residents can similarly offset the tax paid on income/capital in the UAE.

Practical Implications and Timeline:

• Replacement of previous agreement: The new agreement supersedes the limited 2011 agreement, which only addressed taxation of income from state investment funds. The need for updated regulation arose after the UAE introduced corporate income tax (June 2023).
• Investment and trade facilitation: The agreement establishes predictable tax conditions for businesses and citizens of both states, promoting mutual investment growth, trade development, and commercial activity. As noted by Russian Finance Minister Anton Siluanov: “Conditions have been formed for mutual investment attraction… This will stimulate trade, increase mutual investments, and create a favorable environment for businesses and citizens.”
• Anti-evasion measures: Includes modern mechanisms to prevent tax avoidance and evasion.
• Effective date: The agreement enters into force on January 1, 2026, following ratification by both parties.

Conclusion:

The ratification of this comprehensive agreement with the UAE marks a significant step in the economic cooperation between the two countries. Establishing clear taxation rules for diverse income types (business profits, investments, royalties, salaries) and capital reduces tax barriers, minimizes double taxation risks, and creates more attractive conditions for Russian and Emirati investors and companies.