International Tax

Once the Corporate Income tax becomes effective in UAE, the businesses will also required to comply with cross border tax legislation as well.

Every business which has presence in more than 1 country is required to undertake certain compliances in relation to the transaction by the business with its related entities in other country.

Further, the business is also, required to deduct withholding taxes on the payments being made to any entity outside UAE.

Withholding tax is tax collected at source by the payer on behalf of the recipient of the income.Withholding taxes exist in many tax systems and are typically used in respect of dividends, interest, royalties and similar payments.

UAE withholding tax will not be applicable on domestic and cross-border payments of any nature under the UAE CT regime.

Foreign CT paid on UAE taxable income will be allowed as a tax credit against the UAE CT liability.

TRANSFER PRICING

What is Transfer Pricing?

Transfer pricing rules seek to ensure that transactions between related parties are carried out on arm’s length terms (i.e. as if the transaction was carried out between independent parties).

Whether UAE business required to comply?

UAE businesses will need to comply with transfer pricing rules and documentation requirements set with reference to the OECD Transfer Pricing Guidelines.

Therefore, every UAE business transacting with its related business from other country is required to comply with transfer pricing guidelines.