Taxation of the income of residents of the Russian Federation from sources in the UAE
If you are a tax resident of the Russian Federation who receives income from a source in the UAE, here is information on where and how to pay taxes.
As you know, double taxation issues are resolved on the basis of the double taxation avoidance agreement (hereinafter DTAA).
Currently, the Russian Federation (hereinafter - the RF) and the United Arab Emirates (hereinafter - the UAE) have concluded a DTAA only in respect of income tax. The provisions of the agreement do not apply to income received by individuals.
This means that when receiving income in the form of wages, under a civil law contract, the object of which is the provision of services/performance of work, taxation is carried out both in the UAE and in the Russian Federation (on the territory of the Russian Federation without the possibility of offset).
It is also important to note that in the case of the actual performance of labour functions/services/work in/from the territory of the Russian Federation, the income received from a foreign company is recognized from the point of view of the tax legislation of the Russian Federation as income from sources in the Russian Federation.
So, such income is subject to taxation in the territory of the Russian Federation at progressive rates (personal income tax):
- 13% if the sum of tax bases for the year is equal to or less than RUB 2.4 million;
- 15% for income from RUB 2.4 million to RUB 5 million per year;
- 18% for income from RUB 5 million to RUB 20 million per year;
- 20% for income from RUB 20 million to RUB 50 million per year;
- 22% for income over RUB 50 million per year.
Dividends are also subject to taxation in the Russian Federation, with personal income tax rates of 13% (tax base amount not exceeding RUB 2.4 million) and 15% (tax base amount exceeding RUB 2.4 million).
In February 2025, a draft DTAA between the UAE and the Russian Federation was announced. The agreement will come into force on 1 January of the year following the year of signing the agreement.
The draft provides that the agreement will apply in the RF to:
- corporate income tax,
- personal income tax,
- property tax on organizations;
- tax on the property of individuals.
It also provides for the possibility of offsetting in the Russian Federation (within the framework of the above-mentioned types of taxes) the tax amounts paid in the UAE.
However, it should be noted that if, in the UAE, the rate of personal income tax on wages, dividends, and civil law contracts is 0%, a tax resident of the Russian Federation will, in any case, pay personal income tax in the Russian Federation in the amount stipulated by the national legislation of the Russian Federation.
Author: Yaroslavna Zadesenskaya
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