Withholding Tax on Cross-Border Payments from the UAE

The UAE corporate tax law introduced a 0% withholding tax, meaningful for what it does not impose. But cross-border payments are still complicated, especially when the recipient sits in a treaty country with its own withholding rules.

The UAE position

Article 45 of the UAE CT law sets withholding tax at 0% on UAE-source income paid to a non-resident person. This applies to dividends, interest, royalties, service fees and most other categories. There is no withholding required on outbound payments from a UAE payer to a foreign payee.

The Cabinet has the authority to introduce specific withholding rates in future, but as of 2026 the rate remains 0%. Compliance is a procedural exercise, no tax to remit, but documentation requirements still apply.

Why your foreign supplier still cares

When you pay an Indian software vendor or a UK consultant, their home country may impose tax on the income. Many countries treat services rendered to the UAE as taxable in the home country, with credit for any UAE withholding (which is zero, so credit is zero). The supplier owes the home-country tax in full.

Practically: your foreign supplier may ask for a Tax Residency Certificate from the UAE, gross up their invoice to absorb their home-country tax, or request specific documentation under a Double Tax Treaty. Be prepared to provide a TRC and a clean payment trail.

Tax Residency Certificates

A UAE TRC is issued by the FTA on application. It confirms that an entity is tax resident in the UAE for treaty purposes. The application requires audited financial statements, 12 months of bank statements, the trade licence, and a fee. Issuance takes 3-4 weeks.

TRCs are usually valid for one financial year. Renew annually if you have ongoing cross-border relationships that depend on treaty benefits. Many of our clients renew in Q1 to coincide with their annual statutory audit completion.

Practical documentation

For each cross-border payment, retain: the invoice, the contract, evidence of services performed, the payment proof, FX conversion at the date of supply, and (if treaty benefits are claimed) a TRC of the supplier. The FTA's CT audit team can request this within five years.

If you make payments to related parties, common in corporate groups, additional transfer pricing documentation applies. See our TP guide. Cross-border related-party flows are scrutinised more aggressively than third-party transactions.

This guide is general information, not professional advice. For situations that involve specific facts, talk to your accountant, or hire one of ours from the marketplace.