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14 / 02 / 2025
Agreement between Russia and the UAE on the Elimination of Double Taxation with Respect to Taxes on Income and Capital and the Prevention of Tax Avoidance and Evasion
We previously reported that in January the final round of negotiations between Russia and the UAE was completed, following which a new double tax treaty was initialed and an agreement was reached to proceed to signing as soon as possible.
As a reminder, the key feature of the new DTT is that it applies to both business entities and individuals. The agreement concluded between the Russian Federation and the UAE in 2011 applies exclusively to state-owned companies and structures and does not reduce the tax burden on private individuals.
On 13 February, it became known that the Russian Government approved the draft agreement and instructed the Ministry of Finance of the Russian Federation to sign it, with the right to make non-fundamental amendments. This follows from Government Decree No. 280-r of 11 February 2025.
Attached to the decree is the text of the agreement, which confirms the professional community's expectations regarding its content.
As anticipated, the new DTT is based on the “10-10-10” formula. Upon entry into force of the agreement, the withholding tax rate on dividends, interest and royalties will be 10% for each type of passive income.
These terms were proposed by the Russian side and were not immediately accepted by the Emirati side, since Russia's existing treaties with Qatar and Saudi Arabia provide more favourable terms. However, it should be noted that those treaties were signed in 2001 and 2011, and Russia's approach to concluding DTTs has changed since then. The content of the new DTT, however, corresponds to the model currently followed by Russia when concluding such agreements.
The new agreement is expected to enter into force on 1 January 2026.
As a reminder, the key feature of the new DTT is that it applies to both business entities and individuals. The agreement concluded between the Russian Federation and the UAE in 2011 applies exclusively to state-owned companies and structures and does not reduce the tax burden on private individuals.
On 13 February, it became known that the Russian Government approved the draft agreement and instructed the Ministry of Finance of the Russian Federation to sign it, with the right to make non-fundamental amendments. This follows from Government Decree No. 280-r of 11 February 2025.
Attached to the decree is the text of the agreement, which confirms the professional community's expectations regarding its content.
As anticipated, the new DTT is based on the “10-10-10” formula. Upon entry into force of the agreement, the withholding tax rate on dividends, interest and royalties will be 10% for each type of passive income.
These terms were proposed by the Russian side and were not immediately accepted by the Emirati side, since Russia's existing treaties with Qatar and Saudi Arabia provide more favourable terms. However, it should be noted that those treaties were signed in 2001 and 2011, and Russia's approach to concluding DTTs has changed since then. The content of the new DTT, however, corresponds to the model currently followed by Russia when concluding such agreements.
The new agreement is expected to enter into force on 1 January 2026.
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