Russia-UAE double taxation agreement: Everything you need to know

Double taxation happens when you get taxed on the same income twice, by two different countries. This can happen if you are a citizen of one country but earn money in another. In this case, both your home country and the other country could claim the right to collect taxes on that income.

Understandably, this can be a major pain for people and companies involved in international activities. It can stop cross-border investments and trade. To avoid this and promote economic growth, countries all over the world make Double Taxation Agreements (DTAs). These treaties clarify the taxing rights of the two signatory countries, ensuring that income is taxed only once or that taxes paid in one country can be offset against taxes owed in the other.

Under a DTA, there are specific rules that determine which country gets the main right to tax certain types of income. Usually, the deal will outline:

• Reduced tax rates: The DTA may specify a maximum tax rate that the source country can apply to certain types of income, such as dividends or interest.
• Tax exemptions: Some income might be exempt from tax in one of the countries.
• Tax credits: If you earn money and pay taxes in one country, the DTA usually allows you to claim a tax credit for that income when filing your taxes in your home country. This prevents you from paying taxes on the same income twice.

Russia and the UAE have signed an agreement to avoid the double taxation of income and capital, and to prevent tax evasion. The agreement will begin on January 1, 2026, once both countries have ratified it. This isn't the first time Russia and the UAE have signed an agreement. Back in 2011, they did a similar deal, but it only covered a limited number of companies. The new agreement has clearer rules and applies to more businesses.

The main point of the this document to make it clear how different kinds of income will be taxed for people living in both countries. This includes income from various sources, such as business profits, dividends, interest payments, royalties, and earnings from employment or freelance work.

Previous agreements primarily offered tax breaks to public companies in the UAE and Russia. The new DTA aims to extend these benefits to private businesses as well.

Companies will only be taxed in their home country unless they have a permanent setup in another country. This applies to UAE companies that have operations or investments in Russia, as well as to Russian companies that have operations or investments in the UAE.
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Salaries and other payments are taxed in the country where you live, unless you work in another country for more than six months (183 days) during any 12-month period that starts or ends in your tax year. Residents can claim foreign taxes as a deduction from their local tax bill, so they don't end up paying more than they should.

Dividends may be taxed in both countries, but the withholding tax rate is capped at 10% (“10-10-10” scheme) in the beneficiary's country if the beneficiary is a resident of the other country. It includes dividends paid to governmental or financial institutions.

1. Determine residency: Establish your tax residency in either Russia or the UAE because it is a key factor in how double tax treaties work. For example, you can obtain a Tax Residency Certificate for Treaty Purposes (TRC) to confirm your tax residency in the UAE.

2. Take a closer look at the DTA: Once the new agreement is ratified, be sure to read through all the articles carefully. Or, you could simply ask the experts to explain the nuances of the treaty.

3. Provide necessary documentation: To claim benefits under a DTA (like reduced tax rates), you often need to provide proof of your tax residency from your home country to the other country's tax authorities. movingo makes it super easy - just contact us and we'll take care of all the paperwork for you, so you can claim that tax deduction.