Definition

Withholding Tax is a tax on payments made to non-residents. In the UAE, the rate is 0%, making it unique compared to many other countries. This supports the UAE’s position as an attractive business hub.

Key points

• Applies to cross-border payments such as royalties, interest, or dividends.
• The UAE currently imposes 0%, so no tax is withheld.
• Double Taxation Treaties may still require documentation to prove UAE residency.

Practical example

A UAE company pays royalties to a software provider abroad. No withholding tax is applied, but the company may need to provide a Tax Residency Certificate.

Why it matters

Even though the rate is 0%, businesses must understand withholding tax to manage international contracts and tax treaties.