Dubai’s new 20% tax: all you need to know

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Dubai’s new 20% tax for foreign banks explained

Foreign banks operating in Dubai will be subject to new taxation, according to a new law by Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.

The new applies to foreign banks operating in Dubai, including special development zones and free zones. Foreign banks licensed to operate in Dubai International Financial Centre are exempted.

According to the law, foreign banks are subject to a 20 percent tax on their annual taxable income. However, if these banks pay corporate tax, the amount of corporate tax will be deducted from their total tax liability. What is corporate tax in UAE?

The new tax law, announced on March 7, applies to the tax year beginning after its enactment. Violators will be fined up to Dh500,000 while those committing repeat violations within two years will be fined up to Dh1 million. Banks can file a dispute at the Department of Finance.

The law also specifies rules on calculating taxable income, tax filing and payments, tax auditing and voluntary disclosure. ICA/Expat Media


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