Russia’s President signed into effect Federal Law #107-ФЗ “On the Ratification of an Agreement between the Government of the Russian Federation and the Government of the United Arab Emirates on Taxation of Income from Investments by the Party-Countries and their Financial and Investment Institutions.”
The Agreement’s terms apply to income from investment, loans and ownership of real estate, and covers corporate profit tax in Russia and corporate tax and income tax in the United Arab Emirates, including provincial income tax collected by each of the individual emirates.
Earnings from real estate are taxable in the country in which the property is located. The same country withholds profit tax from the sale (disposal), of property or stock shares and other rights, if more than 50% of the value comes expressly or is implied by the property.
Dividends paid by company-resident of one of the contracting states to the other state or its financial or investment institutions are taxable only in this other state. Also, interest incurred in one state and paid to the other state or its financial or investment institutions is taxable only in this other state.
Under the agreement’s provisions, tax preferences can be refused if the agreement’s terms are being used for unlawful aims.
The law also includes a clause that any political subdivision or local governmental authority has the right to enforce its own laws and regulations related to taxation of profits and capital received from ownership, management, manufacture, development, operation, transportation, and distribution of natural resources and hydrocarbons, including oil and gas, their condensates, derivatives and secondary products.
The agreement also sets out procedures for exchanging tax information between the two countries’ tax authorities.
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