In January 2025, Russia and the United Arab Emirates signed a ‘Double Taxation Agreement’, establishing a tax rate of 10% on income from dividends, interest, and royalties.
Two Party Agreement
Companies registered in the UAE, but receiving income from Russia, will be subject to a 10% tax on three types of passive income: dividends, interest and royalties.
Similar conditions apply to Russian companies receiving income from the UAE. This agreement is aimed at simplifying tax obligations and reducing the tax burden on international transactions between the two countries.
Negotiations Since 2022
Negotiations on the DTT between Russia and the UAE began back in 2022. The approval process was delayed due to differences in tax systems and approaches to taxation. However, the parties reached an agreement in January 2025, underlining the desire of Russia and the UAE to create more favorable conditions for doing business.
The DTA & Other Treaties
The treaty with the UAE sets lower tax rates than a number of other countries. For example, the Oman treaty sets a 15% rate on dividends and 10% on interest and royalties, while the UK treaty sets a 20% rate on dividends.
The Cyprus treaty also sets a 10% tax rate, but includes more complex provisions for taxing other types of income, such as royalties and interest.
This highlights Russia’s desire to create a more favorable environment for foreign investors and partners by offering favorable tax rates and simplified taxation procedures under the new UAE treaty.
Russian Dependence on Western Markets
Russia is heavily dependent on Western markets, particularly in key sectors such as energy, technology, finance, and natural resource exports. Before the imposition of sanctions, the EU was the largest consumer of Russian oil and gas.
Imports of high-tech equipment and software from Western countries also played a critical role in the development of various industries. Access by Russian banks to Western financial markets ensured investment and liquidity.
However, Western sanctions have significantly limited this access, forcing Russia to seek new economic partnerships and diversify its ties.
UAE Assistance
The signing of a DTA with the UAE opens up opportunities for Russia to strengthen economic ties in emerging markets.
The terms of the agreement facilitate the inflow of Emirati investment into Russian projects, particularly in the real estate, energy and high-tech sectors, whilst underscoring the UAE’s role as a key intermediary in diplomacy and FDI between Europe, the Middle East, and wider Asia.
UAE financial institutions can substitute for Western markets, providing access to capital and supporting international payments, while cooperation in technology helps develop alternative solutions to Western sanctions.
The Russia-UAE DTA is a win-win for both states that aim to diversify their economies whilst spreading risk across multiple markets.
