A new Double Taxation Treaty between Russia and the UAE

In 2026, a new Double Taxation Treaty (DTT) between Russia and the UAE came into force.

For international entities in which the UAE participate, this is one of the most significant changes in taxation in recent years. Prior to the entry into force of the new DTT, the treaty between Russia and the UAE effectively applied only to state-owned organisations and sovereign wealth funds. The new provisions now also apply to private companies, investment institutions, and individuals.

What it means in practice

The withholding tax on payments from Russia is reduced:

• dividends: 10% instead of 15%
• interest: 10% instead of 25%
• royalties: 10% instead of 25%.

For multinational groups, this means the opportunity to reduce their tax burden through intra-group financing, the use of intellectual property, the structuring of asset ownership.

The new DTT also allows Russian companies to avoid withholding tax (WHT) for intra-group services made to UAE companies. This is particularly important following amendments to the Russian Tax Code, under which payments to foreign affiliated companies for the provision of services are now subject to 15% WHT.

The DTT separately addresses remote work issues. Remote work is treated as work performed in the employer’s country rather than in the country where the employee is physically located. For Russian companies employing staff in the UAE, this significantly reduces uncertainty regarding taxation.

However, the new DTT is not just about tax benefits.

The DTT contains provisions designed to prevent the obtaining of unjustified tax advantages. If one of the main purposes of a structure or transaction was to obtain benefits under the agreement, those benefits may be refused. In practice, this means that the tax authorities are paying increasing attention to:

• the existence of tangible business activities in the UAE
• an actual right to income
• the business purpose of the entity
• the place where the company is actually managed
• the presence of employees, office space, and management functions in the UAE.

The exchange of tax information between Russia and the UAE has been further strengthened, including on matters relating to controlled foreign companies (CFCs) and business ownership structures.

One of the most significant consequences of the new DTT is the removal of the UAE from Russia’s list of offshore jurisdictions. This has opened up access for Russian businesses, in particular, to:

• a 0% tax rate on dividends received from UAE companies
• tax relief on the sale of shares and equity interests
• other income tax benefits.

Following the entry into force of the DTT, many companies are already reviewing existing structures between the Russian Federation and the UAE , the procedure for intra-group settlements, and approaches to confirming tax residency.

Following the entry into force of the DTT, many companies are already reviewing existing structures, the procedure for intra-group settlements and approaches to confirming tax residency.