Dividends received by a UAE company
Our UAE company got dividends from a UAE subsidiary and from India. Are they taxable?
The situation
Dividends from UAE resident companies are exempt. Foreign dividends can be exempt under the participation exemption if the holding meets the conditions.
The law
- Art 22, Federal Decree-Law 47 of 2022: Exempt income includes UAE dividends
- Art 23, Federal Decree-Law 47 of 2022: Participation exemption for qualifying shareholdings
What it means for you
The participation exemption generally looks at at least 5 percent ownership held for 12 months, with the subsidiary subject to tax of at least 9 percent, among other tests. Example: a 20 percent stake in an Indian company held for 3 years usually qualifies. Remove exempt dividends from taxable income and keep proof of holding and the subsidiary's tax status.
What to do
- List each dividend and the payer.
- Mark UAE dividends as exempt.
- Test foreign dividends against the participation rules.
- Keep shareholding and tax evidence.
We can do this for youStandard Corporate Tax return: taxable income computation at 0% and 9%, adjustments, losses and payment: AED 4,750