United Arab Emirates Tax Updates November 2021

a) UAE to set out new law regulating charity giving and fundraising

As reported by ‘The National’ on 11 October, 2021, a new law to tackle money laundering and terrorist financing is being developed by the UAE.

The legislation will govern how charitable donations are made and the way non-profit organizations operate, a senior official has said.
Nasser Ismail, assistant undersecretary at the Ministry of Community Development and a member of the National Committee for Countering Money Laundering, told state news agency Wam that non-profit organisations operating in the UAE “must exercise due diligence to avoid any wrongdoings related to money laundering.” He further added, that the law will be part of the country's ongoing attempts to tackle money laundering and the financing of terrorism and that the law will set out conditions and regulations for licensed charitable and humanitarian authorities within the UAE, in order to "ensure the safety, security and stability of the community''.

b) Tax Treaty between the Democratic Republic of the Congo and the UAE Signed

On 12 October 2021, officials from the Democratic Republic of the Congo and the United Arab Emirates signed an income tax treaty. The treaty is the first of its kind between the two countries and will enter into force after the ratification instruments are exchanged. Details of the treaty will be published once available.

c) Tax Treaty between Indonesia and the UAE has Entered into Force
The new income tax treaty between Indonesia and the United Arab Emirates reportedly entered into force on 19 August 2021. The treaty, signed 24 July 2019, replaces the 1995 tax treaty between the two countries.

Amongst other Articles (limited Force of Attraction, Service PE (services rendered for more than 6 months), income from hydrocarbons, principle purpose test, the withholding taxes rates on passive income prescribed by the Treaty are as under:
· Dividends - 10%
· Interest - 7%
· Royalties - 5%
· Fees for Technical Services (technical, managerial, or consultancy) - 5%
Note - Article 10 (Dividends) also includes the provision that the profits of a permanent establishment may be subject to additional tax, but the additional tax so charged shall not exceed 5% of the amount of such profits after deducting income tax and other taxes.

The treaty applies from 1 January 2022. The 1995 tax treaty between the two countries ceases to have effect once the new treaty is effective.

Corporate Tax