New tax announced on foreign banks in Dubai

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has issued a law regarding a 20 per cent tax on foreign banks operating in Dubai.

This new law applies to all foreign banks in the emirate, including special development zones and free zones, except those licensed to operate in the Dubai International Financial Centre (DIFC).

The annual 20 per cent tax will be imposed on the taxable income of the bank. However, if these banks pay corporate tax, the amount of corporate tax will be deducted from their total tax liability.

The Law specifies the principles governing the calculation of taxable income, tax filing and payments, procedures for the audit of tax filing, voluntary disclosure, and responsibilities and procedures related to tax auditing.

Further, it allows the taxable entity to lodge objections with Dubai’s Department of Finance regarding the amount of tax or fines imposed on them, subject to certain conditions.

The Chairman of The Executive Council of Dubai will issue a decision on acts deemed as breaches of the law and penalties imposed for violations.

The total penalties imposed should not exceed AED 500,000. The fine will be doubled in case of repeat violations within two years, up to a maximum of AED 1 million.

This new law applies to the tax year beginning after its enactment.

. @HHShkMohd issues Law on taxation of foreign banks in #Dubai. https://t.co/BrAc45bWSj

— Dubai Media Office (@DXBMediaOffice) March 7, 2024