Concerning
Tax on Foreign Banks Operating in the Emirate of Dubai[1]
ــــــــــــــــــــــــــــــــــــــــــــــــــــــــ
We, Mohammed bin Rashid Al Maktoum, Ruler of Dubai,
After perusal
of:
Federal Law by
Decree No. (14) of 2018 Concerning the UAE Central Bank and Regulating
Financial Institutions and Services and its amendments;
Federal Law by
Decree No. (28) of 2022 Concerning the Tax Procedures and its Implementing
Bylaw;
Federal Law by
Decree No. (47) of 2022 Concerning Corporate and Business Tax and its
amendments;
Law No. (5) of
1995 Establishing the Department of Finance;
Law No. (1) of
2016 Concerning the Financial Regulations of the Government of Dubai, its
Implementing Bylaw, and their amendments;
Law No. (4) of
2018 Establishing the Financial Audit Authority;
Law No. (5) of
2021 Concerning the Dubai International Financial Centre;
Decree No. (22)
of 2009 Concerning Special Development Zones in the Emirate of Dubai;
Decree No. (59)
of 2023 Concerning the Supreme Fiscal Committee in the Emirate of Dubai;
Regulation No.
(2) of 1996 Concerning Collection of Tax from Branches of Foreign Banks in the
Emirate of Dubai; and
The legislation
establishing and regulating free zones in the Emirate of Dubai,
Do hereby issue this Law.
This Law will
be cited as “Law No. (1) of 2024 Concerning Tax on Foreign Banks Operating in
the Emirate of Dubai”.
The following
words and expressions, wherever mentioned in this Law, will have the meaning
indicated opposite each of them unless the context implies otherwise:
|
UAE: |
The United
Arab Emirates. |
|
Emirate: |
The Emirate
of Dubai. |
|
Ruler: |
His Highness
the Ruler of Dubai. |
|
CBUAE: |
The Central
Bank of the United Arab Emirates. |
|
SFC: |
The Supreme Fiscal
Committee in the Emirate of Dubai. |
|
DOF: |
The
Department of Finance. |
|
FAA: |
The Financial
Audit Authority. |
|
Director
General: |
The director
general of the DOF. |
|
Corporate Tax
Law: |
Federal Law
by Decree No. (47) of 2022 Concerning Corporate and Business Tax and its
amendments. |
|
Tax: |
The tax
imposed on a Taxable Person under this Law. |
|
Foreign Bank: |
A branch of a
foreign bank licensed by the CBUAE to operate
in the UAE in accordance with the legislation applicable to the CBUAE. |
|
Taxable
Person: |
A Foreign
Bank and its branches that are licensed by the CBUAE to operate in the Emirate. |
|
Tax Period: |
A period of
time in respect of which a Taxable
Person must submit a Tax Return
and calculate the relevant due Tax. |
|
Taxable
Income: |
The revenue realised
by a Taxable Person within the Emirate during a Tax Period, which is calculated in accordance with
the provisions of this Law. |
|
Tax Return: |
The
information and data that must be provided to the DOF by a Taxable Person on
the forms prescribed by the DOF and in accordance with the relevant resolutions issued by
it. |
|
Tax Audit: |
A process
undertaken by an Auditor to examine the accounting records, books, and
documents; or any information or data related to the Tax due
from a Taxable
Person. |
|
Tax
Assessment: |
A decision
issued by the DOF determining the amount of Tax due
from a Taxable
Person based on the findings of a Tax Audit. |
|
Voluntary
Disclosure: |
A statement
submitted by a Taxable Person to the DOF, under this Law and the resolutions
issued in pursuance hereof, notifying it of any error, deficiency, or omission in a Tax Return or Tax Assessment. |
|
Auditor: |
Any Person
authorised by the FAA to audit
a Taxable Person. |
|
Tax Evasion: |
A Taxable
Person’s use of
illegal means resulting in the under-assessment or non-payment of the amount of due Tax, or a Tax refund to which he is not entitled. |
a. This Law applies to all
Foreign Banks operating in the Emirate, including in Special Development Zones
and free zones.
b. This Law does not apply
to Foreign Banks licensed to operate in the Dubai International Financial
Centre in respect of the income they realise from
conducting their Business within or through the DIFC.
a.
An annual
Tax at the rate of twenty percent (20%) of the Taxable Income is hereby levied
on Foreign Banks.
b.
The Corporate
Tax rate applicable under the Corporate Tax Law will be deducted from the rate indicated
in paragraph (a) of this Article, provided that the
Foreign Bank pays the relevant tax prescribed under the
Corporate Tax Law.
When calculating a Taxable Income, the following will be observed:
1.
The rules
and regulations approved by the Director General regarding:
a.
the method
of calculating Joint Revenues and Joint
Expenditures;
b.
the head
office expenditures and the Regional Management Expenditures;
c.
the
unrealised losses and gains from the Taxable Income;
d.
any
profits that are not included in the income statement; and
e.
any other matters required to
be considered when calculating the Taxable Income.
2.
the
provisions of the Corporate Tax Law and the resolutions issued in pursuance thereof,
in any cases other than those covered by
the rules and regulations approved by the Director General for calculation of
the Taxable Income.
a.
A Taxable
Person must, within the time frame prescribed by the Director General, provide the DOF
with:
1.
the Tax
Return for the outgoing Tax Period, on the
relevant form prescribed by the
DOF;
2.
the Taxable
Person’s financial statements and financial notes;
3.
the amount
of Tax due in respect of the
outgoing Tax Period, together with the documents supporting the method of
calculation of that amount; and
4.
the tax
rate applicable to the Taxable Person, and the
amount of Tax paid by him, under the Corporate Tax Law.
b.
The
financial statements and financial notes of a Foreign
Bank must be certified by an
accredited external auditor.
c.
A Tax
Return submitted to the DOF will not be accepted unless it includes the basic
information determined in the form prescribed by the DOF.
d.
A Taxable
Person is responsible for the accuracy of the information and data set
forth in the Tax Return, financial
statements, and
financial notes; and all other data
and information provided by him to the DOF or the FAA.
a. Where a Taxable Person becomes aware that
a Tax Return submitted by him to the DOF, or a Tax Assessment sent to him by
the DOF, is incorrect, resulting in under-assessment of the Tax due under this Law,
the Taxable Person must correct the Tax Return, or the information based
on which the Tax Assessment is made, by submitting a Voluntary Disclosure; and
must pay the outstanding difference in Tax within thirty (30)
days from the date on which he becomes aware of the same.
b. Where a Taxable Person becomes
aware that a Tax Return submitted by him to the DOF, or a Tax Assessment sent
to him by the DOF, is incorrect, resulting in over-assessment of the Tax due
under this Law,
the Taxable Person may submit a Voluntary Disclosure within
thirty (30) days from the date on which he becomes aware of the same. In
that case, the Taxable Person must notify the DOF of an
appropriate refund method, either through making
the refund to his bank account or considering the
difference in Tax as an
advance payment towards the Tax due in respect of the next
Tax Period.
c. The Voluntary
Disclosure referred to in paragraphs (a) and (b) of this Article will be
submitted on the relevant forms and in accordance with the procedures
prescribed by the DOF.
a.
The DOF
will refer to the FAA the Tax Returns, financial statements and notes, data,
information, documents, and Voluntary Disclosures submitted by Taxable Persons.
b.
The FAA
will audit and verify the accuracy of the Tax Returns, financial statements,
notes, data, information, documents, and Voluntary Disclosures referred to it
by the DOF. The FAA will include the findings of audit in the
relevant reports, which it will submit to the
DOF.
a. An Auditor will conduct the Tax Audit of a
Taxable Person to verify his compliance with the provisions of this Law. The audit may
be conducted at the offices of the FAA; at the
place of business of the Taxable Person; or at any
other place where the Taxable Person keeps his records, in which case the
Taxable Person must be notified at least five (5) days before the date of
conducting the Tax Audit.
b. For the purpose of performing the Tax Audit
duties, an Auditor will have the authority to access all documents,
information, records, and data at the Taxable Person’s place of
business or at the place where the Taxable Person keeps his
records, provided that these documents, information, records, and data are
relevant for Tax purposes.
c. Notwithstanding the provisions of
paragraph (a) of this Article, an Auditor will have the right to access any
place of business of the Taxable Person or any place
where he keeps his records,
without notifying him in advance of the Tax Audit, in any of the following
cases:
1.
where the
FAA has substantial grounds to believe that the Taxable Person is involved or
implicated in Tax Evasion;
2.
where the
FAA has substantial grounds to believe that the Taxable Person is concealing
any Tax-related data or information; or
3.
where the
Taxable Person is notified in advance of the Tax Audit but attempts to prevent
the Auditor from accessing the place where the Tax Audit is to be conducted.
d. A Tax Audit
will be conducted during the official working hours of the FAA. However, where
necessary, the Tax Audit may be conducted outside of these working hours
pursuant to a decision of the FAA Director General.
e. A person who is subject to Tax Audit, or
any other person whose work is related to the Tax Audit, must provide all
possible facilitations and assistance to the Auditor to enable him to perform
his duties.
f. The DOF and the FAA will have the right to
re-audit any matter that has been previously audited if new information emerges
which may impact the Tax Audit findings.
In conducting
the Tax Audit, the Auditor will have the authority to obtain or seize original
records and documents, or copies thereof, in accordance with the relevant rules
prescribed by the FAA Director General.
A person subject
to Tax Audit will have the right to:
1.
request the
Auditor to produce his identification card;
2.
obtain a
copy of the Tax Audit report once completed;
3.
have his
representative attend the Tax Audit conducted at his place of business or at
the place where he keeps his records; and
4.
receive copies of
any records or documents seized or obtained by the Auditor in the course of
conducting the Tax Audit.
a. The FAA will provide the DOF with the
final Tax Audit findings within ten (10) days from the date of the Tax Audit
completion.
b. The DOF will, within ten (10) days from
the date on which it approves the Tax Audit findings, issue the Tax Assessment
and notify the Taxable Person of the amount of the
payable Tax, in the event of any
difference, whether an
overpayment or underpayment, between
the Tax amount paid by the Taxable Person and the Tax amount payable by him.
Where the DOF is unable to determine the amount of due
Tax, it will issue an estimated
Tax Assessment. The DOF must amend
this assessment where new information emerges after its issuance, and must
notify the Taxable Person of such amendment within ten (10)
days from the date of the same.
a.
A Taxable
Person may file a challenge with the
DOF in respect of the amount of Tax or fine imposed on him under this Law. This
challenge will be admissible subject to the
following:
1.
The challenge must be in
writing, reasoned, and supported by the relevant
documents and facts.
2.
The challenge must be
filed within twenty (20) days from the date on which the Taxable Person is
notified of the Tax Assessment and the amount of
the due Tax, or the
imposed fine.
3.
The Taxable
Person must pay at least fifty percent (50%) of the amount of the due Tax or
imposed fine.
b. The DOF will consider any challenge that meets the requirements referred to in paragraph (a) of this
Article through a committee formed for this purpose by the Director General
from among the employees of the DOF or other entities. This committee must
submit its recommendations in respect of the challenge to the SFC within
thirty (30) days from the date of duly filing the challenge. The SFC must
determine the challenge by issuing a reasoned decision within ten (10) days
from the date of submitting the recommendations to it.
c.
The DOF
will notify the Taxable Person of the SFC decision within five (5) days from
the date of its issuance.
d.
The SFC
decision will be deemed final, and
may be appealed only before the competent court.
a.
Without
prejudice to any stricter penalty stipulated in any
other legislation, a Person who commits Tax Evasion by performing any of the
acts stipulated in paragraph (b) of this Article will be punished by a fine
equal to double the amount of the evaded Tax.
b.
A
Taxable Person
will be deemed to have committed Tax Evasion if he:
1.
submits an
incorrect Tax Return, and fails to provide a Voluntary Disclosure in respect
thereof within the time limit prescribed by this Law;
2.
fails to pay the due Tax or
the difference in Tax
established by the Tax Audit;
3.
understates
his actual Taxable Income;
4.
manipulates
accounting data or provides incorrect, incomplete, or false information,
records, or statements;
5.
misuses, or
causes damage to, any documents prepared by the DOF or the FAA;
6.
destroys or
conceals any documents, data, or information he is required to maintain and
provide to the DOF or the FAA;
7.
prevents or
precludes the Auditor from performing his duties in
a manner that leads to Tax Evasion; or
8.
commits any
other act or omission aimed at evading, in part or in whole, the payment of
Tax.
c.
Without
prejudice to the Taxable Person’s liability
for Tax Evasion, where it is established that a third party has directly
particpated in or caused Tax Evasion, the same fine imposed on the Taxable
Person will be independently imposed on that third party.
Where a Taxable
Person delays in paying, in whole or
in part, the Tax due from him, or the fine imposed on him, beyond the deadline prescribed under this Law and the
resolutions issued in pursuance hereof, he will be subject to a penalty of a
fine of two percent (2%) of the amount of unpaid Tax or fine for every month of delay, in which case a part of a month will be rounded up to a full month.
a. The Chairman of the Executive Council will
issue a resolution determining the acts that constitute administrative
violations of this Law and the resolutions issued in pursuance hereof; and the
fine prescribed for each violation. The fine for each violation
must not exceed five hundred thousand dirhams
(AED 500,000.00)
b. Upon repetition of the same administrative
violation within two (2) years from the date of the previous violation, the
amount of the fine referred to in paragraph (a) of this Article will be
doubled. A fine must not exceed one million dirhams (AED 1,000,000.00).
The imposition
of the fines prescribed by Articles (15), (16), and (17) hereof does not prejudice the Taxable Person’s obligation to pay the Tax due from him.
The DOF
employees nominated pursuant to a resolution of the Director General, and the
FAA employees nominated pursuant to a resolution of the FAA Director General,
will have the capacity of law enforcement officers to record the acts committed
in breach of the provisions of this Law and the resolutions issued in pursuance
hereof. For this purpose, they may issue the necessary violation reports; and, where necessary, seek the assistance of police
personnel.
a. The DOF and the FAA will notify each Taxable
Person of any decisions or procedures related to implementing the provisions of
this Law and the resolutions issued in pursuance hereof
on the address he
specifies, unless he notifies the DOF and the FAA of
any change to that address; and will use the method of notification
agreed upon by the Taxable Person and the DOF.
b. A notification communicated in accordance
with paragraph (a) of this Article will be deemed valid and will have full
legal effect.
Government Entities
in the Emirate must, upon request, fully cooperate with the DOF and the FAA to
enable them to implement the provisions of this Law and the resolutions issued
in pursuance hereof.
a.
Subject to
liability, the employees
of the DOF and the FAA must maintain the confidentiality of, and not disclose,
the information and data which they obtain or to which they have access in the
course of implementing the provisions of this Law and the resolutions issued in
pursuance hereof; and will remain bound by this confidentiality obligation even
after the end of their service.
b.
Without
prejudice to any liability incurred, where applicable, a Person who
obtains any data or
information related to implementing the provisions of this Law and the
resolutions issued in pursuance hereof must not disclose or use the same for
any purposes other than those for which it is obtained unless
such disclosure or use is requested by the Competent
Judicial Authority.
c.
The
Director General will, in coordination with the FAA Director General, issue the
bylaws and instructions required for regulating the exchange of the data and
information related to implementing the provisions of this Law and the
resolutions issued in pursuance hereof.
The rules and
procedures stipulated in the above-mentioned Law No. (1) of 2016 and the
resolutions issued in pursuance thereof apply where a Taxable Person refrains from paying the Tax due, or the fines imposed on him, under this Law and the
resolutions issued in pursuance hereof.
Where no time
limit is specified for the performance of any obligation or act under this Law
and the resolutions issued in pursuance hereof, the DOF or the FAA will grant each Taxable Person a time limit commensurate with the
nature of the obligation or act he is required to perform. In that case, the time limit may neither be less than five (5) days nor
more than forty (40) days.
In calculating a time limit provided for under this Law
and the resolutions issued in pursuance hereof, the following rules will apply:
1.
The time
limit will be exclusive of the day of notification, or day of occurrence of the
event in respect of which the time limit is prescribed.
2.
If the last
day of the time limit falls on a weekly rest day, or a public holiday, the time
limit will be extended to the next working day.
a. Except in cases of proven Tax Evasion, the
DOF may not conduct Tax Assessment after the lapse of five (5) years from the
end of the relevant Tax Period.
b. Where Tax Evasion is proven, the DOF may
conduct Tax Assessment within fifteen (15) years from the end of the Tax Period
in which the Tax Evasion occurs.
c. Claims for the Tax
due or fines imposed under this Law and the
resolutions issued in pursuance hereof, of which the Taxable Person is notified
will not be time-barred, and may be raised at any
time.
a. The burden of proof of the accuracy of a
Tax Return rests with the Taxable Person.
b. The burden of proof of committing any of
the violations stipulated in this Law, and the resolutions issued in pursuance
hereof, rests with the DOF or the FAA, as the case may be.
Without
prejudice to the nature of the Tax levied under this Law, and to the roles assigned to the DOF and FAA hereunder, the rules, conditions,
procedures, regulations, and time limits prescribed by the Corporate Tax Law, and the resolutions issued in pursuance thereof, apply in respect of:
1.
Tax
Periods; and
2.
all other
matters on which this Law and the resolutions issued in pursuance hereof are
silent.
For the
purposes of this Law, all amounts must be expressed in UAE dirhams, and any amount expressed in another currency must be converted into UAE dirhams according to the exchange rate specified by the CBUAE unless otherwise determined by the DOF.
A Taxable
Person must retain all Tax-related records and documents for a period of not
less than seven (7) years from the end of the relevant Tax Period, to enable
the DOF and the FAA to refer to
them where required.
a. The provisions of this Law apply to Tax
Periods starting after the effective date hereof.
b. The rules, procedures, and time limits
prescribed by the above-mentioned Regulation No. (2) of 1996 apply to the Tax
Periods preceding the effective date hereof.
c. The Director General will establish any other
transitional provisions relating to the implementation of this
Law pursuant to a resolution he issues in
this respect.
The Taxes and
fines collected pursuant to this Law and the resolutions issued in pursuance
hereof will be paid to the Public Treasury of the Government of Dubai.
The Director
General will issue the resolutions required for the implementation of this Law.
These resolutions will be published in the Official Gazette of the Government
of Dubai.
a.
Subject to
paragraph (b) of Article (31) of this Law, the above-mentioned Regulation No.
(2) of 1996 is hereby repealed. Any provision in any other legislation is also
hereby repealed to the extent that it contradicts the provisions of this Law.
b.
The
resolutions and instructions issued in implementation
of the above-mentioned Regulation No. (2) of 1996 will continue in
force, to the extent that they do not contradict this Law, until new
superseding resolutions and instructions are issued.
This Law will be published in the Official Gazette and
will come into force on the day on which it is published.
Mohammed bin
Rashid Al Maktoum
Ruler of Dubai
Issued in Dubai on 1 March 2024
Corresponding
to 20 Shaban 1445 A.H.
©2024 The Supreme Legislation Committee in the
Emirate of Dubai
[1]Every effort has been made to produce an
accurate and complete English version of this legislation. However, for the
purpose of its interpretation and application, reference must be made to the
original Arabic text. In case of conflict, the Arabic text will prevail.