UAE signed 146 agreements to avoid double taxation on income in 2024

The UAE signed 146 agreements to avoid double taxation on income by the end of 2024, as the country continues to develop its tax policies and regulations.

The details were revealed by Sheikh Maktoum bin Mohammed, First Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance, in a post on X on Sunday, as he reviewed the ministry's 2024 annual report.

Double taxation refers to a similar tax (such as an income tax) being imposed in two countries on the same person or entity on the same tax base, according to the UAE's Ministry of Finance website.

This could “harmfully affect the exchange of goods, services and capital and technology transfer and trade across the border”, it says.

Public and private companies, investment firms, air transport firms and other companies operating in the UAE, as well as residents, benefit from double taxation agreements (DTA), according to the ministry.

DTAs ensure people and businesses are only taxed once. They clarify how certain types of income, such as dividends, property income and pensions, should be taxed, and lay out rules on non-discrimination to prevent different treatment based on factors such as nationality or residency.

The ministry is working on expanding its DTA network, with the purpose of exempting or reducing taxes on investment and profits from direct and indirect taxes and to promote the UAE’s competitiveness, the website says.

While the UAE does not currently levy an income tax, it introduced a value-added tax in 2018 and corporate tax in 2023.

However, the Emirates does not have a treaty with the US, which imposes taxes on the worldwide earnings of its citizens and green card holders. US President Donald Trump had pledged to end double taxation for Americans living abroad during his election campaign.

“The UAE is committed to building an integrated economic system that promotes diversification and continuous development, with people at the heart of the process, as its primary driving force,” Sheikh Maktoum said in a statement released by the Dubai Media Office.

“The Ministry of Finance has made significant progress in boosting governmental fiscal management and enhancing its contribution to the national economy through proactive financial policies that promote sustainable growth.”

The Ministry of Finance’s 2024 report also cited the success of the government’s financing tools, especially the launch of 14 auctions under the Islamic Treasury sukuk programme, which raised Dh17.1 billion ($4.6 billion) in total.

T-bonds are fixed-rate government debt securities that pay semi-annual interest payments until maturity, according to the online financial encyclopaedia Investopedia. They are also considered to be relatively risk-free.

The UAE announced the launch of a T-bonds issuance programme in 2022 as part of plans to build a local currency bond market and diversify its financial resources.

The Ministry of Finance also approved 116 investment protection and promotion agreements by the end of 2024, Sheikh Maktoum said.

The UAE's total outstanding domestic public debt reached Dh23.45 billion by the end of 2024, according to the report. This includes an outstanding balance of Dh6.35 billion under the government Treasury bond programme following the repayment of the first tranche of two-year bonds valued at Dh4.85 billion and Dh17.1 billion under the Islamic Treasury sukuk programme, the statement said.

The ministry also signed fiscal policies to increase efficiency in government spending and achieve sustainable fiscal balance and others related to asset management, inventory and leasing within the federal government.

The ministry approved digital projects aimed at improving financial operations, enhancing transparency and accelerating services last year, the report said.