His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, in his capacity as Ruler of Dubai, issued Law No.(1) for 2024 regarding the tax on foreign banks operating in Dubai.
The law applies to all foreign banks operating in the emirate including the special development zones and free zones, provided that foreign banks licenced to operate in the Dubai International Financial Centre (DIFC) are excluded from the provisions thereof, as regards the income they generate from conducting their business within or through the DIFC.
The law stipulates that an annual tax of 20 per cent shall be imposed on foreign banks on taxable income. Deducted from this percentage shall be the corporate tax applied in accordance with the Federal Decree Law No.47 for 2022 on taxation of corporations and businesses in the event a foreign bank has paid the tax under the Corporate Tax Law. While it has regulated the rules for calculating taxable income, the law permitted a taxable person to object at the Department of Finance to the amount of tax or fine imposed on him in accordance with the provisions thereof and certain requirements detailed thereunder.
According to the law, the imposed fine shall be determined in accordance with a decision issued by the Chairman of the Executive Council, provided that it shall not exceed Dhs500,000 and shall be doubled if the violation is committed again within two years from the date of the previous violation but shall not exceed Dhs1 million.
Regulation No.2 for 1996 regarding collecting tax from branches of foreign banks in Dubai shall hereby be cancelled, and so shall any text in any other legislation to the extent that it is inconsistent with the provisions of Law No.1 for 2024. The decisions and instructions issued in implementation of the Regulation No.2 for 1996 shall continue to be applicable to the extent that it does not conflict with the provisions of Law No.1 for 2024 until they are replaced by new decisions and instructions. The law shall be published in the Official Gazette and shall take effect from the date it is published.
tanvir@dubainewsweek.com
