Russia–UAE DTA: 10% rate

• The reduced rate does not apply automatically. Without a UAE tax residency certificate and proof of beneficial ownership obtained prior to the payment date, the Russian party will withhold 15% on dividends and 25% on interest and royalties.
• Under the agreement, a zero-corporate-tax free zone company is also recognized as a UAE resident. The "subject to tax" requirement applies only to the Russian party; there is no such requirement for the Emirati party.
• The agreement sets no ownership or investment thresholds for dividends. For interest and royalties, the preferential treatment is limited to the arm's-length amount; any excess falls outside the scope of the 10% rate.
• Payments not explicitly named in the agreement are subject to a 25% tax rate in Russia. Reclassification of a payment carries a higher cost than any paperwork error.
• The removal of the UAE from the Ministry of Finance’s lists enabled the zero rate on inbound dividends but did not eliminate transfer pricing controls: due to the 9% Emirati tax rate, transactions exceeding 120 million rubles per year once again fall within the scope of these regulations.
• The agreement does not cover VAT. A Russian licensee paying royalties for foreign software must pay 22% agency VAT in addition to the 10% withholding tax.

Here is the short answer to the question that brought you to this page: the 10% rate is applied by the Russian payer on their own initiative, but only if, prior to transferring the funds, they have received an UAE tax residency certificate from the Emirati recipient, along with confirmation that the recipient is the beneficial owner of the income (i.e., not merely passing it along the chain). No permission needs to be requested from the tax authorities, and no formal application is required. The responsibility for applying the correct rate lies with the payer. If the necessary documents were not available at the time of payment, the tax must be withheld at standard domestic rates, leaving the long process of reclaiming the overpayment as the only subsequent option.

Changes in the relationship between the two tax systems

The agreement signed in Abu Dhabi on February 17, 2025, entered into force on July 18, 2025, and applies to income starting January 1, 2026. The gap between these dates often causes confusion. Legally, the treaty has been in effect since July, but it applies to specific payouts only starting with payments made in the new calendar year. Dividends remitted on December 29 are subject to the old rules, whereas dividends paid on January 12 fall under the new ones.

The previous treaty covered only state funds

The 2011 agreement existed formally but offered no benefit to private business. It covered investments made by states and their financial or investment institutions. A standard UAE company did not qualify, let alone an individual. Consequently, until recently, payments from Russia to the UAE were subject to full domestic tax rates, and the jurisdiction itself appeared on the Ministry of Finance’s "offshore" lists—entailing all the associated restrictions regarding tax relief and transfer pricing.
The new document is structured differently. It applies to both companies and individuals, covering income taxes in both countries as well as property taxes on the Russian side. The old agreement ceased to be effective the moment the new one came into force.

The "10-10-10" formula and what it excludes

A uniform 10% rate on three types of passive income is a model framework that the Russian Ministry of Finance offers to neutral jurisdictions. Compare this with domestic rates: without a treaty, dividends paid to a foreign entity are taxed at 15%, while interest and royalties are taxed at 25% (following the hike in the general corporate profit tax rate). The savings on interest and royalty payments are more than twofold.
However, the formula is less favorable than what businesses were accustomed to under the old European treaties, which featured zero rates for interest and royalties. Moreover, it does not provide an exemption—it sets a cap. A ten percent tax is withheld and remains withheld. For an Emirati recipient paying zero corporate tax, there is no tax liability in the UAE against which to offset this amount. In other words, the Russian tax becomes the final cost of the transaction rather than a prepayment.

Exemption for government entities

A full exemption from withholding tax on all three types of income has been retained for financial, investment, and other institutions that are wholly owned—directly or indirectly—by either of the two states. This provision carries over from the 2011 treaty. While this rule does not apply to private investors or entrepreneurs, it is worth noting so as not to confuse reports regarding sovereign wealth funds with the regulations applicable to ordinary companies.

Who from the UAE is eligible for the 10% rate?

Eligibility for the tax benefit is determined based on two criteria: formal residency status and the substantive status of the income recipient. The former is confirmed by documentation, while the latter is established through facts regarding the company. Russian tax authorities verify both aspects, scrutinizing the second one much more rigorously.

Free zone companies and zero corporate tax

The agreement with the UAE has a unique feature that is rarely discussed. The requirement to be "subject to tax" applies only to Russian entities; no such criterion exists for the UAE side. Consequently, any UAE tax resident—including free zone residents and companies subject to a zero corporate tax rate—can avail themselves of the agreement's benefits.
This is a crucial point for those structuring their business through a free zone. In treaties with many other jurisdictions, the "subject to tax" clause effectively excludes entities under preferential tax regimes from the agreement's benefits. Here, no such exclusion applies. However, there is a caveat: UAE offshore companies do not receive a tax residency certificate, and without this certificate, the discussion regarding the 10% rate cannot even begin. In this context, the difference between free zone and offshore registration translates into real financial impact, a factor worth considering when choosing the legal form for a UAE company.

Substantive proof of beneficial ownership is required

A residency certificate confirms residency status but does not prove that the recipient is the ultimate owner of the funds. That is a separate issue. The company must have the discretion to dispose of the income and must not be under an obligation to immediately pass it on to another party. Inspectors look for specific formal indicators: the presence of an office and staff, independent management decision-making, the company’s own expenses, the intended use of funds received, and the payment history following the receipt of funds.
A company whose only asset is a bank account and whose sole function is forwarding incoming funds to a parent entity will not qualify for the tax benefit. A refusal in such cases is not based on nitpicking over paperwork, but on an economic analysis of fund flows. Therefore, preparing a corporate structure to qualify for a reduced tax rate is not merely a matter of handling documents, but of addressing the substance of business operations—such as lease agreements, staffing, a corporate account with genuine transaction volume, and management reporting.

Individuals and Residency Disputes

An individual may be considered a tax resident of both countries simultaneously. The agreement resolves such conflicts by applying a hierarchy of criteria: permanent home, center of vital interests, habitual abode, and citizenship. If none of these criteria prove decisive, the matter is referred to the respective authorities for resolution.
Russian tax residency is lost if an individual spends fewer than 183 days in the country during a calendar year. UAE residency, however, can be obtained on one of three grounds, two of which do not require a six-month stay: having a permanent home or holding a valid residence visa combined with 90 days of physical presence. For those planning to relocate, the difference between these thresholds is significant, and the visa itself is obtained through the standard UAE residence permit application process.

Tax Consultant, IT-OFFSHORE (International Structuring Division)

"We almost never start by discussing the tax rate. We begin by asking who is paying whom and for what. In eight out of ten cases where clients approach us to arrange a tax benefit, it turns out that some of the payments do not fall under any of the three articles of the agreement." "It is a mixed contract: it covers licensing, implementation services, technical support, and expense reimbursement. The Russian tax authority breaks such a contract down into its constituent parts and applies a specific rate to each one. Certain components are classified as 'other income,' which attracts a 25% rate instead of the expected 10%. Therefore, the first step is to redraft the contract so that each payment is clearly defined—only then should you gather the certificates."

Applying the 10% rate in practice

The mechanism is simple to describe but meticulous to execute. When a Russian company makes a payment to an entity in the UAE, it acts as a tax agent. It withholds the tax at the time of transfer and remits it to the budget. The right to apply the reduced rate arises only when the supporting documents are actually on file—not when there is merely a promise that they will be sent next week.

UAE Tax Residency Certificate

This document is issued by the UAE Federal Tax Authority (FTA) via the EmaraTax portal. For a company, the application typically requires a trade license, details of founders and directors, a lease agreement, bank statements covering six months of the relevant financial year, and financial statements. For an individual, requirements include an Emirates ID, a passport with a visa, a long-term lease agreement or property ownership deed, a border crossing report, and bank statements or proof of income. Issuance takes approximately five to ten working days, though the process is prolonged if the document package is incomplete.
The certificate is issued for a specific period. It must cover the year in which the payment is made. Tax authorities will not accept a document from the previous year for a current-year payment, and there is no point in arguing the matter. The practical takeaway is simple: if dividend payments are planned for March, the application to the FTA should be submitted in January, not at the end of February.

No apostille required, but translation is

A protocol to the agreement eliminated the requirement for the legalization and apostilling of UAE tax residency certificates. This significantly reduces preparation time; previously, consular procedures took weeks. However, even though the document is in English or Arabic, it must still be accompanied by a Russian translation when submitted for Russian tax record-keeping purposes. Waiving the apostille requirement does not eliminate standard requirements for supporting documentation.
In addition to the certificate, the package must include a letter from the recipient confirming their beneficial ownership of the income; if the payment is made via an intermediary, documentation covering the entire chain of ownership up to the ultimate beneficial owner is also required. Separate confirmation is prepared to verify that the UAE counterparty does not have a permanent establishment in Russia, in cases where this status affects the tax classification of the income.

What to do if the document arrives after the payment is made

In that case, tax is withheld at the standard domestic rate. While a refund of the excess tax withheld can subsequently be obtained through the Russian tax authorities, the procedure is lengthy—requiring a full set of documents and an application from the foreign entity—and the funds remain tied up in the state budget for months. Moscow-based companies that make regular payments to UAE entities often manage this by planning ahead: they order the certificate in January to cover the entire year and keep it on file alongside the contract.
There is another detail that is often overlooked: the tax return detailing income paid to foreign organizations must be filed regardless of whether the applicable rate is 10% or zero. Tax exemption does not exempt the company from the reporting requirement. The filing deadline is the 25th day of the month following the reporting period.

Breakdown by Payment Type

Three articles of the agreement yield the same figure, yet the conditions for their application differ. This is rarely explained, and it is precisely these distinctions that most often cause calculations to fall apart.

Dividends and the Zero-Rate Scenario

The agreement imposes no additional conditions for dividends. There are no requirements regarding minimum equity stakes, holding periods, or investment volumes. A UAE resident holding a tax residency certificate and possessing the beneficial right to the income receives a 10% rate instead of 15%, regardless of the size of their shareholding. The definition of dividends is broad, encompassing the distribution of additional capital, reductions in authorized capital, other profit-participation rights, and payouts on investment structure units—excluding funds established for real estate investment.
The reverse scenario is more interesting. Under Ministry of Finance Orders No. 187n and No. 188n dated December 22, 2025, the UAE was removed from both "offshore lists," effective January 1, 2026. This enabled a Russian parent company to benefit from a zero tax rate on dividends from its Emirati subsidiary, provided it holds at least a 50% stake for a period exceeding 365 days. For holdings that accumulate profits in the UAE, this is more significant news than the 10% rate itself.

Interest and Market Rates

Here, a condition arises that is absent from the article on dividends. The tax relief applies only to the portion of interest that corresponds to market rates. If the interest rate on an intercompany loan is inflated relative to comparable terms, the excess portion falls outside the scope of the interest article and is treated separately—typically by being reclassified and taxed according to domestic rules. This gives rise to a practical requirement for loans between related companies: the justification for the interest rate must exist in writing prior to payment, rather than being compiled retroactively during an audit. Acceptable forms of documentation include calculations based on comparable market rates, bank offers from the same period, or the group’s internal financing policy.

Royalties, equipment leases, and VAT on top

The definition of "royalties" in the agreement is broader than usual. In addition to copyrights, patents, and trademarks, it encompasses payments for the use of industrial, commercial, and scientific equipment. Consequently, cross-border equipment leases between Russia and the UAE are also subject to the 10% cap. At the same time, this expanded wording creates grounds for disputes regarding the classification of lease payments; therefore, the subject matter of the contract should be described unequivocally.
For IT businesses, another detail is significant—one that is not part of the agreement itself but always accompanies it. Withholding tax and VAT are distinct taxes, and double taxation treaties do not apply to VAT. A Russian licensee paying an Emirati rights holder for software withholds 10% in tax at the source while simultaneously acting as a VAT tax agent at the 22% rate (effective from the beginning of 2026). The VAT exemption for software applies only to products listed in the Russian registry. This 22% charge must be factored into the transaction budget from the outset; otherwise, the savings gained on withholding tax will be negated.

Situations where the 10% rate does not apply

The treaty is replete with anti-avoidance provisions. This is a deliberate choice by the Russian side: the more lenient the rates, the stricter the conditions for accessing them. Let us examine three scenarios that occur most frequently.

The "Other Income" article and the cost of reclassification

Most Russian treaties assign unnamed types of income to the recipient's country of residence. The treaty with the UAE works the other way around: "other income" is taxed in the country of source. For payments originating in Russia, this implies a 25% rate.
This article covers anything that does not fall under dividends, interest, royalties, real estate income, or business profits. Examples include debt forgiveness, penalties, compensation, and payments of an ambiguous nature. It also captures payments reclassified by tax authorities: if the economic substance of a payment differs from its contractual designation, the treaty either does not apply at all or applies via the "other income" article. For a cash flow of hundreds of millions of rubles, the difference between 10% and 25% amounts to tens of millions.

The Principal Purpose Test and conduit entities

Benefits are denied if the sole or primary purpose of a transaction or structure was to obtain those very benefits. While this wording is standard for modern treaties, its application is quite specific. A company established just a month before a major payment—with no employees and no business activity other than receiving that single payment—will fail the test.
There is a second rule as well: a company (though not an individual) may be denied benefits if, considering its place of effective management and other circumstances, it is deemed a resident of both jurisdictions. Managing an Emirati company from a Moscow office using Russian staff creates precisely this situation. The place where decisions are made matters just as much as the registered address.

Transfer Pricing Rules Remain in Effect

Many publications mislead readers by claiming that the UAE’s removal from offshore lists eliminated transfer pricing controls. This is not the case. Starting in 2026, a new version of Subparagraph 3, Paragraph 1, Article 105.14 of the Tax Code of the Russian Federation applies: transactions with residents of states where the corporate income tax rate is 15% or lower are classified as controlled transactions. The UAE’s corporate tax rate is 9%, meaning the jurisdiction falls within the scope of the rules under this new criterion, despite having been removed from the offshore lists.
The threshold remains unchanged: 120 million rubles in aggregate transactions per calendar year. Exceeding this limit triggers the obligation to file a notification regarding controlled transactions and to prepare transfer pricing documentation. When planning the volume of intra-group operations with the UAE, this threshold should be kept in mind from the outset, rather than discovered only at the end of the year.

Where to start analyzing your structure

There is no one-size-fits-all answer to the question of whether operating through the UAE is advantageous for you; anyone offering such an answer before reviewing your figures is simply saving their own time at your expense. The benefits depend on the nature of your revenue streams, the proportion of passive income, the presence of actual local operations, plans for profit repatriation, and the physical location of key decision-makers.

What we examine first

The process begins with an audit of the status quo. We analyze existing contracts and payments by income type, cross-reference their classification with the wording of relevant agreements, and calculate the effective tax burden for each stream—factoring in withholding tax, VAT, and the UAE corporate tax. We also assess whether the structure meets the "Main Purpose Test" and satisfies requirements regarding beneficial ownership. Additionally, we verify whether transaction volumes exceed the thresholds for controlled transactions.
The result is not an abstract recommendation but a data-driven table showing the costs of the current setup versus the proposed one, along with a list of required documents and the necessary sequence of actions. Sometimes, the conclusion is that the UAE is not the right fit for a specific objective, and that jurisdictions such as Hong Kong, Cyprus, or Kazakhstan would be more appropriate. We are fully prepared to share that conclusion as well.

Timelines and next steps

Experience shows that preparing a structure to qualify for a reduced tax rate takes between one and a half and three months if the UAE company already exists, and three to five months if incorporating from scratch and opening a bank account. While "ready-made" companies with existing bank accounts can partially accelerate the process, they do not waive the requirements for actual local substance. The logical sequence is as follows: first, classifying the payments and amending the contracts; next, establishing or fine-tuning an Emirati company with genuine operational substance; then, obtaining a tax residency certificate for the required period; and only then making the first payment at the reduced rate. Reversing this order—making the payment first and gathering the necessary documentation later—procurers higher costs and inevitably leads to correspondence with the tax authorities. Further materials on international taxation can be found in the articles section, and you can discuss specific arrangements via the contactdetails provided.