Foreign Banks in Dubai to Pay 20% Annual Tax

12-03-2024 | 09:19 am | Editor
As per the Corporate Tax Law issued recently, all foreign banks functioning in Dubai, besides the Dubai Financial Centre should pay an annual tax of 20% on taxable income. When these banks, including the ones operating in special development zones and free zones, pay the tax according to the new law, the corporate tax rate shall be deducted from the mentioned percentage. The latest law was announced by Sheikh Mohammed, the ruler of Dubai. 

The new law covers the regulations for submitting tax returns and paying taxes, computing taxable income, the methods for auditing tax returns and voluntary declarations and the responsibilities and procedures associated with the tax audit process. Furthermore, it also mandates the rights of the individuals subject to tax audit that a foreign bank and its branches authorised by the Central Bank of the UAE to function in Dubai.

Apart from that, depending on the factors outlined in the law, the legislation also permits the taxable entity to file an objection with the Department of Finance of Dubai against the amount of tax or penalty charged upon it. Moreover, the Chairman of the Executive Council of Dubai will also make a judgement on the activities that are considered a violation of this law, by law. It will also be done on the fines imposed for violations.

When these foreign banks are caught violating these laws, they will be imposed with fines of up to Dh500000. The fines will be doubled, up to a maximum of Dh1 million, if there are two or more violations within two years.

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