ABU DHABI: The telecom giants e& (formerly Etisalat) and du operate under a royalty deal with the UAE government. The royalty deal between e&, du, and the UAE government involves the companies paying a percentage of their profits to the government under the Ministry of Finance’s Royalty Guidelines.

So, for every profit e& and du make, they give 38% as federal royalty and another 9% as corporate tax to the UAE government. This deal ensures that the government receives a share of the companies’ earnings to support national projects and services.

Here’s a simple breakdown:

  1. Royalty Rate: e& and du pay a federal royalty rate of 38%. This rate is applied to their total net profit, including both regulated and non-regulated profits.
  2. Corporate Tax: In addition to the royalty rate, there is a 9% corporate tax on their profits.

UAE telecom operators e& and du have paid AED 3.54 billion in federal royalty to the UAE government during the first half the current year compared to AED 3.73 billion in the same period of 2023. e& has to pay at least AED 5.7 billion in royalties and taxes each year. Du has to pay at least AED 1.8 billion each year.

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The 2024 royalty payment formula does not include profits from international operations. This means:

  1. Profits from international companies they control are excluded.
  2. Profits from international companies they don’t control (like associates and joint ventures) are excluded.
  3. Dividends or profit distributions from international investments that already pay 9% or more in local taxes are excluded.
  4. Profits that belong to minority shareholders in UAE-controlled companies are also excluded.