Mohammed bin Rashid issues Law to tax foreign banks in Dubai

Dubai: His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, has enacted Law No. (1) of 2024 to govern the taxation of foreign banks operating in Dubai. This law applies to all foreign banks in Dubai, except those licensed within the Dubai International Financial Centre (DIFC). Foreign banks are subject to a 20% tax on their annual taxable income, but if they already pay corporate tax under Federal Law No. (47) of 2022, this amount is deducted from their total tax liability.

The law details principles for calculating taxable income, filing taxes, undergoing tax audits, voluntary disclosures, and the procedures and responsibilities associated with tax auditing. It also outlines the rights of foreign banks and their branches licensed by the Central Bank of the UAE, including steps for notifying tax audit results and lodging objections with Dubai’s Department of Finance regarding taxes or fines, under specific conditions.

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The Chairman of The Executive Council of Dubai will issue decisions on violations of this law and the penalties for such violations, capped at AED500,000, with double penalties for repeat violations within two years, up to a maximum of AED1 million.

Effective from its publication in the Official Gazette, this law applies to the tax year following its enactment. The Director-General of the Department of Finance will issue necessary decisions to implement this law, published in the Official Gazette. Law No. (1) of 2024 supersedes Regulation No. (2) of 1996 and any conflicting legislation, while decisions and memos made under Regulation No. (2) of 1996 remain valid until new decisions replace them.

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