Managing income tax compliance for foreign banks in the UAE

The United Arab Emirates (UAE) is a federation of seven Emirates comprised of Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain. No income tax is currently imposed at the federal level but most Emirates have issued income tax laws as follows:

• Income Tax Decrees providing for corporate income tax on business activities carried out in the respective Emirate;
• Special banking tax legislation subjecting foreign banks to corporate income tax.

Accordingly, branches of foreign/international banks are subject to income tax in the Emirate where they are established and operate. Navigating through these conditions can seem challenging; Deloitte has therefore created a new document to guide these banks through the mechanism of taxation under the banking tax regulations and the necessary means for transforming their tax-operating model.