WITHHOLDING
TAX IN THE UAE
& THE GCC

WITHHOLDING
TAX IN DUBAI,
ABU DHABI &
THE UAE

Domestic Withholding Tax (WHT) of 0% is applicable on domestic and cross-border payments but there is no obligation to file WHT returns.

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WITHHOLDING TAX IN THE GCC REGION

Within the GCC region, withholding tax is not applicable in the United Arab Emirates and Bahrain. Furthermore, in the UAE, no withholding taxes will be applicable on domestic and cross-border payments under the new UAE corporate tax regime.

Withholding tax is imposed in Saudi Arabia, Qatar, Kuwait, and Oman.

WHAT IS THE WITHHOLDING TAX RATE IN GCC COUNTRIES?

Country	Withholding Tax Rate
Saudi Arabia	- 5% on technical fees, interest & dividends - 15% on royalties, commissions, related party payments, and other services - 20% on management fees
Qatar	5% on fees, interests, royalties, commissions & other services
Kuwait	5% of all payments
Oman	10% of gross payments

WHAT ARE THE RISKS RELATED TO WITHHOLDING TAX SERVICES IN THE UAE?

Through careful planning and professional advice, the minimal risks connected to Taxes in the UAE can be reduced. You can handle the Tax legislations and procedures easily with the assistance of professional consultants, ensuring adherence to legislations and reducing potential risks.

For an expert consultation, contact Creation Business Consultants via email [email protected] or call +971 4 878 6240 today.

WITHHOLDING TAX IN OMAN

WHO IS SUBJECT TO WITHHOLDING TAX?

Foreign companies which do not have a permanent establishment in Oman and yet realize their income from Oman are subject to a 10% Withholding Tax.

WHAT ARE THE OBLIGATIONS OF THE ENTITY CHARGED WITH WITHHOLDING TAX?

The Omani-based entity is required to file the tax return for withholding within 14 (fourteen) days from the end of the month in which the amount was paid or payment is due to the non-resident service provider. The statement of remittance is to be submitted electronically only through the Oman Tax Portal of the Secretariat General.

WHAT ARE THE SOURCES OF INCOME SUBJECT TO WITHHOLDING TAX?

Dividends and interest (suspended until May 5th, 2024, under the Economic Stimulus Plan – Oman Vision 2040).
Royalties.
Management Fees.
Consideration for research & development services.
Consideration for the use of or right to use computer software.
Provision of services (excluding exempts).

WHO IS EXEMPT FROM WITHHOLDING TAX?

Dividends paid by a limited liability company are exempt from Withholding Tax; as profit distributions from ownership in a limited liability company are not considered as dividends of shares.
Payments related to the provision of the following services: freight charges and related insurance, air ticket and accommodation costs abroad, board of directors meeting, participation in training, conferences, seminars & exhibitions, reinsurance payments, and services provided to businesses or property located outside Oman.
Distributions paid by governmental authorities and banks on issued bonds and sukuk.
Interest payable on bank-to-bank facilities for liquidity management purposes.
Interest payable on bank deposits in Oman.

WITHHOLDING TAX IN QATAR

WHO IS SUBJECT TO WITHHOLDING TAX IN QATAR?

Non-resident and non-registered individual or company in Qatar who derives its income from an activity, carried out wholly or partially in Qatar is subject to a Withholding Tax at a rate of 5%.

WHAT ARE THE OBLIGATIONS OF THE ENTITY CHARGED WITH WITHHOLDING TAX?

The taxpayer is requested required to file the Withholding Tax return for withholding electronically to the “Dariba” platform before the 16th day of the month following the month in which the tax was withheld.

Failure to submit the Withholding Tax imposes a financial penalty equivalent to the Withholding Tax amount and a penalty of 2% of the tax per month on delays in remitting tax withheld subject to full amount of the withholding tax Withholding Tax due.

WHAT ARE THE SOURCES OF INCOME SUBJECT TO WITHHOLDING TAX?

Interests Interest.
Royalties.
Fees and other service payments.

RETENTION SYSTEM

A retention tax of 3% of the contract value or the final contractual payment (whichever is higher) applies to payments made to a temporary branch in Qatar by the Qatar government or government agency for a particular project contract.

The retention is released when the temporary branch completes its contract and submits a No Objection Letter issued by the General Tax Authority. The retention system is not applicable to resident companies in Qatar or permanent branches.

WITHHOLDING TAX IN KUWAIT

The tax law in Kuwait does not impose withholding tax, rather, it imposes a somehow a Retention System in which all public and private entities operating in Kuwait are required to retain 5% from the contract value or payment made to a service provider; until the latter submits a tax clearance certificate from the Ministry of Finance (“MoF”). All operational entities in Kuwait are obliged to inform the MoF of the companies they have contracts, agreements, or transactions with and provide a copy of the related contracts.