Sheikh Mohammed bin Rashid, the Ruler of Dubai, has made the announcement that the Emirate of Dubai would be implementing a new yearly tax scheme.
When it comes to the tax that is levied on international banks that are functioning in Dubai, a new legislation has been introduced. All international financial institutions that are active inside the emirate are subject to the rules of the legislation, which also apply to free zones and special development zones. Members of the Dubai Financial Centre are not permitted to participate.
Sheikh Mohammed bin Rashid announces the adoption of a new annual tax of 20% in Dubai
It is stipulated in the legislation that foreign banks will be subject to an annual tax of twenty percent on their taxable income. Additionally, the corporation tax rate will be subtracted from this percentage if the foreign bank is required to pay the tax in accordance with the corporation Tax legislation.
The legislation defines the rules that govern the calculation of taxable income, the controls that govern the submission of the tax return and the payment of the tax, the processes that govern the auditing of the tax return and the voluntary declaration, as well as the duties and procedures that are associated with the process of conducting a tax audit. Furthermore, the legislation outlines the rights of the person who is subject to a tax audit. This individual is the foreign bank and its branches that have been granted permission to conduct business in Dubai by the Central Bank of the United Arab Emirates.
The legislation also permits the taxable entity to file complaints with Dubai's Department of Finance against the amount of tax or fines that have been levied on them, provided that certain requirements that are outlined in the law are met.
It is the responsibility of the Chairman of the Executive Council of Dubai to make a judgment about the acts that are considered to be breaches of this Law and the penalties that are imposed for violations, as stipulated by the law. The total amount of the fines that are levied might not go over Dh500,000. For recurrent offenses within a period of two years, the punishment will be increased by a factor of two, reaching a maximum of one million dirhams.
