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What is Withholding Tax in UAE?
Withholding tax, also known as WHT, is income tax that is deducted at the source. For instance, an employer deducts WHT from an employee’s salary. Usually, withholding tax is imposed on payments made to overseas companies or non-resident individuals.
Usually, a percentage of the payment is deducted from the original salary or payment and withheld by the employer or payer. The payer then submits this tax to the relevant tax authorities on behalf of the recipient.
Withholding tax allows the employees to avoid paying taxes by deducting it at the source. It enforces compliance as employers would pay the tax for every tax liable employee.
When does Withholding Tax Apply?
The United Arab Emirates does not currently impose any withholding tax regardless of whether the recipient is a UAE entity or located overseas. However, the same cannot be said about other GCC countries.
Leverage Qamar al ahmar’s Specialist Withholding Tax Advisory Services
The UAE does not have withholding tax right now. However, companies making international payments must still consider WHT compliance and obligations across the GCC countries.
Avyanco, a leading accounting and auditing firm in Dubai, UAE, has a team of experienced tax professionals and auditors to offer a wide range of withholding tax advisory services:
- Carefully analyze your situation to determine the impact of WHT on your current and future transactions between GCC countries and overseas businesses as well
- Perform WHT health checks and diagnostic reviews to ensure there are no hidden compliance gaps, exposures, or areas of tax risks across your international payments
- Guidance on WHT implications on modes of payment repatriation, such as royalty amounts, technical services fee, and interest
- Inform you of withholding tax rates in different jurisdictions relevant to your business and find exemptions as well as treaty benefits to reduce tax liability