Dubai Imposes Tax on Foreign Banks: Law No. (1) of 2024 Overview

Sheikh Mohammed bin Rashid Al Maktoum, Ruler of Dubai, issued Law No. (1) of 2024, imposing taxes on all foreign banks operating in Dubai, including private development zones and free zones. Foreign banks licensed to operate in the Dubai International Financial Center are excluded from its provisions for the income generated from, within or through the center.
The law mandates a 20% annual tax on foreign banks’ taxable income, with deduction for corporate tax as per federal decree law No. (47) of 2022 regarding corporate and business tax, if applicable. The law regulates the rules for calculating taxable income, tax return submissions and tax payments, tax auditing the tax return and voluntary declaration, and the duties and procedures related to the tax audit process.
The law specifies the rights of foreign bank and its branches licensed by the UAE Central Bank to operate in Dubai, concerning tax audits and notification procedures. It also permits the objections to the department of finance about the amount of the imposed tax or fine, with specific details as per the law’s requirements.
Regarding administrative violations and fines, the law designates them under the provisions of this law, determined by the Chairman of the Executive Council, with maximum fine of 500,000 dirhams per violation, doubling for repeated violations within 2 years from the date of committing the previous administrative violation, and not to exceed 1 million dirhams. The law also states the tax obligations duration and the rules for calculating time periods.
This law does not override the Corporate Tax Law. Instead, it complements it. The roles of the Department of Finance and the Financial Control Authority remain intact as per this law’s provisions. However, any matters not explicitly addressed in this law and its decisions are subject to the regulations outlined in the Corporate Tax Law and its decisions.

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