The UAE has signed an agreement with Japan that will exempt all its federal and local government institutions from 20% tax on interest profits. The recipients of tax and financial benefits will be identified and covered under the main agreement, including the sovereign funds. National airlines and other airlines based in the UAE are also exempted from taxation under the agreement.
UAE has, in record, signed and adopted 66 agreements to prevent double taxation. These agreements played important role in strengthening its regional and international role by creating an amiable investment climate and developing the aviation sector. These agreements significantly increased the volume of trade and tourism exchange, which contributed to the socioeconomic development of the UAE.
The taxes will be reduced from 20% to 5% with a rebate rate of 75% for any of the UAE institution or company that owns 10% capital in any Japanese company. In cases where the percentage is less, the taxes will be decreased from 20% to 10% with a reduction rate of 50%.
The agreement was signed by Khalid Ali Al Bustani, Assistant Undersecretary of International Financial Relations Sector of the Ministry of Finance, for the UAE and the Japanese Director of the Middle East and Africa, on behalf of Japan. The parties agreed to complete the procedures at the earliest in order to facilitate the movement of capital, investments and technology between the two countries.