Tax Treaty Between Russia and the United Arab Emirates

Investment organisations and sovereign wealth funds from the United Arab Emirates will be exempt from taxation in Russia under a double tax treaty signed in Abu Dhabi on December 7, 2011.

The agreement is not based on the OECD Model Tax Convention on Income and Capital and would apply, strictly speaking, only to state companies and companies wholly owned by the government. Private businesses will be able to benefit from the treaty by investing through public investment funds.

So far (the agreement is yet to be ratified), UAE sovereign investors in Russia have to pay a 20% tax on repatriated profits, 15% on profits from interest and 20% on capital gains.

The UAE is one of the world’s largest oil exporters. Its Abu Dhabi Investment Authority (ADIA), with assets between $400 billion and $600 billion, is among the largest sovereign wealth funds.

In Russia, UAE is considered a tax haven. The agreement, therefore, is tailored in somewhat extravagant way so that it does not apply to privately held companies.