Quick Summary

• DTAA is a treaty between two countries to avoid taxing the same income twice.
• It benefits residents who earn income abroad or from foreign sources.
• The UAE has signed a DTAA with over 130 countries.
• It allows exemptions, or reduced tax rates.
• You must provide a Tax Residency Certificate (TRC) to benefit under DTAA.

What is double taxation avoidance agreement (DTAA)?

Nobody wants to pay taxes twice on the same income. That’s where the Double Taxation Avoidance Agreement (DTAA) comes in. It’s a legal arrangement between two countries that protects taxpayers from being taxed twice for the same earnings.

Whether you’re a UAE resident investing overseas or an expat working in the UAE, understanding DTAA can help you save money and comply with international tax laws.

Why DTAA exists

When income crosses borders, things get tricky. Two countries may claim tax on the same income.

DTAA helps prevent this “double taxation” by exempting or reducing tax payable.

DTAA explained in simple words

DTAA is a bilateral agreement between countries that defines:

• Which country gets to tax a particular type of income
• Whether both countries can tax it, and if yes, how to avoid paying double
• The methods used: Exemption or reduction

There are two types of taxation systems:

1. Source-based taxation: The country where the income is earned taxes it
2. Resident-based taxation: The country of the taxpayer’s residence taxes it

DTAA balances both systems to ensure fairness and transparency.

How the UAE treats double taxation

The UAE is known for being a tax-friendly country. While there is no personal income tax in the UAE, UAE residents with foreign income can still be affected by taxes in other countries.

To address this, the UAE has signed over 130 DTAAs with countries like:

• India
• United Kingdom
• Pakistan
• France
• Germany
• China
• Canada
• Australia

These agreements allow UAE residents to avoid or reduce tax liability in those countries.

How DTAA works – step-by-step process

Let’s break down how the DTAA process works in 6 easy steps:

1. You earn income abroad (salary, rent, interest, dividends, capital gains).
2. The foreign country applies its local tax on that income.
3. You check if the UAE has a DTAA with that country.
4. If yes, you can apply for relief under the agreement terms.
5. You submit a Tax Residency Certificate (TRC) issued by the UAE authorities.
6. You either get a lower tax rate, full exemption, or a credit for the tax paid.

Necessary: You must renew your TRC annually to keep claiming DTAA benefits.

Types of relief provided under DTAA

1. Exemption method

The income is taxed only in one country — either the source or the residence.

Example: If the DTAA says UAE residents pay tax only in the UAE (which has 0% income tax), the foreign country doesn’t tax it.

2. Tax credit method

You pay tax in the source country and then get a credit for it in your home country.

Example: If you pay 10% tax in India, and your resident country also taxes you 15%, you pay only the difference (5%).

Common income types covered under DTAA

Income type	How DTAA typically applies
Salary/Employment	Taxed in the country where the work is performed
Business Profits	Taxed in the country of business registration
Dividends	May have a reduced withholding tax (5%–15%)
Interest Income	May be taxed at a reduced rate in the source country
Royalties	Often subject to lower tax rates under DTAA
Capital Gains	Usually taxed in the country of asset location
Rental Income	Taxed where the property is located

UAE residents should consult a tax expert for specific country details.

UAE’s DTAA network

The UAE has one of the most extensive DTAA networks globally, covering over 135 countries. Here are some examples:

Country	Data Status	Benefits
India	Active	Tax credit on income earned in India
UK	Active	Reduced tax on certain types of income
Pakistan	Active	Tax credit or exemption possible
Canada	Active	Exemption or credit for certain types of income
Saudi Arabi	Active	Exemption and credit for certain types of income

UAE residents should consult a tax expert for specific country details.

Benefits of DTAA for individuals & companies

• Avoids double taxation
• Lowers tax rates in many cases
• Provides legal certainty and tax transparency
• Encourages cross-border investment
• Supports tax planning and compliance

Whether you’re a freelancer working for international clients or a company receiving foreign dividends, DTAA protects your income from being taxed unfairly.

How to claim DTAA benefits in the UAE

To claim DTAA relief, you typically need to prove your residency status in the UAE.

Documents required:

Document	Purpose
Tax Residency Certificate (TRC)	Proof that you’re a UAE tax resident
Passport & Emirates ID	Identity and residency verification
Bank Statements	Proof of income routing through the UAE
Lease or Tenancy Contract	Proves physical presence in UAE
Company Trade License (for businesses)	Business registration proof

How to get a tax residency certificate in the UAE

We can assist you with obtaining the tax residency certificate through the Ministry of Finance. It takes 3-7 business days.

Note: You must have at least 183 days of stay in the UAE during the tax year to qualify.

Frequently asked questions (FAQs)

Make the most of your income with Kanoony

Understanding DTAA helps you protect your earnings, stay compliant, and make informed financial decisions. For expats and businesses in the UAE, this is not just a tax hack—it’s a necessity.

At Kanoony, we assist clients with:

• Tax Residency Certificate (TRC) applications
• DTAA documentation and advisory
• Cross-border tax planning
• Corporate structuring for tax efficiency

Keep more of what you earn, legally and smartly.