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As trade and investment ties between Turkey and the United Arab Emirates continue to grow, the risk of the same income being taxed in both countries is one of the top concerns for investors. The Double Taxation Avoidance Agreement (DTAA) in force between the two countries removes this risk and creates a predictable tax environment for Turkish entrepreneurs, self-employed professionals and companies. In this guide we explain the scope of the agreement, withholding rates, the role of the residency certificate, the permanent establishment concept and the current UAE tax landscape, step by step and based on official sources.
The agreement for the avoidance of double taxation on income and capital taxes between the Republic of Turkey and the United Arab Emirates was signed on 29 January 1993. It was published in the Official Gazette dated 27 December 1994 (No. 22154), entered into force on 26 December 1994, and its provisions have applied since 1 January 1995. The agreement remains in force unless one of the parties terminates it, giving investors long-term legal certainty. In international tax law, DTAAs generally take precedence over domestic legislation, so these provisions are decisive for cross-border transactions between Turkey and the UAE.
The agreement applies to individuals and legal entities that are residents of one or both states. Its main purpose is to prevent the same income item from being taxed in both Turkey and the UAE, and to allocate taxing rights according to the type of income. On the Turkish side it covers income tax and corporate tax; on the UAE side it covers income and corporate tax. Double taxation is a significant barrier that raises costs for individuals and companies operating internationally; by removing this barrier, the agreement supports the growth of direct investment and trade between the two countries.
Individuals resident in Turkey earning income in the UAE, companies resident in the UAE earning Turkey-sourced income, and businesses trading between the two countries can all benefit. For example, income earned by a UAE company for services provided to a client in Turkey, or a dividend received by a Turkish investor from a Dubai subsidiary, is assessed within the framework of the agreement. The prerequisite is presenting a valid residency certificate to the country where the income is earned.
Residency determines which country a person is considered a tax "resident" of. If an individual is treated as resident in both countries, the state where a permanent home is available is decisive; if a home exists in both, the state with which personal and economic relations are closer (the centre of vital interests) prevails. If that test is inconclusive, the state of habitual abode and, finally, nationality are considered.
To benefit from the reduced rates offered by the agreement, UAE residents must present a Tax Residency Certificate to the tax withholding parties in Turkey. If the original certificate together with its Turkish translation certified by a notary or Turkish consulate is not submitted, domestic law provisions—i.e. non-reduced rates—apply. A current and complete residency certificate is therefore the most critical step in accessing the withholding advantage.
The agreement sets the maximum withholding rates applicable in the source country for dividends, interest and royalties. Where the beneficial owner is a resident of the other country and presents a residency certificate, the following upper limits apply. These rates limit the source country's taxing power, although the income may still need to be declared in the residence country.
| Type of Income | Article | Maximum Withholding |
|---|---|---|
| Dividends (public body as owner) | Article 10 | 5% |
| Dividends (min. 25% holding) | Article 10 | 10% |
| Dividends (other cases) | Article 10 | 12% |
| Interest | Article 11 | 10% |
| Royalties | Article 12 | 10% |
As an example, a dividend distributed by a Turkey-based company to a UAE-resident company holding at least 25% of its capital cannot be subject to a source withholding above 10%. These rates are decisive for corporate tax and overall tax planning. To explore the UAE corporate tax regime in more detail, see our Dubai corporate tax guide.
A fixed place through which the business of an enterprise is wholly or partly carried on is considered a "permanent establishment". A place of management, branch, office, factory or workshop falls within this scope. Under the agreement, the profits of a Turkish enterprise are taxable only in Turkey unless it operates through a permanent establishment in the UAE. Where a permanent establishment exists, only the profit attributable to it may be taxed in the source country.
Businesses providing remote services without a physical structure in the UAE therefore generally remain liable in Turkey. Correctly assessing the permanent establishment threshold is especially important for digital and consulting companies providing cross-border services; otherwise an unexpected tax burden may arise.
Under the agreement, income derived by a resident of one state from immovable property situated in the other state may be taxed in the state where the property is located. Rental income from property in Turkey is therefore subject to Turkey's taxing rights, while income from property in the UAE falls under the UAE's taxing rights.
For independent personal services, if a person carries out the activity through a fixed base in the other state or beyond a certain period, that state may also gain the right to tax. For wages earned from Turkey in return for services performed in the UAE not to be taxed in Turkey, the person must present a document proving UAE residency to the withholding parties.
Under Article 23, double taxation for Turkish residents is eliminated using the credit method: tax paid on income earned in the UAE is credited against tax calculated on the same income in Turkey. This prevents the same income from being taxed twice. On the UAE side, double taxation is relieved in line with its own general principles.
The agreement also governs the exchange of information between the competent authorities of the two countries and the mutual agreement procedure. This aims to prevent tax avoidance and informality, while also providing a resolution mechanism for taxpayers who face taxation contrary to the agreement.
At the time the agreement was signed, the UAE had no corporate tax. However, the UAE introduced a federal corporate tax from June 2023. Currently, taxable income up to AED 375,000 is taxed at 0%, while the portion above this threshold is taxed at 9%. In addition, a 5% VAT has applied since 2018, with a mandatory VAT registration threshold of AED 375,000 per year.
Certain free zone companies may continue to benefit from a 0% corporate tax rate on qualifying income. Because the conditions of this status and the qualifying activities matter, see our Qualifying Free Zone Person (QFZP) guide for details. This new UAE tax regime has made documentation and filing obligations even more important in applying the agreement.
Taxpayers wishing to benefit from the agreement should obtain a valid, complete residency certificate, correctly classify their income type (dividends, interest, royalties, business profits, independent services) and comply with transfer pricing rules. With the UAE moving to a corporate tax regime, documentation and filing obligations have increased and economic substance criteria have gained importance. Incorrect structuring can result in penalties and late-payment interest on both the Turkish and UAE sides. Each specific case should therefore be assessed with an expert advisor familiar with both jurisdictions.
The agreement was signed on 29 January 1993, published in the Official Gazette of 27 December 1994 (No. 22154), and entered into force on 26 December 1994. Its provisions have applied since 1 January 1995.
Where the beneficial owner is a resident of the other country, the maximum dividend withholding is 5% for a public body, 10% for a company holding at least 25% of the capital, and 12% in all other cases (Article 10).
Under Articles 11 and 12, where the beneficial owner is a resident of the other country, the maximum withholding rate on interest and royalty payments is 10%.
Yes. UAE residents must present the original residency certificate and its Turkish translation certified by a notary or Turkish consulate to the withholding parties in Turkey. Without it, domestic (non-reduced) rates apply.
As of July 2026, UAE taxable income up to AED 375,000 is taxed at 0% and the portion above at 9%. VAT is 5%. As rates may change, verify them on official institution websites.
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