With the UAE treaty now in force, the choice of where operations should sit — Russia at 25% CIT, the UAE at 9% — is worth modelling properly. But headline rates aren't the answer; banking, treaty benefits and compliance decide it.
25% CIT, but where the operation, market and substance genuinely are — with full access to the Russian market and its costs.
9% CIT and a strong holding position via the new treaty — but substance requirements and the right split of activity matter.
Since the Russia-UAE double tax treaty entered into force on 1 January 2026, international businesses increasingly ask the same question: should operations be run from Russia, from the UAE, or from both — and how do the two jurisdictions compare as platforms for doing business? This guide sets out the key parameters side by side, without advocacy for either jurisdiction, so companies can make an informed structural decision.
Russia's CIT rate rose from 20% to 25% in 2025 — significant for operating companies. The UAE's 9% rate applies to taxable income above AED 375,000; qualifying free zone entities can maintain 0% on qualifying income under strict substance and ring-fencing rules. Both countries have participation exemptions, making them viable holding platforms in the right structure.
Russia's VAT rate increased from 20% to 22% on 1 January 2026 — one of the highest in the world for a major economy. For businesses selling primarily within Russia, this is a cost of compliance rather than a bottom-line tax (VAT is passed to the customer), but it increases administrative complexity and cash flow management requirements.
The new treaty, signed in February 2025 and in force from 1 January 2026, is arguably the most significant bilateral tax development for businesses operating in both countries. Key provisions:
Pick your situation — we'll tell you where you stand:
"10-10-10" scheme: dividends, interest and royalties paid between Russia and UAE residents are capped at 10% withholding tax in the source country — down from 15% (dividends) and 20% (interest/royalties) under prior domestic Russian rules.
Service fees between related parties: payments from a Russian company to a related UAE resident for services are exempt from Russian withholding tax under the treaty — previously these attracted 15% WHT.
Capital gains on Russian shares: a UAE-resident individual selling shares of a Russian company (where Russian real estate is less than 50% of assets) can be exempt from Russian personal income tax.
Beneficial ownership requirement: treaty benefits require the UAE entity to be the genuine beneficial owner of the income, supported by a UAE Tax Residency Certificate (TRC) — not simply a pass-through structure.
Construction PE threshold: a construction project in Russia by a UAE company does not create a permanent establishment unless it lasts more than 12 months (raised from a shorter period).
Benefits apply to income arising from 1 January 2026 onwards. Dividends, royalties or interest paid before that date were subject to the prior domestic rates — 15% and 20% respectively. Structures relying on the new treaty should be reviewed to ensure income falls within the effective period.
The UAE's zero personal income tax is often cited as a primary attraction for executives and mobile talent. For a company, the total cost of an employee is significantly lower in the UAE once social contributions are factored in. For Russian-resident operations, the 30% social contribution rate is a material fixed cost that does not reduce with profits.
For a company structuring a Russian operating business under a foreign holding entity, the choice between Russia and UAE as the holding jurisdiction involves several practical considerations:
UAE holding over Russian operating company: under the new DTT, dividends from Russia to UAE are taxed at 10% (versus 15% without treaty). UAE corporate tax at 9% applies to the UAE holding's taxable income, but the participation exemption may apply to qualifying dividend income. Net effective rate on repatriated profits is meaningfully lower than pure domestic Russian distribution.
Russian holding: if all profits ultimately stay in Russia and no cross-border extraction is needed, Russian CIT at 25% applies, but domestic dividend distributions to Russian corporate shareholders can benefit from 0% inter-company dividend rate (participation exemption, 365-day holding, 15%+ stake).
Substance requirements: the UAE free zone 0% rate requires genuine economic substance in the UAE — real employees, decision-making, office. A brass-plate entity in a free zone without substance will not qualify for the preferential rate or reliably satisfy Russian CFC/beneficial ownership tests.
Currency: Russia operates in rubles with strict currency control rules on cross-border transfers; UAE operates in dirhams (USD-pegged) with essentially free capital movement — a significant practical difference for treasury functions
Banking: access to international banking is more constrained for Russian entities post-2022; UAE entities retain broad international correspondent banking access
Russia's CIT at 25% is now meaningfully higher than UAE's 9% — for profit-generating companies this matters more than ever in structuring decisions
The DTT requires TRC documentation to be obtained before each payment — not retroactively — to claim reduced rates; build this into payment processes
Anti-avoidance rules: Russia's general anti-avoidance rule (ст.54.1 НК) applies to arrangements lacking business purpose; UAE substance requirements apply to holding and IP-holding entities
It depends on where the activity, market and substance genuinely are — Russia's 25% against the UAE's 9% is only the starting point. Banking, the new treaty, and compliance all factor in, so the right answer is a modelled split, not a headline-rate choice.
By placing the right activity in a UAE entity with genuine substance and claiming the treaty rate on flows from Russia. Since Russian authorities apply a beneficial-ownership test, the structure has to be real, not a paper layer.
Russia needs the operation to genuinely be there; the UAE side needs real management and activity to hold the treaty benefit. Getting the substance right on both sides is what makes the structure hold rather than being looked through.
This compares running operations from Russia versus the UAE now that the treaty is in force. Your question is where your specific operation should sit — Russia at 25% CIT, the UAE at 9% — once banking, treaty benefits and compliance are weighed together, not just headline rates.
Deciding where operations should sit? The right split depends on your specifics — worth modelling before you restructure.
Practical support for international business in Russia.