In recent months, the topic of a new double taxation treaty between the UAE and Russia has generated significant interest among investors, entrepreneurs, and consultants alike.
Some advisors have gone as far as offering paid consultations and structuring services based on the assumption that the treaty is already in force.

This article explains what has actually been signed, what has not yet entered into force, and why acting prematurely can create real legal and tax risks.

UAE–Russia Double Taxation Treaty: What Has Actually Happened?

In 2023, the governments of the United Arab Emirates and Russia signed a new draft agreement intended to replace the previous tax arrangements between the two jurisdictions.

For a double taxation agreement (DTA) to become legally effective, several steps must occur:

  1. Ratification by both states according to domestic law
  2. Official publication in each jurisdiction
  3. Exchange of ratification instruments
  4. Entry into force on a defined date (often the following tax year)

As of today, these steps have not been completed.

The Treaty Is Signed but NOT in Force

Despite widespread discussion, the UAE–Russia DTA has not yet been enacted.

This means:

  • It cannot be relied upon for tax planning
  • It cannot be applied in tax filings
  • It does not override domestic tax law
  • Any planning based on it is speculative

“A signed treaty has no legal effect until it enters into force under the procedures defined by both contracting states.”
— OECD Model Tax Convention Commentary

Why This Matters: Real Risks of Premature Structuring

We are increasingly seeing businesses approach us after receiving advice that assumes the treaty is already applicable.

This creates several risks:

  • Incorrect withholding tax assumptions
  • Invalid reliance on reduced tax rates
  • Exposure during tax audits
  • Re-characterisation of income by tax authorities
  • Loss of credibility with banks and counterparties

Some consultants have even begun charging upfront fees for “UAE–Russia treaty optimisation” — despite the treaty not being legally operational yet.

That approach may be optimistic. It is not compliant.

What Law Applies Right Now?

Until the treaty officially enters into force:

  • Russian tax law applies to Russian-source income
  • UAE tax law applies to UAE entities
  • No treaty relief can be claimed
  • Withholding taxes are governed by domestic rules
  • Substance, residency, and beneficial ownership tests remain critical

Any claim to treaty benefits at this stage would likely be rejected by tax authorities.

What Businesses Should Do Instead

At Affinitas, our approach is conservative, practical, and audit-resistant.

Right now, the correct strategy is to:

  • Structure based on current law, not announcements
  • Monitor official ratification and publication
  • Prepare scenarios, not implement assumptions
  • Ensure compliance with UAE corporate tax rules
  • Avoid aggressive interpretations that cannot be defended

“Tax planning should be based on enacted law, not anticipated law.”
— International Tax Best Practice Principle

When Will the Treaty Actually Matter?

Only when both the UAE and Russia officially publish and ratify the agreement will it become relevant for:

  • Dividend withholding tax reductions
  • Interest and royalty taxation
  • Permanent establishment rules
  • Relief from double taxation mechanisms

At that point, restructuring may be justified.
Before that point, it is premature.

The UAE–Russia double taxation treaty is signed, but not enacted.

Until official ratification and publication occur:

  • It has no legal effect
  • It should not be used for structuring
  • Any advice suggesting otherwise should be treated with caution

FAQ: UAE – Russia Double Taxation Treaty

❓ Is there a double taxation treaty between the UAE and Russia?

A new double taxation treaty between the United Arab Emirates and Russia has been signed, but it has not yet entered into force.
Until it is officially ratified, published, and enacted by both countries, it has no legal effect.

❓ Can I rely on the signed treaty for tax planning?

No.
A signed but unenacted treaty cannot be relied upon in:

  • Tax returns
  • Withholding tax calculations
  • Audit defense
  • Bank or compliance reviews

Any planning based on it is speculative and may be challenged by tax authorities.

❓ When will the UAE–Russia treaty become effective?

There is no confirmed effective date yet.

For the treaty to become effective, both countries must:

  1. Ratify it domestically
  2. Officially publish it
  3. Exchange instruments of ratification

Only after these steps — usually starting from the next tax year — can it be applied.

❓ Should I restructure my business now in anticipation of the treaty?

In most cases, no.

The prudent approach is to:

  • Structure based on current enacted and practiced law
  • Monitor official developments
  • Prepare scenarios, not implementations
  • Avoid irreversible changes based on assumptions

Premature restructuring can create unnecessary tax and compliance risks.

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