Dividend Withholding Tax based in Dubai, U.A.E

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Hi All,

I am sure this was discussed many times but here is my case. I am a resident of the Untied Arab Emirates, the U.A.E does not have any sorts of income taxes and lately I saw this new feature that I can extract a report to show my dividends paid in 2020 and this where I was shocked!

On average I have been taxed at a rate of 53%!!! I researched a bit and found out that yes we are taxed 15% investing in the USA market on the dividends but why the heck am I taxed for 53% of my total dividends for 2020?

As per the law here in the U.A.E there is no withholding tax on dividend whatsoever so why is this happening and at that huge rate!

Please share your experience and if there is solution to this as by the look of it this is not worth it at all!

Thanks

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I don’t understand 53%. But according to this table the US withholding tax rate for U.A.E. is 30% (it falls under column 6 “all other countries”).

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Hi Richard,

I did a mistake calculating, the average is like 40% tax. Below are examples:

Name No. of shares Price / share Currency (Price / share) Exchange rate Total (USD) Withholding tax Currency (Withholding tax)
AT&T 1 0.36 USD Not available 0.36 0.16 USD
Apple 0.25 0.57 USD Not available 0.14 0.06 USD
Citigroup 1 0.36 USD Not available 0.36 0.15 USD
Starbucks 0.5 0.29 USD Not available 0.14 0.06 USD
Johnson & Johnson 0.2 0.71 USD Not available 0.14 0.06 USD
Exxon Mobil 1 0.61 USD Not available 0.61 0.26 USD
Microsoft 0.388 0.36 USD Not available 0.14 0.06 USD
3M 0.2 1.03 USD Not available 0.21 0.09 USD
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The last AT&T dividend was $0.52 per share. 30% withholding is $0.156. This has been rounded up to $0.16, and then subtracted to give you payment of $0.36. So that looks correct. The Price/share column is badly labelled, That is really “Dividend per share less withholding tax”

When you have small fractional holdings it is possible that rounding can cause a slight overpayment of tax.

I would have to check each one by one, but by eye I do not see any with a tax rate as big as 40%. Which company do you see that for?

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Thanks Richard for the explanation! I have done the calculation and turned out as you said. I misunderstood the labels, as you mentioned they are badly labeled. Now it seem everything is within this 30% which I still think is high. People always envy us living in the UAE without taxes. Now I know how it feels :smiley:

Cheers buddy