Under the current tax system, foreign tax credit is not granted since foreign-source income is not subject to corporate income tax. Foreign tax credit carry-forward or carry-backs do not exist.

Effective 1 June 2023, the UAE implemented a new federal corporate tax regime allowing foreign tax credits to reduce the corporate tax obligations for the relevant tax year. The foreign tax credit must not exceed the amount of corporate tax due on the corresponding income. Any unutilized foreign tax credit cannot be carried forward or carried back.

Below is a summary of the available methods for various income streams based on the new federal corporate tax regime effective 1 June 2023.

The credit column shows the type of foreign tax credit granted when the receiving country receives a payment. Four abbreviations are used for the type of foreign tax credit available:

• NC means no credit, but foreign withholding taxes can be deducted.
• OC means ordinary credit, i.e., credit for foreign withholding taxes (e.g., withholding taxes).
• IC means indirect credit, i.e., credit for underlying corporate taxes as well as foreign withholding taxes.
• ND means no credit and no deduction for any foreign withholding taxes incurred.

Below is a summary of the available methods for various income tax streams based on domestic law.

The credit column shows the type of foreign tax credit granted when the receiving country receives a payment. Four abbreviations are used for the type of foreign tax credit available:

• NC means no credit but foreign withholding taxes can be deducted.
• OC means ordinary credit, i.e., credit for foreign withholding taxes (e.g., withholding taxes).
• IC means indirect credit, i.e., credit for underlying corporate taxes as well as foreign withholding taxes.
• ND means no credit and no deduction for any foreign withholding taxes incurred.