The term dividend in Latin means something to be divided, and in essence, it is particular amount of net income of the company that is distributed among shareholders in proportion to their shareholdings. Normally, preferred shareholders are the first to receive dividends, whereas subsequently dividends are paid to ordinary shareholders (in case of issuance of shares of various classes).
Preferred shareholders receive fixed amount of dividends negotiated in advance, whereas ordinary shareholders receive dividends depending on the performance of the company. Dividends are usually paid once a year or each quarter.
The tax system of the United Arab Emirates stipulates exemptions relating to payment of dividend tax. This applies to both payment of dividends within the country, and payment of dividends abroad to individual or legal entity. In other words, dividend tax or dividend withholding tax is not charged in the UAE.
Dividend tax applies only to companies operating in the oil industry and in the banking sector in the UAE.
Tax free payments of dividends is one of a number of advantages UAE companies offer.
