Distributing profits as dividends from a UAE free zone company is straightforward but requires following the correct process. Here is the complete 2026 guide.
In this guide:
Pre-Dividend Checklist
- Profit confirmed: Ensure company has distributable profits (positive retained earnings)
- CT filed: Ensure UAE CT return is filed and tax (if any) is paid before dividend distribution
- Shareholder approval: Dividend distribution requires shareholder resolution
Step-by-Step: Distributing Dividends
- Step 1: Review company financial statements; confirm distributable profit
- Step 2: Pass shareholder resolution declaring dividend (amount per share; payment date)
- Step 3: Record minutes of meeting or circular resolution
- Step 4: Transfer dividend amount from company bank account to each shareholder
- Step 5: Record dividend in company accounts as distribution of equity
UAE Tax on Dividends
- UAE WHT: 0%; UAE has no withholding tax on dividends paid to shareholders of any nationality
- UAE personal income tax: 0%; UAE residents do not pay personal income tax on dividends received
- Home country tax: Shareholders who are tax resident in other countries may owe tax on dividends in their home country; consult home country tax adviser
Frequency of Dividends
- No restriction: UAE free zone companies can distribute dividends as frequently as desired (monthly, quarterly, annually)
- Best practice: Annual dividend after year-end accounts are prepared; some owners take monthly profit drawings