What is the withholding tax rate on dividend paid from Canadian sources into a Canadian brokerage account to a non-resident Canadian citizen living in the UAE with a golden visa?
Canada and The UAE Tax Treaty
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Hi Riaz,
Canada generally withholds 25% tax on dividends paid to non-residents. However, if the recipient is a resident of the UAE for treaty purposes and is the beneficial owner of the dividend, the Canada-UAE tax treaty can reduce the withholding rate to 15% in most cases. If the recipient is a company that directly or indirectly controls at least 10% of the voting power of the Canadian company paying the dividend, the rate may be reduced further to 5%.
A few practical points:
- The fact that the dividends are deposited into a Canadian brokerage account does not, by itself, change the withholding tax result. What matters is the person’s tax residency and whether they qualify for treaty benefits.
- A UAE golden visa does not automatically guarantee treaty entitlement. The individual must still be a resident of the UAE under the treaty and not remain a Canadian tax resident under Canadian domestic rules or the treaty tie-breaker rules. The treaty applies to persons who are residents of one or both contracting states.
- If the Canadian payer or broker withholds the default 25% instead of the treaty rate, it may be possible to request a refund of excess Part XIII tax by filing Form NR7-R, subject to the filing deadline.
Thank You,
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