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Reclaim tax on interest for UAE resident

Income tax deducted on interest earned on loan to private co. Can UAE resident reclaim?

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Individual resident in UAE for last 3 years has provided loan to UK private limited company.

Interest of £20,000 was paid to individual having had £5,000 income tax deducted at source.  

No tax is payable on this in the UAE - can this tax be reclaimed from HMRC using the HS204 form as part of the ITR submission?  This seems to be the case according the article 11 of the double tax treaty.  There doesn't appear to be any clause for being subject to tax in the UAE.

Thanks for any help

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By Matrix
24th Feb 2021 22:32

If the conditions of article 11 para 3 are met then I assume the interest is only taxable in UAE (or not), but doesn’t go on a UK return. Any income tax withheld would have to be reclaimed from HMRC. Relief at source can also be claimed to avoid future withholding.

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Replying to Matrix:
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By Wanderer
24th Feb 2021 23:44

Matrix wrote:

...., but doesn’t go on a UK return. Any income tax withheld would have to be reclaimed from HMRC.

IF possible, wouldn't it actually go on the HS304 & RR pages as the OP (nearly) said?
Matrix wrote:

Relief at source can also be claimed to avoid future withholding.

Is this possible bearing in mind it's a UK private limited company paying to an individual?

SDGREEN wrote:

There doesn't appear to be any clause for being subject to tax in the UAE.

? Doesn't Article 11 para 1 & 2 suggest it is?

Also, do you need to consider the disregarded income rules or does the DTA trump these?

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Replying to Wanderer:
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By Matrix
25th Feb 2021 03:28

I would complete this form if the income is ongoing.

https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

I am not familiar with the form you mention, is this submitted with a tax return? Why don’t you need to prove you are resident in that country?

I don’t see the subject to tax condition.

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Replying to Matrix:
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By Wanderer
25th Feb 2021 07:26

Matrix wrote:

I would complete this form if the income is ongoing.

Yep, that's a good move, if it applies.

The HS304 is submitted with an SA return to claim back tax which has been deducted and is not due under a DTA. You don't need to prove you are resident in that other country because you are declaring it.

I suppose it depends whether the individual is otherwise submitting an SA return or not.

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