Please see below an explanation of the different taxes you are liable for with Sarwa.
For UAE residents*:
|
Type of Tax |
Definition |
Does it apply to Sarwa Invest? |
Does it apply to Sarwa Trade? |
|
1. Dividend Withholding Tax |
A Dividend withholding tax is the tax a company must take off a dividend before the payment is made to the shareholder. In the case of US Domiciled ETFs and Stocks, the Dividend Withholding tax rate is 30% on dividends. For example, if a US Domiciled ETF is paying a dividend of $1, you would receive $0.7 in your Sarwa account. Since this tax is automatically deducted at source, there is no reporting required and you do not have to worry about it. |
Yes** |
Yes |
|
2. Estate Tax |
The estate tax in the United States is a federal tax on the transfer of the estate of a person who dies. This is a 40% tax on all investments greater than 60,000 USD. This exclusively applies in case of death. |
No |
Yes |
Notes:
* Please note that there is no Capital Gains Tax for UAE Residents.
** Some Sarwa Classic accounts are subject to a 15% Dividend Withholding Tax dependent on if the accounts were converted upon client's consent from US Domiciled ETFs to Irish Domiciled ETFs. This would have been done to shelter from US Estate Tax as investment balances have approached the $60,000 threshold. If not converted over, then the 30% Dividend Withholding Tax would be applicable.
For Non- UAE Residents
Dividend Withholding Tax and US Estate Tax treatment for Non-UAE Residents is the same as UAE residents, however when it comes to Capital Gains Tax, this is dependent on your tax residency. Kindly refer to a tax advisor or tax expert in your country of residence for more information relevant to your circumstances. Tax guidelines differ from country to country, so please take the above as general guidelines. We highly encourage you to consult with your tax advisor for your unique situation.