1. Where a resident of the United Arab Emirates derives income, profits or capital gains which in accordance with the provisions of this Convention may be taxed in the United Kingdom, the United Arab Emirates shall allow as a deduction from tax on the income, profits or capital gains of that person an amount equal to the tax on income, profits or capital gains paid in the United Kingdom. Such deduction shall not, however, exceed that part of the tax computed in the United Arab Emirates before the deduction is given, which is attributable to the income, profits or capital gains which may be taxed in the United Kingdom.
2. Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside
the United Kingdom or, as the case may be, regarding the exemption from United Kingdom tax of a dividend arising in a territory outside the United Kingdom or of the profits of a permanent establishment situated in a territory outside the United Kingdom (which shall not affect the general principle hereof):
(a) United Arab Emirates tax payable under the laws of the United Arab Emirates and in accordance with this Convention, whether directly or by deduction, on profits, income or chargeable gains from sources within the United Arab Emirates (excluding in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the United Arab Emirates’ tax is computed;
(b) a dividend which is paid by a company which is a resident of the United Arab Emirates to a company which is a resident of the United Kingdom shall be exempted from United Kingdom tax when the exemption is applicable and the conditions for exemption under the law of the United Kingdom are met;
(c) the profits of a permanent establishment in the United Arab Emirates of a company which is a resident of the United Kingdom shall be exempted from United Kingdom tax when the exemption is applicable and the conditions for exemption under the law of the United Kingdom are met;
(d) in the case of a dividend not exempted from tax under sub-paragraph (b) above which is paid by a company which is a resident of the United Arab Emirates to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend, the credit mentioned in sub-paragraph (a) above shall also take into account the United Arab Emirates’ tax payable by the company in respect of its profits out of which such dividend is paid.
Profits, income and gains owned by a resident of the United Kingdom which may be taxed in the United Arab Emirates in accordance with this Convention shall be deemed to arise from sources in the United Arab Emirates.