Uae Double Taxation Avoidance Agreement

Posted: October 12, 2021 in Uncategorized

“The United States, in particular, enjoys special treatment for the UAE government and for double taxation,” Al Khoori said. “We didn`t negotiate anything, but we worked closely with the U.S. Treasury on ways to start negotiations.” For expats, double taxation agreements come into play when they have a second residence outside the UAE, says Ghassan Azhari, managing partner at Azhari Legal Consultancy in Dubai. Of the 90 tax treaties in force, 42 exist in Europe, 23 in Asia, 13 in Africa, four in the Middle East, two in South America, two in Central America, two in Oceania and one in North America and the Caribbean. The agreement with Russia is a public agreement on capital gains tax, which means that it only applies to income from dividends, interest and capital gains of governments and their financial or investment institutions. For companies, the agreements may result in exemptions and reduced rates of withholding tax on dividends, interest and royalties. If a UAE company has international shareholders, “it is not subject to the tax of the shareholders` jurisdiction,” Azhari says. 21 double taxation treaties are ongoing, 12 signed but not yet ratified and 9 are under negotiation. Last May, the United Arab Emirates signed an agreement with Saudi Arabia, the first in the GCC.

Among the countries under negotiation are Australia, Peru and Nepal. Uae has in force or ongoing 123 double taxation treaties that benefit expatriates and businesses To implement BEPS measures, the UAE has signed a multilateral instrument to more easily amend its existing contracts accordingly. “It allows the UAE to change all tax treaties through an agreement,” says Khan, of al-Tamimi law firm. “The agreements can also reduce foreign taxation and certain foreign tax obligations in other countries,” says Jochem Rossel, Partner and International Tax Services Leader at PwC Middle East. For a country with very low taxation, the United Arab Emirates has an extensive network of double taxation treaties. With agreements in 90 countries – and 33 countries pending – the UAE has more double taxation treaties than countries like Ireland, Luxembourg and Singapore. At the end of the day, it is a political process. Both countries benefit from a double taxation treaty, but sometimes it is not easy to share the cake. “Since the UAE doesn`t have a lot of taxes, UAE companies have a greater utility [of double taxation treaties],” says Shiraz Khan, who heads the tax practice of law firm Al Tamimi in the region. “This may mean that they are subject to a lower withholding tax rate, and only with regard to the terms of the agreement.” South Africans from the United Arab Emirates residing in South Africa may soon have to pay foreign income tax. Under a double taxation agreement with the United Arab Emirates, a provision of South African tax law provides for a preventive exemption from foreign income tax, also known as “expatriate tax”. This means that South African residents who are employed for more than 183 days out of the country and for an uninterrupted period of more than 60 days for a period of 12 months are not subject to South African taxation.

However, an amendment that will come into force next March will limit this exemption to income of up to R1 million (Dh252,950). At an event held in Dubai, representatives of the UAE Ministry of Finance, the Organisation for Economic Co-operation and Development and the private sector celebrated the thirtieth anniversary of the signing of such agreements – the first treaty took place in 1989 with France. In recent years, the UAE has also implemented reforms to combat international tax evasion. “We have covered nearly 120 countries and are still expanding, we are signing other agreements with south American countries and some other countries in Africa and working with the Nordic countries,” Younis Al Khoori, undersecretary of state at the UAE Ministry of Finance, told The National.

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