UAE Double Tax Treaties & Agreements to Avoid Double Taxation
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uae double taxation

UAE Double Tax Treaties: UAE Signs Agreements on Avoidance of Double Taxation

Tax transparency is an essential matter that should be observed by countries in the world. There have been concerns regarding international tax evasion and avoidance. The Ministry of Finance (MoF) of UAE is eager to take continuous actions regarding these obstacles that being faced by most nations.

The UAE, being a member of the Forum on Transparency and Exchange of Information for Tax Purposes, further shows its driven desire to be one of the competitive countries in the world through the Ministry of Finance (MoF)’s a continually growing network to be in discussion with other countries with regard to the agreements on exchanging tax information and avoiding double taxation.

These days, the UAE spreads its network across the five continents, having 94 agreements. This covers most of the UAE’s trading partners. Still, the UAE is on ongoing negotiations with 15 other countries.

Country List/Agreements on the Avoidance of Double Taxation:

Date of Ratification Date of Final Signing Country No.
7/16/1995 4/12/1994 Egypt 1
6/25/2004 4/24/2001 Algeria 2
4/29/2004 2/13/2001 Yemen 3
5/27/1997 4/10/1996 Tunisia 4
7/1/2000 2/9/1999 Morocco 5
6/6/2004 3/15/2001 Sudan 6
1/12/2002 1/26/2000 Syria 7
3/23/1999 5/17/1998 Lebanon 8
3/2/2004 9/24/2003 Mozambique 9
11/20/2000 2/7/1993 Pakistan 10
11/30/1992 4/29/1992 India 11
10/3/2007 3/27/2007 Amendment Protocol
3/12/2013 4/16/2012 Amendment Protocol
7/4/2004 9/24/2003 Sri Lanka 12
10/20/2008 9/23/2003 Philippines 13
3/9/2005 9/22/2003 South Korea 14
7/18/1996 12/1/1995 Singapore 15
Under Ratification 10/31/2014 Singapore / Amendment Protocol
6/1/1999 11/30/1995 Indonesia 16
1/4/2001 3/1/2000 Thailand 17
1/4/2001 3/1/2000 Thailand 17
9/24/1996 11/28/1995 Malaysia 18
7/22/1994 7/1/1993 People’s Republic of China 19
7/29/2004 9/24/2003 New Zealand 20
3/9/2004 2003 Ukraine 21
2/1/2001 2/27/2000 Belarus 22
1/23/1996 4/11/1993 Romania 23
Under Ratification 5/4/2015 Romania (New)
12/30/2011 6/9/1998 Turkmenistan 24
9/23/2003 4/22/2002 Armenia 25
3/27/2000 12/17/1995 Tajikistan 26
2/24/2004 2/21/2001 Mongolia 27
9/23/2004 9/23/2003 Austria 28
2/3/1994 1/31/1993 Poland 29
5/1/2015 12/11/2013 Poland / Amendment Protocol
7/14/2011 7/1/2010 Germany 30
12/26/1997 3/12/1996 Finland 31
10/5/1997 1/22/1995 Italy 32
1/1/2005 9/30/1996 Czech Republic 33
11/8/1994 7/19/1989 France 34
12/22/2003 9/30/1996 Belgium 35
6/19/2009 11/20/2005 Luxembourg 36
Under Ratification 10/26/2014 Luxembourg / Amendment Protocol
1/29/1995 1/29/1993 Turkey 37
5/25/2004 6/9/2002 Canada 38
9/25/2007 9/18/2006 Mauritius 39
4/14/2007 9/19/2006 Seychelles 40
5/19/2009 9/18/2006 Bosnia and Herzegovina 41
6/12/2007 11/20/2006 Azerbaijan 42
4/2/2007 3/5/2006 Spain 43
9/13/2006 3/13/2006 Malta 44
6/2/2010 5/8/2007 Netherlands 45
11/16/2008 6/26/2007 Belgium 46
2/25/2011 10/26/2007 Uzbekistan 47
11/27/2013 12/22/2008 Kazakhstan 48
4/12/2010 2/16/2009 Vietnam 49
Under Ratification 1/18/2010 Greece 50
Under Ratification 6/27/2013 Amendment Protocol
7/6/2011 7/1/2010 Ireland 51
4/28/2011 11/24/2010 Georgia 52
6/20/2011 12/11/2010 Venezuela 53
5/22/2012 1/17/2011 Portugal 54
6/13/2011 1/17/2011 Bangladesh 55
3/17/2013 2/27/2011 Cyprus 56
3/29/2012 4/20/2011 Estonia 57
10/21/2012 10/6/2011 Switzerland 58
7/9/2014 11/13/2011 Guinea 59
Under Ratification 11/21/2011 Kenya 60
6/23/2013 12/7/2011 Russia 61
6/11/2013 3/11/2012 Latvia 62
2/11/2013 3/26/2012 Montenegro 63
12/20/2013 9/2/2012 Fiji 64
Under Ratification 9/24/2012 Palestine 65
10/23/2013 10/13/2012 Panama 66
7/9/2014 11/20/2012 Mexico 67
7/2/2013 1/13/2013 Serbia 68
Under Ratification 3/4/2013 Benin 69
Under Ratification 4/1/2013 Libya 70
10/4/2014 4/30/2013 Hungary 71
12/24/2014 5/2/2013 Japan 72
11/21/2014 5/21/2013 Nation of Brunei, the Abode of Peace 73
12/19/2014 6/30/2013 Lithuania 74
9/29/2014 10/12/2013 Slovenia 75
3/25/2015 3/13/2014 Albania 76
Under Ratification 9/22/2014 Barbados 77
Under Ratification 10/10/2014 Uruguay 78
Under Ratification 12/7/2014 Kyrgyzstan 79
Under Ratification 12/11/2014 Hong Kong 80
Under Ratification 2/12/2015 Bermuda 81
Under Ratification 3/26/2015 Comoro Islands 82
Under Ratification 4/12/2015 Ethiopia 83
Under Ratification 6/8/2015 Uganda 84
Under Ratification 7/27/2015 Gambia 85
Under Ratification 7/28/2015 Andorra 86
Under Ratification 10/1/2015 Belize 87
Under Ratification 10/1/2015 Liechtenstein 88
Under Ratification 10/22/2015 Mauritania 89
Under Ratification 10/21/2015 Senegal 90
Under Ratification 10/26/2015 Macedonia 91
Under Ratification 11/23/2015 South Africa 92
Under Ratification 12/21/2015 Slovakia 93
Under Ratification 1/18/2016 Nigeria 94

Source: Ministry of Finance

The UAE has its best interests in protecting and promoting investments as well. There are 58 agreements that the UAE has signed with countries that represent investment opportunities. Negotiations are still ongoing with other five countries. In regards to better the international tax compliance that is associated with the Foreign Account Tax Compliance Act (FATCA), the UAE signed an agreement with the USA government.

The Agreements

The agreements that have been dealt with and continuously discussing with other countries helping in achieving a balance in the economy.
As per the decisions of G20, MoF is keen and dedicated to the execution of the highest transparency and information exchange standards for tax purposes. Along with this are the terms and conditions that go with the agreements, all for avoiding double taxation with the UAE’s economic and trading partners.

A. Double Taxation

A double taxation is paying tax twice for the same earned income. When you are tax twice in two different countries this happens. This is where the double taxation agreement comes in, which ensures that you won’t be charged twice for tax at the same time in different states or countries for the same income.

The Ministry of Finance (MoF) organized together with a team that is comprised of representatives from different divisions, namely the Ministry of Foreign Affairs (MOFA) and Abu Dhabi Investment Authority (ADIA), and named it the International Financial Relations and Organisations Department. This group has the responsibility of negotiating and following up with nations regarding agreements on avoiding double taxation.

The Avoidance of Double Taxation agreement has the following goals:

  • Promoting UAE’s development goals and diversifying the sources of the country’s national income
  • Eliminating is not just double taxation, but, also additional and indirect taxes, tax evasion
  • Eradicating cross-border trade and investment flow obstacles
  • Providing taxpayers the protection they need from double taxation—direct or indirect
  • Promoting the capital’s free movement and the exchange of goods and services

B. Investor Protection

The protection of the investments is in one of the UAE’s best interests, signing 58 agreements with the aim to protect and promote investments. These agreements have done between the UAE, 25% of the nations in the world, and most of its trading partners.

The Investment Protection Agreement has the following goals:

  • Protecting the investments of the UAE from non-commercial risks, including those that are related to the transfer of profits and revenues in convertible currency
  • Organizing of conflict resolution (if needed)
  • Establishing investments within the states’ agreement signatories and granting licenses to investors who are Emirati
  • Stipulating the rules and regulations for granting the UAE investors with just and instantaneous compensations (without discrimination), in the events that investment expropriation happens; all compensations are necessary to be based on the investment’s market value.

C. Information Exchange

The MoF has been conducting agreements with countries in order to achieve transparency, justice, and protection for the economy. A Memorandum of Understanding (MoU) was signed by the MoF with the Organisation for Economic Cooperation and Development (OECD).

This agreement is with regard to creating and establishing a partnership that takes care of taxation matters, by which the UAE is strengthening its reputation as a training hub of MENA with regard to information exchange, as well as being the country that has qualified and active network of tax experiences.

There were eight MoUs that signed:

  • Central Bank of the UAE
  • Dubai International Financial Centre (DIFC)
  • Jebel Ali Free Zone (JAFZA)
  • Dubai Multi Commodities Centre (DMCC)
  • Fujairah Free Zone Authority
  • Ras Al Khaimah Free Trade Zone (RAK FTZ)
  • Ras Al Khaimah Investment Authority (RAKIA)
  • Umm Al Quwain Free Trade Zone Authority

MOF has signed An extended MoU for the 2016-2018 fourth period. Workshops had presented, showing the introduction to tax information with tax experts from different places in the world.

The points that have discussed in the workshops include the following:

  • Common international standards in the field of tax reports,
  • Implementation mechanisms,
  • Approved legal frameworks

The intention was to strive in developing a system for tax information exchange automatically. But, still has the interest of protecting the information and complying with confidentiality rules of the tax information exchange.

Conclusion

The UAE has always been venturing into becoming one of the most competitive countries in the world. The works that Ministry of Finance has been doing to safeguard and enhance economy balance shows the country’s vigor.
when it comes to things that might affect you with regard to tax, however, It is essential to be knowledgeable. Especially with the never-ending changes that are happening in the State. FAR – Farahat & Co. is happy to assist you. You can contact us here to book a consultation.

Ervee is a CPA with international experience in Tax and Accounting. He has over 12 years of experience in accounting and bookkeeping and over a year in VAT implementation, registration, and accounting in UAE. He regularly drives out inefficiencies in company operations and loves the challenge of helping clients find additional ways for an easier and improved compliance and verification of transactions. Read more