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	15
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)	23
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	29
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	36
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	50
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.