While most of Dubai`s agreements to avoid double taxation are customized, they contain provisions on the following: „The United States, in particular, receives special treatment for the UAE government and for double taxation,” said Al Khoori. We have not negotiated anything, but we have worked closely with the U.S. Treasury on the possibility of engaging in negotiations. DUBAI/JERUSALEM, Oct 15 (Reuters) – The United Arab Emirates and Israel have reached a tentative agreement on preventing double taxation as part of measures to encourage investment between the two countries, the U.S. Ministry of Finance said on Thursday. For companies, agreements can result in waivers and reduced withholding rates on dividends, interest and royalties. If a company in the United Arab Emirates has international shareholders, „it is not subject to the tax of the shareholders` jurisdiction,” Azhari said. To implement the BEPS measures, the United Arab Emirates has signed a multilateral instrument that facilitates the modification of its existing treaties. „It allows the UAE to change all tax treaties through an agreement,” says Khan of the law firm Al Tamimi. The United Arab Emirates has 100 double taxation agreements with most of its trading partners. Although tax treaties directly affect individuals and businesses, they are subject to a broader political environment. „The high level of fiscal sovereignty is, to some extent, concerned that too many companies are opening a branch or business in the United Arab Emirates. You can have a business in Europe and sometimes pay up to 50 percent in taxes, and here in the United Arab Emirates you pay zero percent tax,” says Azhari. Because the UAE doesn`t have a lot of taxes, companies in the United Arab Emirates have more advantages [of double taxation agreements],” says Shiraz Khan, who heads tax practices at the law firm Al Tamimi in the region. „This may mean that they are subject to a lower withholding rate, and that is only because of the terms of the contract.” Participation in an international tax framework offers significant guarantees and benefits for businesses and expatriates in the United Arab Emirates.
Double taxation agreements assign tax duties and ensure that individuals and businesses are taxed only once. They clarify how certain types of income, such as dividends, property income and pensions, should be taxed and establish non-discrimination rules to avoid differences in treatment based on factors such as nationality or residence. Of the 90 tax treaties in force, 42 are in Europe, 23 in Asia, 13 in Africa, 4 in the Middle East, two in South America, two in Central America, two in Oceania and one in North America and one in North America and the Caribbean. The treaty with Russia is a state agreement on investment income tax, which means that it applies only to the profits of dividends, interest and capital gains of governments and their financial or investment institutions. At the end of the day, it is a political process. Both countries have a double taxation convention, but sometimes it is not easy to share the cake. „I hope that next week we can sign some (of these agreements) and that we will soon see tourists and businessmen visiting both countries and visiting the streets of Abu Dhabi and the beach, as well as in Jerusalem, our capital, the beaches of Tel Aviv and throughout the State of Israel.” „The agreements can also allow for an exemption from foreign taxation and certain obligations to comply with foreign taxes in other countries,” says Jochem Rossel, partner and international tax services provider at PwC Middle East. Foreign investors should be aware that taxes paid in Dubai can be charged in the foreign company`s home country as a credit to the tax paid in the United Arab Emirates, depending on the provisions of the double taxation agreement and the legislation.