The UAE has a hundred double taxation treaties with most of its trading partners. Israel and the United Arab Emirates signed a normalization agreement on September 15 and established formal diplomatic relations. Since mid-August, several trade agreements have been signed between the two countries when they agreed on normalization of relations. 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). Foreign investors should be aware that taxes paid in Dubai can be viewed in the home country of the foreign company according to the provisions of the double taxation convention and the legislation in force in the home country. Our Dubai lawyers can provide you with specific information about the provisions of any double taxation agreement if you would like to know more about the agreement signed between Dubai and your country.
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. The first double taxation convention was signed between the United Arab Emirates and France. Since then, the UAE, including Dubai, has signed 92 double taxation treaties with countries around the world. 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. The list of double taxation treaties includes: Algeria, Armenia, Austria, Azerbaijan, Andorra, Belarus, Benin, Belize, Bangladesh, Bermuda, Barbados, Bosnia and Herzegovina, Belgium, Mauritius, Canada, Bulgaria, China, Czech Republic, Egypt, Estonia, Ethiopia, Cyprus, Finland, Fiji, Georgia, Gambia, New Guinea, Germany, Greece, Hong Kong, Italy, India, Ireland, Japan, Kazakhstan, Kyrgyzstan, Kenya, Indonesia, Lebanon, Luxembourg, Latvia, Liechtenstein, Lithuania e, Malaysia, Macedonia, Malta, Mongolia, Montenegro, Mauritania, Mauritius, Morocco, Mozambique, Mexico, Netherlands, New Zealand, Nigeria, Pakistan, Philippines, Poland, Portugal, Palestine, Panama, Romania, Russia, Seychelles, Singapore, Senegal, Switzerland, Spain, Serbia, Slovenia, Slovakia, Sri Lanka, South Korea, South Africa, Sudan, Syria, Tajikistan, Thailand, Turkmenistan, Tunisia, Turkey, New Zealand, Ukraine, Uzbekistan, Uruguay, Uganda, Venezuela, Yemen. In order to implement BEPS measures, the UAE has signed a multilateral instrument that facilitates the amendment of its existing treaties accordingly. “It allows the UAE to change all tax treaties through an agreement,” says Khan, of al-Tamimi law firm.
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. 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. Being part of an international tax framework offers important protections and benefits for companies and expats in the UAE. Double taxation treaties grant taxation rights and ensure that individuals and companies are taxed only once. They specify how certain types of income, such as dividends, property income and pensions, should be taxed and establish non-discrimination rules in order to avoid any difference in treatment based on factors such as nationality or place of residence. . .