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What Countries Are Part of the Dubai Double Tax Treaties

Double Tax Treaty (DTT) is a formal contract between two or more states to mitigate the taxation burden. Their fundamental purpose is to combat the potential issue of international double taxation on income and assets. The central aim of the Double Tax Treaty (DTT) is to allocate tax jurisdiction equitably between the involved countries, thereby eradicating disparities, ensuring uniform rights and safeguards for taxpayers, and deterring any attempts at tax avoidance.

How Dubai Double Tax Treaty Strengthen the Global Position of UAE?

In a concerted effort to enhance its global standing and facilitate international economic relations, the United Arab Emirates (UAE) has embarked on an active campaign to expand its portfolio of Double Taxation Treaty (DTT) and Bilateral Investment Treaties (BITs). This strategic initiative aims to mitigate the impacts of double taxation, promote cross-border trade, and protect investments. Through a series of negotiations and collaborations, the UAE has successfully executed 92 Double Tax Treaty (DTT) and entered into various BITs with numerous countries, demonstrating its commitment to fostering mutually beneficial economic partnerships.

Read more: Expansion of UAE Double Tax Treaty to Strengthen its Global Position

Extensive List of Treaties With Different Countries

The list of countries with which the UAE has signed the Double Tax Treaty (DTT) is impressive and diverse, spanning across continents. Some of these countries include Albania, Algeria, Armenia, Austria, Azerbaijan, Belgium, Canada, China, Egypt, Finland, Germany, India, Japan, Kazakhstan, Malaysia, Mexico, Netherlands, New Zealand, Saudi Arabia, Singapore, South Korea, Switzerland, Turkiye, the United Kingdom, the United States, Portugal and many more. 

Pioneering Step To Sign Double Tax Treaty with France

The journey toward establishing a network of Double Tax Treaties (DTT) began with the UAE’s pioneering step in signing the first Double Tax Treaty (DTT) with France. Subsequently, the UAE, including its dynamic city Dubai, has continued to proactively engage with countries across the globe, culminating in the successful negotiation of the 92 Double Tax Treaty (DTT). These agreements provide a framework for addressing the challenges posed by dual taxation, ensuring fair taxation of income, and fostering international economic cooperation.

Specific Examples of UAE Double Tax Treaty (DTT)

  • UAE Double Tax Treaty with Canada

Canada Double Tax Treaty with UAE protects residents and companies from both countries, ensuring fair taxation of incomes. The taxation of dividends, capital gains, and dividends is governed by the permanent establishment principle. 

  • UAE Double Tax Treaty (DTT) with China

UAE signed the Double Tax Treaty (DTT) in 2014, which aims to protect incomes and combat tax evasion. Tax credits can be provided to Chinese companies that pay taxes in the UAE, further enhancing bilateral economic relations.

  • UAE Double Tax Treaty with India

UAE signed a Double Tax treaty with India dating back to 1993. It ensures that companies operating in both countries are only subject to taxation in one of them. Tax credits can be claimed in the home country, offering a balanced approach to tax treatment. 

  • UAE Double Tax Treaty with Turkey 

The economic ties between UAE and Turkey led to the signing of a Double Tax Treaty (DTT) in 1994, with subsequent provisions added. This agreement covers various taxes, including dividends, royalties, interests, and personal incomes. 

Read more: Foreign Tax Credit under UAE Corporate Tax – All You Need To Know

Important Features Of  Double Tax Treaties

Dubai’s Double Tax Treaty (DTT) is meticulously designed to address various aspects of international taxation, providing a framework that ensures equitable treatment of taxpayers and promotes harmonious economic relations.

The provisions encompass several key areas: 

Taxation of Income

  • Double Tax Treaty (DTT) outlines the taxation of both individual and corporate income, reflecting the income tax policies of contracting states. 

Elimination of Double Taxation

  • These agreements establish methods to eliminate or alleviate instances of double taxation, with each country implementing its unique approach. 

Reduced Tax Rates

  • Certain types of income, such as capital gains, may be subject to reduced tax rates as specified in the agreements.

Tax Incentives

  • Double Tax Treaty (DTT) may offer tax reductions for investments made by governments of the contracting states, encouraging cross-border investment flows.

Exemptions for Specific Sectors

The agreements may provide exemptions from taxes on air transportation and shipping, facilitating international trade. 

Investor Protection

  • Double Tax Treaty (DTT) safeguards the interests of investors, providing a legal framework to prevent non-commercial risks that may affect investments. 

Scope of Coverage

  • The Double Tax Treaty (DTT) signed by Dubai covers a broad spectrum of income sources, ensuring that various forms of income are adequately addressed to prevent instances of double taxation. 

Protection For Income Sources Under Double Tax Treaty (DTT)

Some of the key income sources protected by these agreements include Dividends, royalties, and interests Revenue from air transportation and shipping Income from immovable properties or property alienation Earnings from personal services.

Double Tax Treaty (DTT) and Dubai’s Free Zones

Companies operating within Dubai’s free zones are not left behind in benefiting from the Double Tax Treaty (DTT). These entities can leverage the provisions of the agreements to avoid double taxation, ensuring that their profits are not unfairly taxed in multiple jurisdictions. Dubai’s free zones, known for offering 100% foreign ownership, become even more appealing to foreign investors as they can utilize the tax benefits provided by Double Tax Treaty (DTT).

Double Tax Treaty (DTT) Impact on Investments

One of the significant advantages of Dubai’s Double Tax Treaty (DTT) is the provision of tax credits. Foreign investors can offset the taxes paid in Dubai against the taxes payable in their home country, depending on the provisions of the respective Double Tax Treaty (DTT) and the applicable laws. This serves as an incentive for foreign companies to invest in Dubai, knowing that their tax payments can be credited back home, thereby avoiding double taxation. 

Advantages of Investing in Dubai Double Tax Treaty

Dubai’s appealing business ecosystem and a wide array of investment prospects render it a magnet for both entrepreneurs and investors. With its meticulously designed tax framework, alongside excellent living standards and numerous investment sectors, Dubai stands as a flourishing epicenter for business.

The UAE’s commitment to expanding its network of Double Tax Treaty (DTT) further enhances its appeal, as foreign investors can enjoy the benefits of fair taxation and protection against double taxation. Dubai’s extensive network of Double Taxation Agreements underscores its commitment to promoting cross-border trade, protecting investments, and fostering international economic cooperation. These agreements provide a framework for fair taxation, eliminate dual taxation, and offer incentives for foreign investors. As Dubai continues to strengthen its global position, its robust portfolio of Double Tax Treaty (DTT) serves as a testament to its dedication to economic growth and collaboration on the international stage. Our Tax Consultant Dubai will help you for more information.

 

Mostafa is a qualified Corporate Tax Consultant with over 5 years of experience gained in diverse intricate tax matters, he has high expertise in conducting tax negotiations and investigations with the Federal Tax Authority and other external Tax Bodies. He has vast experience in reviewing and drafting tax documents. Mostafa has also advised on a plethora of tax matters, he draws much attention to tax filing procedures and to offering professional investigations to underlining tax complexities. Read more