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