It should be noted that, as with most double taxation agreements, the double taxation agreement between the United Arab Emirates and the United Kingdom also contains provisions that prevent tax evasion. 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. 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. Representatives of the United Arab Emirates Ministry of Finance, the Organisation for Economic Co-operation and Development and the private sector celebrated 30 years of signing such agreements – the first treaty with France in 1989 – at an event in Dubai. In recent years, the United Arab Emirates has also undertaken reforms to combat international tax evasion. The signing in April 2016 of a double taxation agreement between the United Kingdom and the United Arab Emirates was undoubtedly eagerly awaited and marks another step in the successful expansion of the UAE`s international tax network. | Relevant provisions Comments Definition of “residents of a contracting state” (Article 4) For uae residents, the text of the “personal scope” of the agreement has been adapted from the OECD standard model and does not refer to the concept of “tax obligation”. For expats, double taxation agreements come into play when they have a second residence outside the United Arab Emirates, says Ghassan Azhari, managing partner at Azhari Legal Consultancy in Dubai. There are 21 outstanding double taxation agreements, 12 signed but not yet ratified and nine currently under negotiation. The VaE signed an agreement with Saudi Arabia last May, the first in the GCC.
Among the countries under negotiation are Australia, Peru and Nepal. “We have covered almost 120 countries and are still expanding, we are signing other agreements with South American countries and a few other African countries, as well as cooperation with the Nordic countries,” Younis Al Khoori, undersecretary of state at the UAE Ministry of Finance, told The National. For a country with very low taxes, the United Arab Emirates has a vast network of double taxation conventions. With agreements in 90 countries – and 33 in progress – the UAE has more double taxation conventions than countries such as Ireland, Luxembourg and Singapore. 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. 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. South Africans in the United Arab Emirates, who reside in South Africa, may soon have to pay foreign income tax. As part of a double taxation agreement with the United Arab Emirates, a provision of South African tax law provides for an exemption from the tax on income from working abroad, also known as the “Expat Tax”. This means that South African residents who work more than 183 days outside the country and who work for a continuous period of more than 60 days for a period of 12 months are not subject to the