Tax Alert − Double Tax Treaties & Investment Protection Treaties Network − What’s new?

The UAE is known for its tax-friendly and dynamic corporate environment attracting investors and entrepreneurs from other countries and contributing to economic stability.

UAE resident companies and individuals have access to one of the largest networks of double tax treaty (“DTTs”) and investment protection treaty (“IPTs”), with 104 DTTs and 70 IPTs entered into force with partner countries. 31 DTTs and 31 IPTs are pending for the final ratifications by the partner countries and enforcement.

What does it mean for UAE residents?

DTTs

Aimed at avoiding a situation where the same income is taxed twice by two different jurisdictions to facilitate investments and trade between countries.

The large and still growing UAE DTTs network provides to UAE resident companies and individuals relief from tax compliance requirements in other partner countries, exemptions, and reduced withholding tax rates on dividends, interest, and royalties. The reduced rates and exemptions vary among countries and specific items of income.

In the absence of a federal corporate income tax regime, UAE tax residents can benefit from no income tax or corporate tax in the UAE, except for foreign oil companies engaged in upstream petroleum activities and branches of foreign banks.

IPTs

Provide global protection of investments for UAE companies and individuals based on the following principles:

Fair and equitable treatment of the UAE investments by partner countries

Prohibit expropriation, although the relevant provisions vary.

Most-favored nation protection, whereby the UAE investors may claim equal preferential treatment for their investments.

Prohibit government measures that are unreasonable, arbitrary, or discriminatory and that impair or harm an investment.

Procedure for the investor dispute resolution, or, in some cases, UAE IPTs may provide for international arbitration.

What’s new?

Enclosed we are sharing insight on the recent developments in the DTTs and IPTs.
Click here for the link

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