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2015 - Edition 4 Middle East Newsletter The Loyens & Loeff Middle East Newsletter is produced by Loyens & Loeff in Dubai. It is designed to alert those (interested in) doing business in the Middle East region to recent developments in the region. Such developments are discussed in brief terms and are based on generally available information. The material was assembled based on information available as at 1 February 2015.
Transcript
Page 1: Middle East Newsletter - Microsoftloyensloeffwebsite.blob.core.windows.net/media/2375/edition-4.pdf · Middle East Newsletter 2015 - Edition 4 The Loyens & Loeff Middle East Newsletter

2015 - Edition 4Middle East Newsletter

The Loyens & Loeff Middle East Newsletter is produced by Loyens & Loeff in Dubai.It is designed to alert those (interested in) doing business in the Middle East region to recent developments in the region. Such developments are discussed in brief terms and are based on generally available information. The material was assembled based oninformation available as at 1 February 2015.

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In this edition• Bahrain• Kuwait• Oman• Qatar• Saudi Arabia• United Arab Emirates

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Dear Reader,

Through this Middle-East Newsletter we aim to keep you abreast of the recent international tax developments in the GCC.

As an internationally oriented tax and corporate law firm, we follow international developments closely. The conclusion

of bilateral tax treaties is a topic that is relevant for any multinational when considering its cross-border corporate and

investment structures and its international tax position.

As can be derived from this newsletter, the GCC member states are rapidly expanding their tax treaty networks to facilitate

both inbound and outbound investments. It should be noted that many countries concluding tax treaties with the GCC

member states, may negotiate specific provisions to deal with the ‘no or low tax’ status of the GCC countries. This means

that it is imperative to meticulously analyze potential tax treaty benefits on a case-by-case basis.

Providing specialized international tax advice requires expertise and experience. Our firm’s tax capabilities are highly

regarded by many clients and rewarded by reputable organizations, like Chambers & Partners, the Legal 500 and others.

Also in the MENA region our tax capabilities have been recognized. In this respect, we are proud to have been awarded

BEST TAX ADVISORY FIRM by MENA FM last week.

About Loyens & Loeff

As you may know, Loyens & Loeff has a longstanding experience of providing high quality tax and legal advice. The firm’s

history dates back to the early 20th century. At present, Loyens & Loeff has 16 offices, which are spread out over Asia

Pacific, the Middle East, Europe and the US.

Loyens & Loeff is an independent full service firm of civil lawyers, tax advisers and notaries, where civil law and tax

services are provided on an integrated basis. Over 1400 people work for the firm, including 840 civil lawyers, tax advisers

and notaries. Our size and range make the firm unique in our home markets Luxembourg, the Netherlands and Belgium.

We hope that the content of this Middle East Newsletter is useful to you. Should it give rise to any questions, please feel

free to contact us or your contact person within Loyens & Loeff.

Yours sincerely,

Jan Bart Schober Tim Dopmeijer

Tax partner Tax associate

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BahrainBahrain – Cyprus authorized by Bahrain 19 January 2015 – The Bahrain Council of Ministers

authorized the signing of the tax treaty between Bahrain

and Cyprus. Details of the treaty are not yet public and

will be reported by us once available.

Bahrain – Pakistan signed protocol to treaty7 January 2015 – Officials of Bahrain and Pakistan

signed a protocol to amend the 2005 tax treaty between

the countries. Details of the protocol contents will be

reported by us once available.

Bahrain – Brunei tax treaty protocol entered into force31 December 2014 – On the last day of the year 2014, the

protocol to the 2008 Bahrain – Brunei tax treaty entered

into force. The treaty was concluded on 18 December

2012. The text of the treaty amending protocol reads as

follows: ‘it is understood that a Contracting State shall

accord to a resident of the other Contracting State, acting

in his capacity as director or a top level managerial

official of the company under Article 17 of the aforesaid

Agreement, treatment which shall not be less favourable

than that accorded to the residents of any third State

acting in the same capacity.’ Article 17 of the tax treaty

deals with directors’ fees, and remuneration of top-level

managerial officials.

Hungary approved tax treaty between Bahrain and Hungary25 October 2014 – The Hungarian parliament approved

the Bahrain – Hungary tax treaty that was concluded

between these countries on 24 February 2013 in Manama,

Bahrain. According to the treaty, it will enter into force

30 days after the exchange of ratification instruments

procedure has been fulfilled and its provisions will then

take effect as from 1 January of the year following the

entry into force date. Although the cabinet of Bahrain

approved the tax treaty with Hungary on 23 March 2014,

at the time of writing it is uncertain if both countries

exchanged ratification instruments before the end of

November 2014 in order for the treaty to take effect as

from 1 January 2015. Reference is also made to the

second edition of this newsletter (in which we elaborated

on the contents of the treaty).

KuwaitKuwait – Lithuania tax treaty approved by National Assembly of Kuwait27 January 2015 – Following the approval of the tax

treaty between Kuwait and Lithuania by the Cabinet of

Kuwait on 17 November 2014, the National Assembly

of Kuwait also approved the tax treaty (on 27 January

2015). Previously, it was already reported that Lithuania

ratified the treaty by way of Decree No. 1K-1649. Under

the treaty, payments of interest, royalties and dividends

are principally taxable in the recipient state. However, the

treaty also allocates a taxation right to the source state

of 5% (participation dividends), 10% (interest and royalty

payments) and 15% (portfolio dividends).

Treaty between Kuwait and Egypt concluded16 December 2014 – Officials of Kuwait and Egypt

concluded a new tax treaty between the countries on

16 December. After entry into force, the new treaty will

replace the 2004 tax treaty between the countries.

Kuwait – Kenya treaty approved by Kuwait and ratified by Kenia18 November 2014 – Following the ratification of the

treaty between Kuwait and Kenya by the last-mentioned

country following the publication in the Kenyan Official

Gazette of 31 October 2014, it has been reported that the

tax treaty is also approved by the National Assembly of

Kuwait on 18 November 2014.

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Tax measures to reduce budget deficit23 November 2014 – According to the Omani News

Agency, the Shura Council has approved the report of the

Economic and Financial Committee on the 2015 budget.

These measures include: (i) imposition of a 2% expatriate

tax on remittances, (ii) imposition of a unified 12% royalty

on telecommunication operators in Oman, (iii) increase

of the rate of the royalty on the exploitation of minerals

to 10% of the sale proceeds, (iv) imposition of a 55% fair

tax on the exportation of liquefied natural gas (LNG) and

(v) certain other tax measures (e.g. broadening tax base,

reconsidering tax rates and improving the collection of

taxes).

Compliance regulations issued by Oman13 November 2014 – According to a report from IBFD

prepared by Mr Gueydi, the Omani Secretariat General

for Taxation (Secretariat) requires taxpayers and auditors

to comply with the following (as of 1 January 2015):

• tax returns are duly approved by including in the

designated areas both the signature of the authorized

signatory and the stamp;

• all required information and details are enclosed with

the tax returns, including the final accounts approved

by a registered auditor; and

• all enclosed pages are signed and stamped by the

taxpayer.

In the case of failure to comply with the above, the

Secretariat will not accept the concerned return or

accounts and will classify the case as an incomplete

tax case. The Secretariat may also apply penalties in

accordance with the provisions of the income tax law.

QatarQatar – Kazakhstan tax treaty ratified by Kazakhstan12 January 2015 – Further to our report in the second

edition of this newsletter about tax treaty developments

of the tax treaty between Qatar and Kazakhstan, it has

now been reported that the treaty has been ratified by

Kazakhstan. In the meantime, the tax treaty contents

have also become available and can be summarized as

follows:

Kuwait ratified the tax treaty with Macedonia31 October 2014 – The tax treaty between Kuwait

and Macedonia, that was concluded on 20 March

2012 in Skopje, Macedonia, has been ratified by the

National Assembly of Kuwait on 18 November 2014. In

September 2012, the Macedonian Parliament ratified the

tax treaty by publication in the Official Gazette No.115 of

17 September 2012.

The tax treaty provides for the following characteristics:

• The treaty does not apply to individuals residing in

Kuwait who are not a national of Kuwait.

• Dividends and interest payments are taxable only in

the state in which the recipient (being the beneficial

owner of the income) is a resident.

• Royalty payments are in principle taxable in the state

in which the recipient is a resident (beneficial owner

test applies). However, the source state remains a

taxation right to impose tax on royalty payments to

the extent such tax does not exceed 15% of the gross

amount of the royalty.

• Capital gains on shares in company derived by a

resident of the other country are taxable only in the

resident state (irrespective of the composition of the

assets of the relevant company).

• Assuming the ratification procedure will be fulfilled

in 2015 (which will be the case after exchange of

ratification instruments between both countries), the

provisions of the treaty can be applied as of 1 January

2016.

OmanTax treaty between Oman and Malta in the making13 January 2015 – According to an official press release

published by the government of Malta, following a visit

of officials of Oman to Malta, the countries entered

into negotiations to come to a tax treaty between the

countries. More details are expected once the treaty has

been concluded (or shortly thereafter). We will inform

you about any relevant updates in future issues of this

newsletter.

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Qatar – Japan tax treaty authorized for signing by Qatar14 January 20145 – On 14 January 2015, Qatar

authorized the signing of the tax treaty with Japan.

The first round of tax treaty negotiations between the

countries was held on 8 December 2014 in Tokyo, Japan.

As the treaty contents have not yet been published, more

info will be reported once available.

Latvia ratified tax treaty that was recently concluded with Qatar17 December 2014 – Latvia ratified the tax treaty

that was concluded with Qatar in New York, USA, on

26 September 2014. The treaty will enter into force after

the full ratification procedure has been fulfilled. According

to article 29 of the treaty, the provisions can be applied

as of 1 January of the year in which the treaty entered

into force.

The most notable treaty provisions are as follows:

• Dividends and interest is generally taxable in the

country in which the recipient is a resident. However,

these payments may also be taxed in the source

state, but if the beneficial owner of the payment is a

resident in the other state, the tax may not exceed:

- 0% of the gross amount of the dividend/interest if

the beneficial owner is a company (other than a

partnership); or

- 5% of the gross amount of the dividend/interest

in all other cases.

• Dividend/interest is taxable only in the resident state

in case dividend/interest is distributed to certain

recipients mentioned or referred to in paragraph 3 of

article 10 (dividends) or 11 (interest) of the treaty.

• Royalties are generally taxable in the recipient state

subject to a taxing right for the source state of 5% of

the gross amount of the royalties.

• Capital gains realized on shares in a company

resident in a state are taxable in the state in which

the alienator of such shares is a resident. However,

if the shares (or any comparable interest) derive their

value, directly or indirectly, from immovable property

situated in the other state, such shares are taxable

only in the state in which the immovable property is

situated.

• Except for dividend payments to certain recipients

mentioned in article 10, paragraph 3 of the treaty, the

maximum withholding tax rate on dividend payments

amounts to 5% of the gross amount of the dividends

if the beneficial owner of the dividend is a resident

and owns at least 10% of shares in the capital paying

the dividends, or 10% of the gross amount of the

dividends in all other cases.

• Except for interest payments to certain recipients

mentioned in article 11, paragraph 3 of the treaty, the

maximum withholding tax rate on interest payments

payable to the beneficial owner amounts to 10% of

the gross amount of the interest.

• Article 12, paragraph 2 of the treaty provides that the

maximum withholding tax on royalty payments to a

beneficial owner amounts to maximum 10% of the

gross amount of the royalty.

• Capital gains on shares in a company in the other

treaty country are generally taxable in the country in

which the alienator is a resident.

The treaty will enter into force after the ratification

procedure has been fulfilled (as far as we are aware,

Qatar still has to ratify the treaty). The provisions of the

treaty can be applied from 1 January of the year following

the entry into force date onwards.

Qatar – Benin tax treaty in the making26 January 2015 – Qatar and Benin initialed a tax

treaty. More details are not public at this stage but will be

reported once available.

Qatar – Morocco tax treaty approved by Moroccan Chamber of Counselors21 January 2015 – Further to our reports about the

treaty development of the Qatar – Morocco tax treaty in

the previous three editions of this newsletter, it has now

been reported that the Moroccan Chamber of Counselors

(upper chamber of parliament) approved the tax treaty.

For details of the treaty please refer to the second edition

of this newsletter.

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exempted from income tax. The exemption also applies

to capital gains derived from trading in these listed shares

and units.

The Law was enacted on 15 September 2014 and shall

be effective 30 days after its publication in the Official

Gazette.

Qatar – Kyrgyzstan tax treaty approved by Qatar8 September 2014 – Further to our news report in the

previous issue of this news bulletin where we reported

that Qatar and Kyrgyzstan concluded a tax treaty on

1 June 2014, Qatar now approved such treaty for

ratification. Presently, the details of the treaty are not

public but will be reported by us once available.

Saudi ArabiaSuccessful second round of treaty negotiations between Saudi Arabia and Belgium18 December 2014 – Further to our news report in the

third edition of this newsletter, it has been reported that

officials of Saudi Arabia and Belgium successfully held a

second round of treaty negotiations to come to a (first)

tax treaty between the countries. Reportedly, these treaty

negotiations took place from 14 to 18 December 2014 in

Riyadh, Saudi Arabia. Treaty texts nor details have been

made public but will be reported by us once available.

Ratification progress on Saudi Arabia – Tajikistan tax treaty15 December 2014 – The Tajikistan Lower Chamber of

Parliament adopted a law ratifying the tax treaty between

Saudi Arabia and Tajikistan that was signed on 13 May

2014. The ratifying law will enter into force after approval

of the law by the Upper Chamber of Parliament and

subsequent signing by the President.

Saudi Arabia – Macedonia tax treaty concluded15 December 2014 – Officials of Saudi Arabia and

Macedonia concluded a tax treaty on 15 December 2014

in Riyadh, Saudi Arabia. Details of the treaty are not

public yet but will be reported once available.

• Article 28 of the treaty provides that no treaty benefits

will be granted if the main purpose or one of the

main purposes of a person was to obtain such treaty

benefits. This main purpose test cannot be applied to

certain institutions and entities mentioned in article

10, paragraph 3 of the treaty.

Tax treaty between Qatar and Gambia signed18 November 2014 – Further to news in the previous

edition of this newsletter, it has been reported that the

tax treaty between Qatar and Gambia was signed on

18 November 2014.

The main treaty characteristics can be summarized as

follows:

• Maximum withholding tax rates for the source state

on payments to a non-resident recipient are 0% on

dividends and interest and 5% on royalty payments.

• Capital gains derived by a non-resident shareholder

on the alienation of shares in a resident company are

taxable in the state in which the alienator is a resident.

• The treaty provides for a tax sparing credit.

Tax treaty between Qatar and Ecuador signed22 October 2014 – Officials of Qatar and Ecuador

concluded a tax treaty between the two countries. Details

regarding the contents of the treaty are not public yet and

will be reported once available.

The 2001 tax treaty between Qatar and Turkey to be revised14 October 2014 – It has been reported that officials

of Qatar and Turkey have entered into a first round of

negotiations on 14 and 15 October in Doha, Qatar, to

revise the current tax treaty between the countries. More

information will be reported subsequently once available.

Qatar exempts investments in listed companies and investment funds from income tax1 October 2014 – It has been reported by Mr. Gueydi and

IBFD that companies and investment funds, the shares

and units of which are listed on the stock exchange, are

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paid to (an entity owned by) the (local) government

of the other state or its Central Bank or in case the

amount invested in the company distributing the

dividend amounts to at least USD 300,000 (or its

equivalent in another currency). In all other cases

the maximum withholding tax on dividend payments

chargeable is 7%.

• The maximum withholding tax rates on interest

payments amounts to 7% of the gross amount of the

interest. However, no interest withholding tax is due

in the source state with respect to interest payments

made to certain creditors in the public domain or

under loan agreements that are guaranteed by the

government.

• The maximum withholding tax rate on royalty

payments amounts to 10% of the gross amount of

the royalty.

• Capital gains realized upon the disposal of shares on

a company resident in the other state are generally

taxable in the country in which the alienator is a

resident.

• The treaty contains a provision that states that the

countries may continue to apply their domestic

provisions to prevent tax evasion and tax avoidance

if the main purpose, or one of the main purposes, was

to obtain the benefits under the treaty (that would

otherwise not be available).

Saudi Arabia – France tax treaty agreed to be extended for five years13 September 2014 – According to a formal publication

on 13 September 2013 in the French Official Journal

(No. 0212), France and Saudi Arabia agreed to extend

the period of application of the tax treaty between Saudi

Arabia and France. At of the moment of this publication,

the procedure of article 20, paragraph 3 of the treaty (that

provides that the treaty remains in force for a period of

five years unless it gets extended through diplomatic

channels) was completed.

Saudi Arabia – Jordan tax treaty negotiations11 September 2014 – Reportedly, a third round of tax

treaty negotiations was held in Riyadh, Saudi Arabia

from 7 to 11 September 2014 to come to a tax treaty

Saudi Arabia – Kyrgyzstan tax treaty concluded2 December 2014 – Further to our report in the first

edition of this newsletter, officials of Saudi Arabia and

Kyrgyzstan signed a tax treaty between the countries in

Riyadh, Saudi Arabia. More details will be reported once

available.

Saudi Arabia – Portugal tax treaty authorized for signing on behalf of Saudi Arabia2 November 2014 – The Cabinet of Saudi Arabia

authorized the Saudi Arabian Ministry of Finance to

conclude the tax treaty with Portugal on behalf of Saudi

Arabia. More details will be reported once available.

Saudi Arabia – Hungary tax treaty approved by Hungarian parliament25 October 2014 – Reportedly, the tax treaty between

Saudi Arabia and Hungary was approved by the

Hungarian parliament. For treaty details, we kindly refer

to the third edition of this newsletter. The treaty will enter

into force when the ratification procedure has been

fulfilled.

Saudi Arabia – Switzerland tax treaty negotiations ongoing1 October 2014 – It has been reported by the Swiss

Federal Administration that the tax treaty negotiations

to enter into a tax treaty between Saudi Arabia and

Switzerland are continuing. In 2009 it was expressed by

the Swiss authorities that they wanted to conclude a tax

treaty with Saudi Arabia. More details will be reported

once available.

Saudi Arabia – Azerbaijan tax treaty ratified by Azerbaijan30 September 2014 – Azerbaijan ratified the tax treaty

that was concluded with Saudi Arabia on 13 May 2014.

Since the third edition of our newsletter the treaty

contents have become public. The most notable treaty

characteristics can be summarized as follows:

• The maximum withholding tax rate on dividend

payments taxable in the source state is 5% of the

gross amount of the dividend in case the dividend is

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period of six months ending on the date on which

entitlement to the dividends is determined, at least 10

per cent of the voting shares of the company paying

the dividends, or 10 per cent in all other cases.

• The maximum interest withholding tax rate for the

debtor state amounts to 10% of the gross amount

of the interest (unless the creditor qualifies under

paragraph 3; in such case the maximum interest

withholding tax rate amounts to nil).

• The maximum royalty withholding tax rate for the

source state amounts to 10% of the gross amount

of the royalty.

• The capital gains provision is not in conformity with

the OECD Model Tax convention and is relatively

complex (e.g. whether the taxation right is allocable to

the alienator or source state among others depends

on holding percentage, composition of assets,

holding period et cetera).

• The protocol to the tax treaty provides that no relief

shall be available under the treaty if it was the main

purpose or one of the main purposes of any person

concerned with the creation or assignment of any

right or property in respect of which the income is

paid or derived to take advantage of the treaty by

means of that creation or assignment.

Tax treaty between UAE and Hong Kong signed in Dubai11 December 2014 – The tax treaty between the UAE

and Hong Kong has been concluded in Dubai, UAE on

11 December 2014. The treaty will enter into force after

the ratification procedure (article 27) has been fulfilled.

The provisions of the treaty then take effect as of

1 January of the year following the entry into force date.

The main characteristics of the treaty can be described

as follows:

• The maximum withholding tax on dividend payments

in the source state is 5%. However, a 0% withholding

tax rate applies if the beneficial owner is the

government of the other state or local governments

of that state or any of its institutions or other entity

wholly-owned directly owned by the government or

local governments of that state.

• The maximum withholding tax on interest payments

in the source state is 5%. However, a 0% withholding

between the countries. More details will be reported once

available.

Saudi Arabia – Luxembourg tax treaty entered into force1 September 2014 – The tax treaty between Saudi

Arabia and Luxembourg, that was concluded on 7 May

2013, entered into force as per 1 September 2014. For

more information about this treaty, please be referred to

the second edition of this newsletter.

Saudi Arabia – Seychelles tax treaty negotiations commenced1 September 2014 – Further to a meeting held in

Jeddah, Saudi Arabia on 28 August 2014, negotiations

have started between Saudi Arabia and the Seychelles

to come to a tax treaty between the countries. This tax

treaty would be the first treaty of this kind between the

countries. Presently, no more details about this process

nor this treaty are public yet but these will be reported in

this newsletter once available.

United Arab EmiratesUAE – Lithuania tax treaty entered into force19 December 2014 – The tax treaty between UAE and

Lithuania (concluded on 30 June 2013) entered into force

as per 19 December 2014. The treaty takes effect as

from 1 January 2015. For details about this treaty, please

refer to the third edition of this newsletter.

UAE – Japan tax treaty entered into force24 December 2014 – As per 24 December 2014, the tax

treaty between the UAE and Japan entered into force.

The treaty, that was signed on 2 May 2013 and ratified by

the UAE earlier in Q4, 2014, its provisions will generally

enter into effect as per 1 January 2015. The main treaty

characteristics are as follows:

• The treaty contains a ‘liable to tax’ requirement in

order to qualify as a UAE resident under the treaty.

• The maximum dividend withholding tax rate for the

source state amounts to 5 per cent of the gross

amount of the dividends if the beneficial owner is a

company that has owned directly or indirectly, for the

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AED / USD fixed currency peg to remain in place29 November 2014 – According to a report of the

Governor of the UAE Central Bank ‘the policy of the

fixed peg of the dirham against the US dollar (1 USD =

3.6725 AED) will remain in place’ as ‘this exchange rate

policy has contributed to maintaining economic stability

and bolstering investors’ confidence over the long period

it has been in effect’.

Ras Al Khaimah Free Zone commits to share information19 November 2014 – The UAE Ministry of Finance

announced that it concluded a memorandum of

understanding (MoU) pursuant to which, among others,

the Ras Al Khaimah Free Zone will be obliged to share tax

information with the Minister in order to meet international

standards on the exchange of information.

Romania intends to amend the tax treaty between UAE and Romania18 November 2014 – According to a publication by the

Romanian authorities of 18 November 2014, Romania

intends to negotiate a protocol with the UAE to amend

the 1993 tax treaty between the countries. Further details

will be reported once available.

UAE and Singapore concluded protocol amending the 1995 tax treaty between the countries31 October 2014 – Officials of UAE and Singapore

concluded a protocol amending the 1995 tax treaty

between the countries. This is the second protocol to

amend the tax treaty.

The protocol amends the treaty as follows:

• The threshold after which a PE is recognized in

respect of a building site, construction, assembly,

installation project or supervisory activities in

connection herewith has been extended from 9

months to 12 months.

• The threshold for a furnishing of services for the same

project or connected project in order to constitute a

PE has been revised from a period aggregating more

than 6 months in a calendar year to 300 days in the

calendar year.

tax rate applies if the payment is made to certain

specific beneficial owners that are mentioned (or

referred to) in the article.

• The maximum withholding tax on royalty payments in

the source state is 5%.

• Capital gains derived by a resident of one state on

the alienation of shares in the other state are taxable

only in the first-mentioned state (i.e. alienator state).

However, the taxation right is allocated to the situs

state if the company it regards derives more than

50% of its asset value directly or indirectly from

immovable property that is situation in the situs state.

This ‘immovable property exception’ does not apply

in case the gain is derived from the alienation of the

shares:

- quoted on such stock exchange as may be

agreed between the countries.

- alienated or exchanged in the framework of a

reorganization of a company, a merger, a scission

or similar operation, or

- in a company deriving more than 50% of its asset

value from immovable property in which it carries

on a business enterprise.

• The treaty contains a provision that states that each

of the countries may apply its domestic laws and

measures concerning tax avoidance, whether or not

described as such.

UAE – Kyrgyzstan signed tax treaty7 December 2014 – The UAE and Kyrgyzstan signed a

tax treaty in Abu Dhabi, UAE. Further details of the treaty

are not know yet and will be reported once available.

UK expressed its intentions to conclude a tax treaty with the UAE3 December 2014 – According to an announcement

of the UK embassy in the UAE, the United Kingdom

has expressed its intentions to negotiate and sign a

tax treaty with the UAE. We have been informed that

treaty negotiations have already taken place between

officials of the UAE and the UK. Details will be reported

subsequently once available.

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UAE – Poland protocol to the tax treaty ratified by UAE 12 October 2014 – The UAE Cabinet approved the

protocol amending the 1993 tax treaty between Poland

and the UAE. The protocol was signed on 11 December

2013. The protocol was already ratified by Poland on

22 August 2014 by publication in the Official Journal.

Please refer to the second edition of this newsletter for

information about the contents of the amending protocol

to the treaty.

UAE – Uruguay concluded tax treaty 10 October 2014 – In Washington, USA, officials of the

UAE and Uruguay have signed a tax treaty between the

countries. Presently, treaty details have not been made

public but will be reported by us once available.

UAE – Hungary tax treaty provisions to enter into effect as of 1 January 20154 October 2014 – Following its ratification by the UAE

(publication in Decree No. 73/2014), on 4 October 2014

the treaty entered into force. According to article 29b, the

treaty will generally enter into effect as per 1 January

2015.

The main characteristics of the treaty can be summarized

as follows:

• The source state is not allowed to impose a

withholding tax with respect to dividends payments,

interest payments or royalty payments made by a

resident of that state to a recipient of the other state.

• Capital gains realized by a company upon the shares

in a company in the other state are generally taxable

in the state in which the alienator is a resident.

However, if the gain is made on shares deriving their

value for more than 50 per cent, directly or indirectly,

from immovable property situated in the other

Contracting State, then such gain is taxable only in

the state in which the immovable property is situated.

UAE – Benin tax treaty ratified by the UAE26 September 2014 – The UAE ratified the tax treaty

with Benin by way of Decree No. 71/2014. The treaty was

concluded on 4 March 2013 in Abu Dhabi, UAE.

• A provision in article 9 that stipulates that a transfer

pricing adjustment has to be made by a treaty

partner to relieve double taxation. If needed,

competent authorities will consult each other about

the appropriate transfer pricing method that has to

be applied.

• Maximum withholding tax rates in the source state

has been reduced from 5% to 0% for dividends and

from 7% to 0% for interest. For both categories it is

relevant that the recipient is the beneficial owner of

the income.

• The ‘Limitation of Relief’ provision of the current

treaty will be deleted.

• The protocol introduces an “exchange of information”

instrument between the countries.

The protocol will enter into force 30 days after the

ratification procedure has been fulfilled, which is the

case if both countries would have exchanged ratification

instruments. The provisions will enter into effect on

1 January of the year following the entry into force date

in respect of withholding taxes and for other taxes on

1 January of the second year following the year in which

the protocol enters into force.

Please click here for the full text of the amending

protocol.

UAE and Luxembourg concluded protocol amending the 2005 tax treaty between the countries26 October 2014 – Officials of Luxembourg and the

UAE concluded a protocol amending the 2005 tax treaty

(including existing protocol) between the countries.

The contents of the protocol are not public yet but will

be reported by us in a separate tax news flash once

available.

Treaty negotiations to come to a tax treaty between UAE and Australia15 October 2014 – Following a meeting held in Dubai,

UAE, it has been reported that negotiations to come to a

tax treaty between the UAE and Australia commenced.

At this stage no further details are known but will be

reported by us once available.

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UAE – Barbados concluded tax treaty 24 September 2014 – In New York, USA, officials of the

UAE and Barbados have signed a tax treaty between the

countries. Presently, treaty details have not been made

public but will be reported once available.

UAE – Albania tax treaty ratified by Albania12 September 2014 – Further to our news report in

the second edition of this newsletter, it has now been

reported on 12 September 2014 by IBFD that the

Albanian parliament ratified that tax treaty between the

UAE and Albania by the adoption of law No. 61/2014

that was subsequently published in the Albanian Official

Gazette No. 109 on 11 July 2014. The wording of the

treaty is currently only available in Albanian language

and will we reported once available in English.

UAE – Brunei tax treaty ratified by UAE 10 September 2014 – In the second edition of this

newsletter we reported that the tax treaty between the

UAE and Brunei was signed on 21 Mei 2013. Recently,

the UAE ratified the treaty by way of Decree No. 49/2014.

Subsequently, the decree was published in a recent issue

of the Official Gazette.

UAE – Libya tax treaty ratified by UAE 10 September 2014 – In the second edition of this

newsletter we reported that the tax treaty between the

UAE and Libya was signed on 1 April 2013. Recently, the

UAE ratified the treaty by way of Decree No. 50/2014.

Subsequently, the decree was published in a recent issue

of the Official Gazette.

UAE – Slovenia tax treaty provisions to take effect as of 1 January 20151 September 2014 – Further to our news report in

the second and third edition of this newsletter, it has

now been reported that UAE ratified the tax treaty with

Slovenia by way of Decree No. 72/2014. Slovenia ratified

the treaty on 26 May 2014. The ratification procedure has

been fulfilled. According to article 27, the provisions of

the treaty can be applied as of 1 January 2015. For more

information about the treaty characteristics, we kindly

refer to the second edition of this newsletter.

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15

Contact

Loyens & LoeffP.O. Box 506647, DubaiDubai International Financial Centre (DIFC), Gate Village, Building #10, Level 2, Office 202, DubaiUnited Arab EmiratesT +971 4 437 27 00F +971 4 425 56 73

Jan Bart SchoberT +971 4 437 27 07M +971 56 179 67 76E [email protected]

Tim DopmeijerT +971 4 437 27 12M +971 502 403 453E [email protected] www.loyensloeff.com

About Loyens & Loeff

At the heart of the legal and tax worldIndependent, international and specialised in Dutch, Belgian and Luxembourg law. With offices in the Netherlands, Belgium and Luxembourg and branches in the most important global financial centres, Loyens & Loeff is completely at the heart of the legal and tax world. Your interest is our priorityWith a wealth of knowledge and experience gathered over the years, we have been active in the legal and tax environment since the beginning of the 20th century. You can count on us to provide personal, tailored advice worldwide. Our 900 advisers closely follow all developments and act quickly to turn them to your advantage. Directly, proactively and always with your best interests as our priority. We combine our knowledge and experience to create high-quality, creative and efficient solutions. That way we can resolve your issues with an innovative and pragmatic approach.

Integrated and connectedWithin Loyens & Loeff, our legal and tax advisers work under the same roof. That means that lawyers, tax advisers and civil law notaries form cohesive teams and all challenges are approached from various angles. Integrated and connected. We view matters from all perspectives that come with a full-service practice. We always consider the full range of options for your situation, which offers you numerous advantages.

Although this publication has been compiled with great care, Loyens & Loeff N.V. and all other entities, partnerships, persons and practices trading under the name ‘Loyens & Loeff’, cannot accept any liability for the consequences of making use of this issue without their cooperation. The information provided is intended as general information and cannot be regarded as advice.

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