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
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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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.
www.loyensloeff.com
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