Dubai - 14 April 2016: The UAE’s Ministry of Finance has further strengthened the UAE’s double tax treaty network with the recent signing of a UAE–UK income tax treaty. Under development for a number of years, the treaty was signed on 11 April 2016.
The treaty brings long anticipated relief to UAE-based businesses and investors who have invested in key UK sectors. It should also bring some level of certainty to UK investors who are monitoring tax developments in the UAE, such as recent announcements on the introduction of a UAE federal corporate tax.
Details of the treaty have not yet been made public but should be released once the treaty is ratified by both countries. It will be interesting to see if and how the UK - as an OECD county - has negotiated the terms of the agreement in light of the final BEPS proposals, particularly Action 6 which makes several recommendations to address treaty abuse. The inclusion of these provisions (if any) will play a key role in determining how transactions between the two countries are structured.
The UAE continues to actively enhance the investment environment and develop trade relations with other countries. In early April 2016, the UAE signed an income tax treaty with Jordan, and negotiations are ongoing with Ecuador, Paraguay and Jersey.
In other news, treaties with Macedonia and Romania have now been ratified. These treaties are yet to be published in the Official Gazette, but should come into force some time in 2017.
© 2018 KPMG, KPMG LLP and KPMG Lower Gulf Limited, registered in the UAE and member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.