Tax treaties signed by the Emirates

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If you want to work in Dubai, read about the different tax treaties in Dubai.

LIST OF TAX TREATIES

The United Arab Emirates have signed several tax treaties for the avoidance of double taxation:
Algeria
Germany
Armenia
Austria
Azerbaijan
Belgium
Belarus
Bosnia and Herzegovina
Bulgaria
Canada
China
Cyprus
Korea, South
Egypt
Spain
Estonia
Finland
France
Georgia
Hungary
Mauritius
India
Indonesia
Italy
Kazakhstan
Latvia
Lebanon
Lithuania
Luxembourg
Malaysia
Malta
Morocco
Mexico
Mongolia
Montenegro
Mozambique
New Zealand
Pakistan
Panama
Netherlands
Philippines
Poland
Portugal
Republic of Korea
Romania
Russia
Serbia
Seychelles
Singapore
Slovenia
Sudan
Sri Lanka
Syria
Tajikistan
Thailand
Tunisia
Turkmenistan
Turkey
Ukraine
Venezuela
Yemen

UNDERSTANDING A TAX TREATY

An international tax treaty is a treaty between two states concerning all or part of their tax relations.

International tax treaties allow the taxpayer to avoid being taxed twice due to the simultaneous application of the tax laws of the two contracting States.

Each international tax treaty concluded between two States concerns
– individuals (income tax, inheritance tax, etc.) and legal entities,
– and a period of application, with retroactive effect when the income for which it applies is that of years prior to its date of entry into force.

Each agreement provides, in particular:
– the allocation of the right to tax,
– and the procedures for avoiding double taxation.

1. Concept of residence

The country of residence for tax purposes of the individual taxpayer is, in principle, the basis for determining the applicable taxation rules. It is determined according to certain criteria, in order of priority:

– permanent residence,
– center of vital interests (personal and economic ties),
– usual place of residence,
– nationality, etc.

2. Distribution of the right to tax

International tax treaties usually provide for three types of taxation for each category of income, as follows
– either exclusive taxation in the State of residence (e.g. capital gains on securities, with some exceptions)
– or exclusive taxation in the source state (e.g. public remuneration, with certain exceptions),
– or non-exclusive taxation in the source state (e.g. income and capital gains on real estate).

Methods to avoid double taxation

Two methods can be used to avoid double taxation of income in the taxpayer’s state of residence: the exemption method and the imputation method.

1. The exemption method has two variants:

– The total exemption, which consists in ignoring the income that has been taxed,
– The progressive exemption (or “effective rate method”), whereby the amount of income already taxed is taken into account in determining the tax rate to be applied to other income.

2. The imputation method also has two variants:

– Full imputation, whereby tax is calculated on the total amount of income that has been taxed, regardless of its source, and then the tax paid in the other state is deducted,
– Ordinary imputation (the most commonly used), which consists of deducting the tax already paid up to the limit of the tax of the State of residence relating to the income taxed abroad (application of a tax credit).

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