UAE and Russia to strengthen trade, investment cooperation

The UAE, represented by the Ministry of Finance (MoF), held the second round of negotiations on the double taxation agreement on income and capital between the UAE and the Russian Federation.

The negotiations follow the ministry’s efforts to further strengthen cooperation frameworks for tax matters, provide full protection to taxpayers from double taxation and avoid the obstruction of the free flow of trade and investment.

The meeting was held at the ministry’s headquarters in Dubai. On the sidelines of the meeting, Mohamed Bin Hadi Al Hussaini, Minister of State for Financial Affairs, met with Alexey Sazanov, State Secretary, Deputy Minister of Finance of the Russian Federation, and Timur Zabirov, Ambassador of the Russian Federation to the UAE to discuss partnership efforts to further enhance cooperation, growth and development between the UAE and Russia in areas of mutual interest.

During the meeting, Mohammed Bin Hadi Al Husseini reaffirmed the UAE’s commitment to growing its friendly relations and cooperative efforts with the Russian Federation, particularly in areas of common interest across critical sectors and in a manner that serves the interests both countries.

Mohammed Bin Hadi Al Husseini added: “We reiterate the importance of coordination and constructive dialogue with the Russian Federation to strengthen our strategic partnerships and expand horizons for economic, financial and trade-related joint action.”

The UAE’s negotiations team was headed by Younis Haji Al Khoori, Undersecretary of the Ministry of Finance, along with representatives from the Abu Dhabi Investment Authority (ADIA) and Mubadala Investment Company.

From the Russian Federation, the meeting was attended by Alexey Sazanov, Alexander Smirnov is Deputy Director, Department of Tax and Customs Policy, Ministry of Finance, Ekaterina Vinogradova, Head of the International Tax Relations Department of the Tax Policy Department of the Ministry of Finance, and Alexandra Kadet, Head of the Transfer Pricing Department at the Federal Tax Service.

Younis Haji Al Khoori emphasised the importance of these dialogues in promoting bilateral relations between the UAE and the Russian Federation, especially in the financial, trade and investment sectors.

Younis Haji Al Khoori said: “The negotiations on the double taxation agreement are of paramount importance, as we aim to eliminate the barriers that hinder economic cooperation between Russia and the UAE.”

Younis Haji Al Khoori added: “The Ministry of Finance aims to expand its network of double taxation avoidance agreements pertaining to income, to promote the UAE’s competitiveness and grow its trade and investment relations with all trade partners. To date, the UAE has finalised and signed 142 double taxation avoidance agreements.”

Double Taxation Avoidance Agreements provide several advantages, including promoting development goals and diversifying national income sources, avoiding double taxation and tax evasion, addressing challenges of cross-border trade and investment flows, providing full protection for individuals from double taxation, as well as avoiding the obstruction of the free flow of trade and promoting investment.

It also takes into account tax-related challenges and global changes, in addition to supporting the exchange of goods, services and the movement of capital.

Meanwhile Russia and Oman have signed an agreement to avoid double taxation, Russia’s finance ministry said, describing the move as an important step in deepening economic ties between the two countries.

“In 2022, the volume of mutual trade between our countries has already shown growth of 46 per cent,” Deputy Finance Minister Alexei Sazanov was quoted as saying. “It is necessary to further increase trade turnover and strengthen economic cooperation.”

Russia has proposed suspending its double taxation agreements with what it calls “unfriendly countries” - those that have imposed sanctions on Moscow over its invasion of Ukraine.

It currently has double taxation treaties - designed to prevent the same income being taxed in two states - with 84 countries, including the United States, the United Kingdom, Germany, France, Japan and others that have imposed sanctions.

The agreement with Oman sets out a general 15 per cent withholding tax on dividend income and a reduced rate of 10 per cent for companies holding at least a 20 per cent stake in the dividend payer, the finance ministry said.

The tax rate on interest income and royalties is set at 10 per cent, the ministry added. State-owned entities and other forms of public investment would be exempt from the withholding tax on dividend and interest income.

The agreement should be ratified this year and enter into force from Jan.1, 2024.