Business Bureau, Gulf Today

The Ministry of Finance (MoF) held an official ceremony on Monday to celebrate 30 years of signing the avoidance of double taxation and bilateral investment agreements. Sheikh Hamdan Bin Rashid Al Maktoum, Minister of Finance; Sheikh Ahmed Bin Saeed Al Maktoum, President of Dubai Civil Aviation Authority, CEO and Chairman of Emirates Group and Second Vice Chairman of Dubai Executive Council; Obaid Humaid Al Tayer, Minister of State for Financial Affairs, as well as their Excellencies Ambassadors, Consuls, senior UAE government officials, and strategic partners of the ministry attended the ceremony.

A press conference to announce and sign the three-year (2019-2021) extension of the MoU between the UAE and the Organisation for Economic Cooperation and Development (OECD) also took place. The MoU stipulates mutual cooperation between both parties in developing a better understanding of the practical application of international tax principles.

Sheikh Hamdan Bin Rashid Al Maktoum stressed the strategic importance of these agreements, and stated the wise leadership of the UAE and its forward-looking vision recognised the importance of signing these agreements to reduce the tax burden on local investments abroad and protect them from non-commercial risks, thereby enhancing the competitiveness of the country and its attractiveness to investments from around the world. He said: “The agreements to prevent double taxation and protect and promote investments are an important element in the process of attracting foreign investment and improving the nation’s competitiveness, which in turn contribute to supporting the country’s development goals and diversifying sources of national income.”

Obaid Humaid Al Tayer, Minister of State for Financial Affairs, affirmed the ministry’s commitment to expand the UAE’s international network of relations by signing agreements to prevent double taxation and agreements to protect and promote investment. These agreements strengthen the country’s trade and economic relations, provide more investment opportunities for companies, boost foreign investments and promote trade, commodity exchange and cross-border movement of capital.

He said: “The Ministry of Finance has taken important steps in this direction and has signed as many as 210 tax agreements to date. The nation also assumed an important position in disseminating knowledge related to double taxation issues in the region and the world. Furthermore, as a strategic partner of the OECD it has held regional workshops on tax treaty issues, and raised awareness among governments of the region on these issues.”

In the opening speech of the ceremony, Younis Haji Al Khoori, Undersecretary of MoF, welcomed their Excellencies and thanked them for participating in the ministry’s celebration of 30 years of signing these agreements. The first negotiation on the avoidance of double taxation and protection and promotion of investment agreement, which aims to achieve economic balance and protect investments from all non-commercial risks, took place in 1989 with friendly countries. Overall, between 1989 and 2018 the nation has signed 210 agreements, including 123 agreements to avoid double taxation and 87 agreements to protect and promote investment. The country ranked second in the world in terms of avoidance of double taxation agreements and first among the Arab nations.

He said: “The UAE’s sovereign fund investments, private sector investment, and national carriers operating in air transport income were subject to heavy taxes ranging from 20-30% of total profits, affecting their operations and reducing profitability. However, after the signing of these agreements and trade and investment partnerships, economic balance was achieved with several nations. These investments enjoyed multiple tax benefits, resulting in reduced tax costs, increased investment efficiency, thereby contributing to the diversification of national income sources and the development of the air transport industry. Agreements to protect and encourage investment have increased foreign capital inflow, protected the country’s overseas investments from commercial risks, and improved the investment climate and business environment.”

He added: “MoF realised that the elimination of double taxation is an important element in the international investment climate because it provides full protection to investors. Furthermore, it clarifies the financial situation of taxpayers engaged in commercial, industrial or financial activities, and helps prevent the disruption of capital and technology transfer. The UAE is therefore working to eliminate the misuse of tax agreements and tax evasion by signing several agreements with the OECD and The Global Forum on Transparency and Exchange of Information for Tax Purposes. These include the Convention on Mutual Administrative Assistance in Tax Matters, the Multilateral Competent Authority Agreement to facilitate the automatic exchange of information between the concerned authorities and the agreement on the exchange of Country-by-Country reports (MCAA CbCR). It also joined the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) by signing the Multilateral Convention (MLI) agreement.”