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The details of the long-awaited double tax treaty between the UAE and the KSA (the “DTT”), which was signed on 23 May 2018, have finally been made available.
The decision approving the DTT in KSA was recently published in the official Saudi Gazette, Umm Al-Qura, together with the text of the DTT. The publication of the decision in the official Gazette completes the ratification process for KSA. Both countries are required to notify the other of the completion of the procedures required by their law to bring into force the DTT.
The main features of the treaty are as follows:
The DTT is the first of its kind between two Gulf Cooperation Council member countries and will enhance the economic relations and bilateral cooperation between the KSA and the UAE.
Once effective, the DTT will have significant tax implications. The conclusion of the DTT may impact the existence of a PE and have the effect of reducing the withholding tax rate in the KSA. Businesses and persons with cross-border transactions should review their transactions and corporate structures as soon as possible to ensure that they are eligible for treaty benefits.
Given that both the KSA and the UAE are signatories to the MLI, it is important to note that the provisions of the DTT may be amended by the MLI depending on the final MLI positions adopted by the KSA and the UAE. Currently the KSA in its provisional MLI positions has already included the DTT as a covered agreement whereas the UAE has not yet included the DTT as such.
As the largest law firm in the Middle East with strong tax expertise, Al Tamimi & Company is well placed to advise you on the tax implications arising as a result of the application of the DTT including whether you qualify for treaty benefits.
We can also liaise with the tax authorities on your behalf to clarify their interpretation of the DTT and assist with the obtaining of tax residency certificates.
Please do not hesitate to contact Al Tamimi’s Tax Team if you require any assistance.
Disclaimer: This chat service should not be relied upon as a substitute for professional advice which takes account of your specific circumstances and any changes in the law and practice. No warranty is made as to the accuracy or completeness of the information provided via this service and no liability is accepted by Al Tamimi & Company Limited, its affiliates, partners or employees for any loss arising as a result of reliance upon the information provided.
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