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UAE-Dutch Tax Treaty Signed

by Lorys Charalambous, Tax-News.com, Cyprus

21 May 2007


The United Arab Emirates and the Netherlands have signed an agreement for the avoidance of double taxation on companies from one country doing business in the other, a move that is expected to boost bilateral trade and investment.

The agreement was signed in Abu Dhabi by UAE's Minister of State for Financial and Industrial Affairs Mohammad Khalfan Bin Kharbash and visiting Dutch Foreign Trade Minister Frank Heemskerk.

The agreement will allow companies of the two countries to pay tax only in their home country.

Although the UAE is already a low-tax country and does not levy corporate tax, the government has resolved to make the emirates a more attractive environment in which to operate by reducing taxation levied in the foreign jurisdiction on profits remitted abroad by foreign corporations operating in the territory.

There are currently double taxation agreements with Algeria, Jordan, Sudan, Syria, Kuwait, Yemen, Egypt, Finland, France, India, Malta, Pakistan, Poland, China, Germany, India, Indonesia, Italy, Malaysia, Poland, Romania, Singapore, South Korea, Sudan, Algeria and Turkey. Under these treaties profits derived from shares, dividends, interest, royalties and fees are taxable only in the contracting state where the income is earned.

The signature of the UAE-Netherlands DTAA coincided with an official visit by a Dutch trade delegation, led by minister Heemskerk, to the Dubai Chamber of Commerce and Industry where he opened the Dutch Investment Office in Dubai.

According to Obaid Humaid Al Tayer, Chairman of Dubai Chamber of Commerce, Dubai's direct non-oil trade with the Netherlands reached AED 3.2 billion ($880 million) in 2006.

"We believe this visit would enhance our bilateral trade volumes, benefiting from the efforts made by the Dutch Business Council which was established in the UAE in 1997, and its cooperation with Dubai Chamber and other commercial organizations in the UAE, to help promote Dutch products and attract more Dutch investments to the region," Al Tayer said.

At present, there are 207 Dutch companies operating in Dubai, 32 of which are fully owned by Dutch businessmen.

"Opening a Dutch Investment Office in Dubai is an important step towards boosting the economic and trade ties between the Netherlands and the UAE on one hand, and between the Netherlands and other GCC countries on the other," said Heemskerk.

"The main mission of the new office will be to encourage direct and joint investments in both countries, exploring and making advantage of the available opportunities of investment in the Netherlands and the UAE and strengthening the bilateral trade ties," he added.

A comprehensive report in our Intelligence Report series looking at offshore and onshore corporate structures and their tax implications is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report7.asp

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