Saudi Arabia and the UAE have signed a double tax treaty.
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The treaty aims to create a legal framework that defines the tax relations between the two countries, with the objective of reducing the tax burden on investors and achieving greater transparency.
Obaid Humaid Al Tayer, UAE Minister of State for Financial Affairs, who signed the treaty for the UAE, wrote on Twitter: “The UAE and Saudi Arabia have signed an agreement to avoid double taxation on income and prevent tax evasion.
“This agreement to avoid double taxation aims at strengthening co-operation frameworks in tax matters and consolidate financial, economic and investment relations between the UAE and Saudi Arabia.”
The treaty is believed to be the first of its kind between two GCC member states and reflects the deepening of economic ties between the UAE and Saudi Arabia.
In a research note, EY, the global management consultancy, wrote that “such [a] treaty is expected to facilitate the mutual flow of investments, increase trade and further strengthen the economic ties between the KSA and the UAE”.
Double taxation treaties are designed to help asset owners avoid paying tax twice on the same declared income. This can happen when a person or company holds overseas assets and ends up paying in the place where the asset is held and in their own country.
The two countries will now begin the process of ratifying the treaty, after which it will come into force