In May 2018, the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) signed the Double Tax Treaty (DTT). It is expected to further boost cross-border trade and investment between these two countries.
In May 2018, the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) signed the Double Tax Treaty (DTT). It is expected to further boost cross-border trade and investment between these two countries. The DTT is expected to apply from 1 January 2020 onwards, assuming it enters into force prior to end of November 2019. On 1 March 2019 KSA published in its Official Gazette (Umm Al Qura) the ratified text of the DTT. UAE is yet to ratify and publish the DTT in its Federal Official Gazette.
The DTT may reduce taxation of UAE residents in KSA. As the DTT will override domestic KSA tax legislation, for UAE recipients of incomes from KSA it is important to consider the DTT impact starting in 2020 on the current domestic KSA tax treatment. UAE-based residents and groups, as well as multinational groups with UAE bases/hubs, will need to revisit the existing arrangements for KSA, in particular, the following:
- direct structures from UAE into KSA;
- indirect structures from a third country into KSA while having UAE base/hub;
- holding/investment structures;
- financing/licensing arrangements;
- direct goods trade/marketing;
- service provision.
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