The UAE, represented by the Ministry of Finance (MoF), has signed an agreement for the Avoidance of Double Taxation and Prevention of Tax Evasion with respect to taxes on income and capital, with Saudi Arabia.

The signing took place at the headquarters of the Saudi Ministry of Finance in Jeddah. The agreement reflects the UAE’s keenness to strengthen cooperation in tax-related matters, and enhance economic relations with its neighbour.

Obaid Humaid Al Tayer, Minister of State for Financial Affairs of the UAE, signed the agreement on behalf of the UAE, while Saudi Arabia’s Minister of Finance, Mohammed bin Abdullah Al-Jadaan, signed it on behalf of Saudi Arabia.

The signing took place at a meeting between the ministers, during which they also discussed a number of topics, notably collaborating on the application of the two GCC unified agreements regarding VAT and selective taxation. To ensure synergy, a team will be established to monitor any issues and implement all necessary steps.

Khalid Ali Al Bustani, director general of the Federal Tax Authority (FTA) will be heading the team on behalf of the UAE and Suhail bin Mohammed Abanmi, governor of the General Authority of Zakat and Tax (GAZT) will be heading it on behalf of Saudi Arabia.

Al Tayer said: “The UAE and Saudi Arabia are an exceptional example of cooperation and collaboration within the GCC. United by a common goal and mutual interests, the UAE and Saudi Arabia were the first GCC countries to implement value added tax, and have also formed important strategic and trade partnerships. The agreement will further boost relations and enhance the achievement of their developmental goals and economic diversification in both countries.”

Al Tayer added that the Double Taxation Agreement signed with Saudi Arabia demonstrates the efforts exerted by the nation to promote the free movement of factors of production, increase investment opportunities, encourage imports and exports, and facilitate the free flow of trade and investment.

It will also promote the exchange of services and flow of capital, as well as contribute to economic diversification and strengthening the partnership between the UAE and Saudi Arabia, which will positively affect trade between the two countries in general.

Al Tayer stressed the UAE's commitment to expanding its network of agreements on the avoidance of double taxation, the most important of which is the exchange of information for tax purposes and the adoption of the best international standards related to the application of transparency and exchange of information.

This is aligned with the UAE’s dedication to accomplish the principle of fairness for tax-paying individuals and companies, protect the national economy, and implement the decisions of the Global Forum on Transparency and Exchange of Information for Tax Purposes, which supports the UAE’s position as a global financial and trading hub.

“MoF continues its efforts to strengthen the financial and economic relations of the nation by signing agreements on the Exchange of Information for Tax Purposes , which have a positive impact on attracting foreign investments and expertise that enhance the country's macroeconomic growth rates,” Al Tayer said.

 The value of real estate transactions for Saudi nationals in the UAE in 2016 alone reached Dh129.9 billion ($35.3 billion), and the number of licenses for economic activities granted to Saudis in the UAE amounted to 10,896 in 2016.

The value of the investments of Saudi nationals and Saudi banks in the UAE amounted to Dh18.66 billion in the same year, while the value of trade between the two countries reached Dh35.11 billion in 2016. Saudi Arabia is ranked third in the world and first in the Arab world as the most important destination for UAE exports, accounting for 45 per cent of the UAE's imports from the GCC and 28 per cent of the UAE's imports from the Arab countries.

The MoF previously signed Agreements on the Avoidance of Double Taxation on income tax with 115 countries. The Ministry is also committed to implementing the highest standards of economic transparency and exchange of information for tax purposes, in accordance with the decisions of the Group of 20 (G20) and the provisions of the Avoidance of Double Taxation agreements with other countries, which included most of the country's economic and commercial partners. – TradeArabia News Service