Page 12 - Focus Group
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KSA UAE Double Tax Treaty
CA Manish Arora
The Kingdom of Saudi It means if UAE introduces any tax on income
Arabia (KSA) and the and capital (in addition to existing taxes which
United Arab Emirates are applicable to only specific sectors), such tax
(UAE) have signed the shall be covered by this DTT;
much-awaited Double • Permanent Establishment (PE) – DTT has
Tax treaty (DTT), effective followed PE definition as per United Nations
from 1st January 2019. Model instead of OCED model. PE is defined as
This is the first DTT signed fixed place of business through which business
between two GCC countries and largely based is carried on and includes:
on 2014 OCED Model Tax Convention.
Business site, a construction, assembly
This DTT covers many important taxation aspects or installation project in other country
and provides clarity to cross border transactions if continues for more than six months (i.e.
between UAE and KSA. Below are the key provisions Installation PE)
covered under this DTT: Furnishing of services if such service
activities continue for more than 183 days
• Applicability – DTT shall apply to all persons within any 12 months period (i.e. Service PE)
who are the resident of either of the two
countries. Resident is defined as person liable Dependent Agent who has or habitually
exercise authority to conclude contracts
to tax by reason of domicile, residence, place of or maintains stock from which it regularly
incorporation, place of management etc. and delivers on behalf of another person
includes persons who are tax exempted or not (Agency PE)
subject to tax;
It also mentions certain specific exclusions as
• Coverage – DTT shall apply to taxes on Income stated below:
and Capital. It includes the existing taxes as well
as taxes which shall be imposed in the future.
12 TAX JOURNAL 2020 The Institute of Chartered Accountants of India (Dubai) Chapter NPIO
