middle east tax & legal newsletter, july 2017 · pdf filemiddle east tax and legal...
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Middle East Tax and Legal Newsletter / July 2017
Country updates p2/ Regional indirect tax updates p19 / BEPS update p20 /
Transfer Pricing update p22/ Trade Facilitation Agreement update p23/ Double tax
treaty updates p24 / Further information p26
Middle East Tax and Legal
Newsletter
In this edition, we highlight tax and legal updates as well as fiscal policy developments within the
Middle East region over the last six months.
Introduction
It is fair to say that the GCC VAT implementation is
a high profile topic across the region.
Saudi Arabia (KSA) and the UAE are both
committing to a 1 January 2018 commencement
date for VAT. KSA has now published the VAT law
and earlier published the GCC VAT framework.
The UAE has been providing information through
information sessions and website channels, albeit
the law and executive regulations have yet to be
made publically available.
Based on officially available information the other
GCC states appear to be working towards an
implementation date after that of KSA and UAE.
Regardless, the timelines are ambitious, creating
challenges for companies to undertake the
necessary implementation actions. It will be
important to focus on the very critical activities:
mapping transactions for VAT treatments, changes
to underlying transaction, invoicing and financial
systems and creating a governance model.
Outside of VAT we have seen a range of
immigration, Excise, Zakat and income tax
developments in KSA and transaction based tax
changes in Egypt amongst other developments.
We hope you find this summary of key
developments helpful.
Dean Kern
Middle East Tax and Legal Services Leader
T: +971 4 304 3575
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Country updates
Bahrain
Minister of Finance signs the GCC Unified Value Added Tax (VAT) and Excise Tax Treaties
The Kingdom of Bahrain signed the GCC unified VAT and Excise Treaties on 1 February 2017. The
Minister of Finance stated that Bahrain is planning to introduce VAT sometime during 2018. The exact
implementation date for Excise Tax is not yet known, however, it is expected to be introduced during
the fourth quarter of 2017. VAT will be imposed at an expected rate of 5% for most goods and services
with some exceptions. The Excise Tax will be imposed on tobacco products, and energy drinks at an
expected rate of 100% and soft drinks at an expected rate of 50%. Other goods may become subject to
the tax as well.
Egypt
Egyptian Government enacts new tax laws
The Egyptian Government has recently enacted two laws after the Egyptian parliament’s ratification.
The first law (No.76/2017) was issued and published in the official gazette on the 19 June 2017 and
amended the capital gains provisions in the Egyptian Income Tax Law as well as added new provisions
to the Stamp Duty Law.
The second law (No. 82/2017) was issued and published in the official gazette on 21 June 2017 and
amended the personal income tax provisions and brackets in the Egyptian Income Tax Law. It also
introduced a tax credit system for three tax brackets to lessen the tax burden on low-income taxpayers.
Extension of the suspension of capital gains tax on listed securities
The provision for the suspension of tax on capital gains arising from trading in shares and securities
listed on the Egyptian stock exchange has been extended until 16 May 2020. Accordingly, capital gains
tax shall not be required to be collected or withheld on securities listed on the EGX until 17 May 2020.
Amendments relating to deferral of capital gains arising from change in the legal form of an entity
The new amendment to Article 53 of the Egyptian Income Tax Law stipulates that capital gains arising
from revaluation of an entity’s assets and liabilities, as a result of changing their legal form, should
normally be subject to income tax in Egypt. The tax may be deferred, however, if the following
conditions are met:
● The assets and liabilities are stated at their book value prior to revaluation the depreciation and
provisions’ values are carried forward based upon those values; and
● Shares or stakes resulting from the change in legal form should not be disposed of for a period
of three years following the date of change in the legal form.
The law also states that tax shall be due in the event that another change in the legal form takes place.
According to article 53 of the Egyptian tax law, a change in the legal form of an Egyptian entity
comprises of any of the following:
● Merger of two or more resident companies;
● Demerger of a resident company into two or more resident companies;
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● Conversion of a partnership/sole proprietorship into a corporation, or a corporation to another
corporate form; or
● Conversion of any type of a juridical person into a corporation.
Stamp duty on sale or purchase of listed and unlisted securities
A new stamp duty was introduced, on a proportional basis, on the total value of the sale of securities’
transactions. Such duty applies to any kind of securities, whether Egyptian or foreign, listed or unlisted
and without deducting any costs.
The burden of this stamp duty is borne by both the seller and the buyer as follows:
● 0.125% shall apply until 31 May 2018
● 0.150% shall apply from 1 June 2018 to 31 May 2019
● 0.175% shall apply from 1 June 2019
Furthermore, a proportional stamp duty of 0.3% will be imposed on both the buyer and seller with
respect to the acquisition or disposition of an investment where either of the following conditions are
met:
1. If the sale and purchase transaction involves 33% or more of the number or value of shares or
voting rights in a resident company; or
2. If the sale and purchase transaction involves 33% or more of the assets or the liabilities of a
resident company by another resident company in return of shares in the acquiring company.
If the total of sale and purchase transactions performed by one person in an entity has reached the limit
mentioned above (i.e., 33% or more) within 2 years from the date of first transaction, as of the date of
this law, all of the transactions involved will be considered as one transaction and subject to the 0.3%
stamp duty. The seller will be required to pay 0.3% when he reaches the disposition limit and the buyer
will be required to pay 0.3% when he reaches the acquisition limit. Any stamp duty fees previously
incurred in regards to these transactions may be deducted when calculating the new stamp duty fee.
This new stamp duty fee will not be deductible for corporate income tax purposes.
Misr for Central Clearing - Depository and Registry (M.C.D.R.), or any other party performing the
transaction, will be responsible for withholding the relevant amount of stamp duty and remitting it to
the Egyptian Tax Authorities according to the rules and deadlines determined by the Minister of
Finance. The M.C.D.R., or the other relevant party, will be jointly responsible, along with the
seller/buyer, for the stamp duty due and any related penalties.
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Amendments to the annual personal income tax brackets
The annual income tax brackets for natural persons have been amended as follow:
Bracket Range in EGP Tax rate Tax credit
First Up to 7,200 Tax exempt N/A
Second 7,200 30,000 10% 80%
Third 30,000 45,000 15% 40%
Fourth 45,000 200,000 20% 5%
Fifth 200,000 and above 22.5% No tax credit
The above rates and credits will become effective in July 2017 for payroll taxpayers and the first tax year
which ends after the publication in the official Gazette (i.e. 21 June 2017) for commercial, professional,
non-commercial, or real estate taxpayers.
Additionally, the Egyptian Tax Authority has issued a circular No.35/2017 on 20/7/2017 which explains
the application method of the provisions of Law No.82/2017
Iraq
The Iraq tax authorities announced in early 2017 that the annual personal exemption amounts will be
reduced by 25%. The updated amounts are as follows:
Annaul personl exmeptions 2016 (Old) 2017 (New)
Single IQD 3,125,000 IQD 2,500,000
Married (if the spouse does not work) IQD 5,625,000 IQD 4,500,000
Children (under 18 years old) IQD 250,000 IQD 200,000
Age allowance (for taxpayers who are 63+ years old) IQD 375,000 IQD 300,000
Widow or divorced IQD 4,000,000 IQD 3,200,000
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Jordan
The Prime Ministry of Jordan approved the following changes for the general and special sales taxes
which became effective as of 8 February 2017:
Special sales tax:
Item Change
Cigarettes The tax rate has, in general, increased
Mobile phones and radio subscriptions
(prepaid and postpaid)
The tax rate increased from 24% to 26%
New mobile phone subscriptions
(beginning 15 February 2017)
Subject to a special sales tax of JD 2.6
Soft drinks Subject to a 10% tax rate
General sales tax:
Item Change
Schedule 2 - items subject to 0% sales tax The number of items included on the schedule
decreased from 102 to 59
Schedule 3 - items exempt from sales tax The number of items included on the schedule
increased from 75 to 79
Items subject to a 4% sales tax The number of items included increased from 90 to
161
Items subject to an 8% sales tax This rate no longer applies; items which were taxed
at 8% were reclassified under different tax rates
Kuwait
Minister of Finance signs the GCC Unified VAT Agreement
Kuwait signed the GCC unified VAT on 1 February 2017. The Minister of Finance aims to implement
local VAT systems from 1 January 2018 or at the least the first quarter of 2018. VAT will be imposed at
an expected rate of 5% for most goods and services with some exceptions. VAT Framework Treaty
provides that VAT on the supply of goods or services within the scope of VAT will generally be charged
at a standard rate of 5% unless the goods or services are exempt or zero-rated.
Kuwait has committed to the Common Reporting Standards (CRS)
The Kuwaiti government committed to implementing CRS on 19 August 2016 with a plan to begin
implementing CRS in 2018. On 12 July 2017 Ministerial Order No. 36 of 2017 was published in the
official Gazette which confirmed Kuwait’s commitment to implement CRS. The CRS rules will apply for
pre-existing customer accounts beginning 31 March 2017 and for new customer accounts beginning 1
April 2017. The deadline to submit the CRS returns for the period ended 31 December 2017 will be 31
May 2018.
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Kuwait Government expected to introduce Excise Tax
The Kuwait government is expected to introduce an Excise Tax according to the principles of the GCC
Excise Tax Treaty. This tax is expected to be applicable to tobacco products, energy drinks and
carbonated soft drinks. Other goods might be included. The exact date of implementation is not yet
known.
Lebanon
Lebanese authorities issue guidance notes relating to the CRS and signs the Mutual Assistance in Tax
Matters and The Multilateral Competent Authority Agreement
On 12 May 2017 the Lebanese authorities committed to implement VAT in Lebanon. Decree No.1022
was published on 13 July 2017 and outlines the CRS implementation requirements. These guidance
notes provide additional detail to point 3 of Article 6 of Law No. 55, dated 27 October 2016, which
relates to the automatic exchange of information and the commitment of Lebanon to implement CRS.
Following the issuance of the CRS guidance notes, the Lebanese authorities signed the Multilateral
Convention on Mutual Assistance in Tax Matters (MAC) and The Multilateral Competent Authority
Agreement (MCAA) on Automatic Exchange on Financial Account Information.
Major Tax updates expected to be officially issued
On 19 July 2017, we understand the Lebanese parliament discussed and agreed a number of potentially
significant changes in tax rates such as increase the VAT rate, the Corporate Income Tax rate, and the
withholding tax rate on interest. As of July 2017 no official decision had been published.
Oman
Major changes to Corporate Income Tax (CIT) and WHT
The changes had been the subject of intense speculation for many months and are aimed at increasing
tax revenue, improving tax administration, and stimulating small business activity. The following
explains some of the key changes which were made:
CIT Rate
The CIT rate was increased from 12% to 15% (effective for financial years beginning on or after 1
January 2017). In addition, all entities with taxable income will be required to file income tax returns
regardless of their level of income. The previous exemption threshold of OMR 30,000 has been
removed.
Tax on Omani proprietorships and limited liability companies (LLCs)
A 3% tax rate will apply to Omani proprietorships (establishments) and LLCs effective for years
beginning on or after 1 January 2017. This rate shall apply subject to fulfilment of prescribed criteria
Permanent Establishment (PE) definition
A building site, place of construction or assembly project will be considered a PE only if continues for
more than 90 days. Previously, the definition also included entities which carried on activities in
connection with a building site, a place of construction, or an assembly project.
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Tax exemptions
Tax exemptions will be available only for industrial (manufacturing) activities. Exemptions will no
longer be available for mining, export of locally manufactured goods, operation of hotels and tourist
villages, agriculture, fishing, education, or medical care provided by private hospitals. In addition, new
industrial exemptions will be limited to the initial 5-year period and no renewal will be available. It is
presumed that this will not affect exemptions already granted.
Tax card
A tax card system was introduced whereby all taxpayers (Omani companies, establishments, and
permanent establishments) will be issued with tax cards. New taxpayers must apply for a tax card at the
time of commercial registration. The tax card number must appear on all contracts, invoices, and
correspondence with the tax authorities.
Tax assessment regime
The current assessment regime is to be replaced by self-assessment under rules and conditions to be
outlined by the Ministry of Finance. Under the new regime, returns will be inspected by the tax
authorities on a sample basis only. The period for assessment now runs until the end of the 3rd year
following the year in which a return was submitted. Reduced timelines have been introduced for
appellate proceedings (objection to be decided by the tax authorities within 8 months – previously 10
months).
Electronic filing of tax returns
Electronic filing of tax returns is to be introduced under rules to be set out by the Ministry of Finance.
Extension of WHT provisions
Another change is the extension of withholding tax (at a rate of 10%) to interest, dividends, and
payments for services, all effective from 27 February 2017. Investors should carefully consider their own
dividend WHT position, to make sure that the correct WHT rates and any reliefs are being applied.
Generally, the domestic WHT rate of 10% of total payment should apply unless a lower rate is
prescribed in an applicable Double Taxation Agreement (DTA). Dividend WHT should be applied only
to dividends paid by Omani joint-stock companies and on dividends which are issued in accordance
with the Commercial Companies Law. Dividends paid to GCC nationals should not be subject to WHT.
It is important for companies to consider immediately the commercial impact of the tax rate changes
and expansion of WHT on their operations in Oman. DTAs may help mitigate the impact of the WHT
changes. Companies will also need to factor the compliance enforcement and WHT changes into
operating models.
2017 Oman State Budget: Continued reduction in government spending as oil prices stabilise
Although oil prices have rallied from their lows of $24/barrel in January 2016, the 2017 budget
continues to focus on reducing expenditure and maximising non-oil and gas revenues. The budget
supports government initiatives such as the Tanfeedh programme and the development of
public-private partnership projects in order to stimulate growth and sustain employment.
Amongst the measures to diversify non-oil and gas revenues, the budget also refers to the proposed
changes to the income tax law and the expected increase in the CIT rate to 15%. The amendment is (per
the budget) expected to effective for financial years beginning on or after 1 January 2017, meaning that
any extra revenues are unlikely to be realised in the current year, but only in later years. Further tax
amendments have included the introduction of selective excise duties on certain items, such as tobacco
and alcohol, the revenue benefits of which should be realised this year.
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The budget predicts net foreign borrowings to rise by 133%. These changes are expected to be the main
financing tool for covering the estimated OMR 3 billion deficit for 2017.
Oman Government expected to introduce Excise Tax
The Oman government is expected to introduce an Excise Tax according to the principles of the GCC
Excise Tax Treaty. This tax is expected to be applicable to tobacco products, energy drinks and
carbonated soft drinks. Other goods might be included. The exact date of implementation is not yet
known.
The Palestinian Territories
Law by Decree no. 10 for the year 2017 regarding the exemption of residents and taxpayers in the
Southern Governorates from paying taxes and service fees
On 20 April 2017, the Law by Decree No. 10 for the year 2017 was issued in Ramallah. This law covers
the exemption of residents and taxpayers in the Southern Governorates in regards to paying taxes and
service fees. In general, the law exempts all residents in the Southern Governorates (Gaza Strip) from
paying tax on service fees which are provided by ministries and institutions of the State of Palestine, as
well as Value Added Tax. The Decree also provides certain exemptions and obligations in regards to the
above.
Qatar
GCC achieve in principle agreement on VAT and Excise Tax treaties
The Cabinet of Qatar approved a draft law on Value Added (VAT) and the Executive Regulations on 3
May 2017. The commitment to introduce VAT has been in line with the GCC United Agreement signed
by the GCC Member States this year. The approval of the draft VAT legislation is a milestone for the
Qatar government and raises expectations that VAT will be introduced in Qatar sometime in 2018.
Excise Tax
In May 2017, the Qatar cabinet approved the Excise Tax Law and Executive regulations. While the exact
date of implementation is not yet known, they are expected to be introduced sometime during 2017 to
2018. Excise tax is borne by the final consumer but is generally collected in an earlier stage in the supply
chain. Manufacturers, importers and other agents have the liability to register for this tax, submit
returns, pay the tax due and maintain specific records.
Changes to the Qatar Financial Center (QFC) tax law
In order to attract more businesses and investments, the QFC has amended the Tax regulations and
rules. They were enacted on 12 June 2017 and are expected to provide further guidance on the
implementation of the amended legislation.
One of the key amendments included in the introduction of Article 10 (1a) in the Tax regulations. This
article deems income derived by QFC entities from the provisions of services for consumption or use
outside the State of Qatar as a non-local profit source and therefore not subject to corporation tax. In
order to qualify for this exemption, the entities need to meet the following conditions:
1. The QFC entity’s accounts must be audited by an external auditor;
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2. At least 30% of the QFC entity’s income can be attributed to activities undertaken by the QFC
entity in Qatar;
3. The QFC entity employs at least three full time employees; and
4. The Tax Department does not consider that the services are rendered under an arrangement the
sole or main purpose of which is the avoidance of tax under the Regulations
Another objective of introducing the aforementioned amendment is to ensure that the amendment is in
line with the OECD’s Base Erosion and Profit Shifting (BEPS) initiative.
Qatar Corporate Governance
The Qatar Financial Markets Authority (QFMA) has issued its updated Corporate Governance Code (the
Code) for both companies and legal entities pursuant to Decision No. (5) of 2016. These updates were
published in the Official Gazette Issue No. (6) on 15 May 2017.
The updated Code sets out a requirement for all entities addressed to reconcile their positions in order
to conform with the provisions of the updated Code within six (6) months from the date of coming into
effect.
The scope of implementation, content of the annual governance report, the provisions for compliance,
board memeber conditions, committee's composition responsibilities, controls, provisions on
disclosure, transparency, stakeholder rights and other governance principles and guidelines were all
outlined in (42) articles in the updated code.
The core principles of governance of Equality, Transparency, Justice, and Responsibility were
considered when drafting the Code as opposed to the previously adopted principle of “Comply or
Justify”. Any non-compliance of the Code should be supported and approved by the QFMA.
Saudi Arabia
Key tax related items from the 2017 National Fiscal Budget of KSA
KSA’s National Budget for 2017 showed a progressively lower budget deficit with the aim of achieving
breakeven by 2020. The government has considered additional taxes as potential sources for additional
revenue such as the introduction of certain new and revised levies on expatriates, Excise Tax, and VAT.
The Excise Tax Law for KSA published by the GAZT
The Excise Tax Law was published by the GAZT on 26 May 2017 and entered into effect on 11 June
2017. The implementation of Excise Tax by KSA follows the agreement of the GCC States on the GCC
Unified Agreement for Excise Taxes, which sets the common rules and principles of a region wide
Excise Tax system.
According to article 6 of the Excise Tax Law, businesses which undertake any of the following activities
must register for Excise Tax purposes:
1. Import of excisable goods;
2. Production of excisable goods; or
3. Acquisition of excisable goods under duty suspension arrangement.
The Excise Tax Executive Regulation, published on 6 June 2017, provide additional guidance regarding
the application of the Excise Tax Law and taxpayers responsibilities in terms of registration and
compliance. The regulations entered into force the same date as the Excise Tax Law (i.e. 11 June 2017).
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The KSA official VAT Law and draft VAT implementing regulations published on the GAZT website
Official VAT law
The Value Added Tax (VAT) law was published by the GAZT on 28 July 2017 and will enter into force
from the start of the fiscal year following the date of its publication in the official Gazette (i.e. 1 January
2018). The VAT law is based on the VAT principles agreed upon in the Unified GCC Agreement for Value
Added Tax (VAT).
VAT registration
The VAT law requires taxpayers to register for VAT within 30 days from the date the law was published
in the official GAZT (28 July 2017). The VAT law also requires taxable persons to submit their advance
VAT registration by 24 August 2017.
Draft VAT implementing regulations
Many details of the application of VAT, including specific VAT requirements, were clarified in the draft
implementing regulations which were issued on 19 July 2017. Taxpayers are invited to share their views
by filling an online form and send their comments and feedback by 19 August 2017.
In addition, the GAZT indicated that the VAT regulations will be supported by user guides to help
taxpayers in their understanding and interpretation of the legislation and it may pass a number of
advanced rulings setting precedent for treatment of certain business specific cases with regards to the
application of VAT.
Ministry of Finance introduces new Zakat implementing regulations
The Ministry of Finance for KSA issued a Ministerial Resolution on 28 February 2017 introducing the
implementing regulations relating to rules and procedures for determining Zakat liability and its
collection. It should be noted that this is not a new legal framework for Zakat but rather a consolidation
into one document of the current Zakat practices of the GAZT with a few key changes, some of which are
highlighted below:
Item Key information
Persons subject to Zakat in KSA Saudi and GCC nationals who are engaged in business activities
and have a commercial registration (i.e. establishment/sole
proprietorship) in KSA.
Assets not legally owned by Zakat
payers
May be deductible provided they are used in the payer’s business
activities and there is a valid reason which prevents the transfer
of asset ownership.
Salaries and benefits to
shareholders and owners
May be deductible provided they are registered with the General
Organisation for Social Insurance (GOSI). Salaries to owners will
only be deductible up to the GOSI maximum threshold of SAR
45k per month. Salary payments through the GOSI’s registered
systems may trigger an additional overall cost of 22%.
Profits declared for distribution
but not yet paid to shareholders
Will be deductible provided the payable amount is transferred
and kept in a separate bank account.
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Donations Will be deductible provided they are supported by proper
documentation. Donations no longer need to be made to a GAZT
approved charity to qualify for a deduction.
Consolidated Zakat returns Consolidated Zakat returns may be filed by:
● Companies owned by same partners (including holding
companies and their subsidiaries)
● Companies owned by a father and his son(s), subject to
the pre-approval of the GAZT.
It is not clear whether this rule will apply automatically or prior
approval from GAZT will still be required.
Statute of limitations Generally 5 years, but it may be extended to 10 years in the case
of “mathematical or material errors”. No statute of limitation will
apply in the following cases:
● A Zakat payer’s acceptance;
● A Zakat payer has not filed Zakat return; or
● The GAZT discovers that the return has included
incorrect information*
*This potentially very broad exclusion requires further
clarification from the GAZT.
Depreciation method Generally, depreciation must be calculate based on a standard
straight line method. Mixed (Tax and Zakat) companies will be
able to choose between using the straight line method or the
modified declining balance method.
It is unclear how the straight line method should be applied
considering the limitation in the Erad system.
Shares of a Saudi government
body in Saudi resident
companies
Will be subject to Zakat.
It is unclear whether KSA resident companies which are 100%
owned by a government body will continue to be exempt from
zakat.
Additional share capital injected
during the year to finance
long-term deductible assets
Will be subject to Zakat regardless of when the injection occurred.
Shareholder credit account The lower of the beginning or ending balance will be subject to
Zakat.
Accumulated losses absorbed by
shareholders
Will be subject to Zakat after completing one year in the business.
Further appeals A Zakat payer will be required to settle Zakat due on
non-appealed items based on the preliminary appeal ruling in
order to be able to file the High Appeal Committee.
Overpayment of Zakat Any overpayment of Zakat will be considered as an advance Zakat
payment which will offset future Zakat liability. Zakat payers may
request to have a refund instead within 5 years of the date of
overpayment.
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Liabilities which are not settled
within one full year
Any liability which is not settled for one full year will become part
of the Zakat base (this is in addition to any liability used to
finance a Zakat deductible item).
Zakat base Zakat should be paid on the “net adjusted profit” as a minimum.
It is unclear whether accumulated losses will continue to be
allowed as a deduction if this method is used.
The issuance of the new Zakat implementing regulations is an important step forward in the developing
legal framework around tax and Zakat regulation in KSA. It is worth noting that these implementing
regulations may act as source guidance in determining Zakat treatment; however, it is not clear how
these will coexist with some fatwas which govern Zakat treatment on some specific items/transactions.
Advance planning and preparation should help with the assessment of the monetary impact of the
changes. Furthermore, although the Ministerial Resolution states the effective date of the implementing
regulations as 28 February 2017, it is not clear whether it will apply retroactively (i.e. the filing for 2016
and Zakat position in prior open periods).
Update on proposal for Zakat
A revised model for assessing the tax and zakat profiles of Saudi listed companies was announced in
December 2016. On 8 March 2017 the GAZT announced that it no longer plans to apply a revised model
for assessing the tax and zakat profile of Saudi listed companies.
Subsequently, Ministry of Finance issued Ministerial Resolution 2083 which amended Article 1.1 of
the implementing regulations of the Saudi tax law to clarify that shares of non Saudi/non GCC in a
joint stock company traded through the Saudi Stock Exchange are not considered as non-Saudi/GCC
shares for the purposes of the Saudi tax law.
Therefore, listed companies should continue determining their zakat and tax profiles under the rules
currently in place and do not have to take into account the effect of non-GCC participation in the
capital resulting from acquisition of their shares in Tadawul secondary market.
KSA introduces new and revised levies on expatriate employees
Currently, companies are required to pay a levy of SAR 200 per month for each expatriate employee
which exceeds the number of Saudi employees hired by the company. This fee will be increased
gradually each year until 2020.
Previously, the fee for each expatriate employees was waived up to the number of Saudi employees the
company hired. The fees for those employees will no longer be waived, but will instead be applied at a
discounted rate. Furthermore, a new fee was introduced which will require employers to pay SAR 100
per month for each dependent of their expatriate employees. This fee will be applicable beginning July
2017 and will increase gradually each year until 2020. Businesses will need to factor the new expatriate
levy into their business planning, budgeting, and HR policies.
The potential plans to levy income tax and or remittance tax on expatriate employees has been placed
on hold for now.
Extended multiple entry visas now available for French nationals travelling to KSA
The Saudi government has taken the decision to revise its regulations on the validity of commercial visit
visas granted to French nationals. As such, with immediate effect, French nationals are now able to
obtain a four year multiple entry commercial visit visa to Saudi Arabia which will permit an in-country
stay of 90 days for each visit.
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Potential tax reassessments using actual accounts
Historically the GAZT has allowed taxpayers to file their tax returns on an estimated or deemed profit
basis on grounds that, among other reasons, the taxpayers would not have been able to produce their
actual accounts due to the nature of their businesses. Actual accounts, however, are much more readily
available now and such businesses have been required to file their actual accounts on the Ministry of
Commerce and Industry’s (MOCI) online platform (Qawaem) for the past few years.
In a recent internal circular from the GAZT to all its branches and departments it indicated that all
taxpayers that were previously granted approval to file their tax returns on an estimated or deemed
profit basis would be required to file the tax returns based on their actual accounts.
These companies should at least have their actual accounts prepared from 2013 as the filing on
"Qawaem" began in 2014 and required the previous year's comparative numbers. Therefore, the GAZT
branches have been directed to reassess taxpayers from 2013 based on their actual accounts and to
collect any additional tax liability where applicable.
We note that "permanent establishments" which have been allowed to file their tax returns on an
estimated or deemed profit basis should not be affected by this internal circular since they do not have a
legal form in KSA and consequently do not have any obligation to file their accounts on "Qawaem".
KSA extends labour market testing period
As part of the Taqat process, employers are required to publish job openings locally in order to allow
Saudi nationals a chance to apply. Only upon the completion of the Taqat process can sponsoring
entities proceed to apply for a block visa/quota to sponsor foreign nationals.
Previously, job listings had to be posted for a period of 14 days. However, effective immediately,
employers are required to ensure that job postings remain on the Taqat portal for a minimum of 45 days
before the authorities can adjudicate the block visa request. As the authorities continue to fine tune the
labour market testing process, we anticipate that additional changes such as the introduction of longer
wait times for senior managerial positions and increased data retention requirements.
Companies operating in KSA must account for the significantly increased lead time in the work
authorisation process. Sponsoring entities must also ensure that they retain any forwarded CVs or
resumes and notes on specific applications, including the reasons for rejection, in the event that these
are required after the completion of the Taqat process.
Higher customs duties for 193 products
In April 2008 the KSA government issued a resolution to reduce the customs duty rates on 193 tariff
lines corresponding to highly consumed products in KSA by removing and/ or subsidising the
“protection duties” which were previously levied. The above resolution was originally intended to be
applied for a limited period of time, but was extended several times.
Following the announcement of the KSA Annual Fiscal Budget for the year 2017, and in an effort to
generate non-oil revenue and achieve fiscal balance by 2020, we understand that the KSA government
has decided not to renew the subsidies which were previously applied.
Based on our informal discussions with Saudi Customs and the current Saudi Integrated Customs
Tariff, the following groups of products are now subject to increased customs duty rates (it is useful to
note that the products are the same as those listed in the above mentioned Resolution of April 2008):
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Item Prior customs duty rate New customs duty rate
Food and beverages 5% 6% to 25% depending on the
product
Fertilizers 5% 12%
Chemicals 5% 20%
Consumer products 5% 10% to 20% depending on the
product
Building materials 5% 12% to 15% depending on the
product
The decision of the KSA government to not renew the subsidies on these 193 products has resulted in an
increase of the cost of procuring the affected products for importers in KSA.
This measure will not only impact upcoming shipments (some of them already at the border) but also
and more importantly all future (whether already planned or not) imports of these products to KSA.
Businesses are recommended to assess the impact of this new measure on their supply chain. This
includes engaging internally, and as appropriate, with suppliers and customers to evaluate how the
price of the products is affected, who is responsible for the payment of the increased duties; if the
impact can be absorbed by the final consumer or not, or whether there are alternative territories to
source the product that enjoy preferential access to the KSA market.
United Arab Emirates
UAE publishes Federal Law for Tax Procedures
On 31 July 2017 the UAE Ministry of Finance published the Federal Law providing the legal framework
and role of the new Federal Tax Authority to undertake a range of activities including collecting taxes,
issuance of assessments and penalties and undertaking audits of taxpayers.
The Procedures Law also sets out requirements on a wide range of areas such as record keeping,
registration for tax purposes, language of submission for certain documentation, preparation of tax
returns and voluntary disclosures. The Law also mentions the creation of a “Tax Disputes Resolution
Committee”, chaired by a member of the judicial authority and two Tax expert members to be appointed
by the Minister of Justice. This body will hear requests for reconsideration of decisions by the Federal
Tax Authority.
The Procedures Law is an important milestone in creating the legal basis for VAT to be implemented by
the UAE. It is worth noting the Procedures Law is not solely focussed on VAT however.
UAE signs the Multilateral Convention on Mutual Administrative Assistance in Tax Matters
(Convention)
On 21 April 2017 the UAE signed the Convention albeit other activities for it to enter into force have not
been finalised we understand. The Convention is an OECD supported mechanism for multi-lateral
cooperation between countries and their competent tax authorities.
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New taxation implications for South Africans working in the UAE
South African nationals who live and work overseas will often continue to be considered tax residents in
South Africa under the South African domestic laws. Currently, any income South African nationals
earn overseas is exempt from taxation in South Africa provided the following conditions are met:
● The individual resides outside of South Africa for more than 183 full days* (including a
continuous period of at least 60 days) during any 12 month period; and
● The income relates to services performed during the period or periods of absence.
*Incidental days of presence in South Africa are currently allowed to be included in the exemption.
Announcement in the Budget and the current proposal in the Draft Bill
It was announced in the Budget earlier this year that amendments would be made to the exemption in
order to ensure that it would only apply if the remuneration is subject to tax in the relevant foreign
country. Accordingly, it was expected that there would be some modification made to section
10(1)(o)(ii) in this year’s legislative cycle in order to prevent double non-taxation.
Surprisingly, however, the Draft Bill proposes the complete repeal of the exemption (with effect from 1
March 2019).
This proposed change will have directly impact South African nationals who work in countries which do
not impose income tax on individuals, such as the UAE. If the proposed limitation to the exemption is
implemented, these individuals would become liable to pay South African income tax on any income
they earn in these countries.
Reasons advanced by National Treasury for the proposed repeal of the exemption
In the draft Explanatory Memorandum (released with the Draft Bill), National Treasury draws attention
to the less extensive treaty network available to South Africa at the time of the introduction of the
exemption. National Treasury also states that the exemption is creating opportunities for double
non-taxation where remuneration is neither taxed in South Africa nor in the relevant foreign country,
and that this was never intended, drawing attention to another statement at the time of the introduction
of the exemption that it would be monitored for abuse to earn foreign employment income without
foreign taxation.
Possible DTA implications
That being said, South Africa and the UAE have entered into a DTA which may allow South African
nationals to be considered as tax residents of the UAE. South African tax legislation states that where a
person is deemed to be exclusively a tax resident of another country by virtue of a treaty that person will
be considered a non-tax resident in South Africa. Those individuals would then not be subject to income
tax in South Africa on any income they earn overseas.
Employer considerations
Companies in the UAE which employ South African nationals will need to consider the following in the
event those individuals are not able to take advantage of the UAE-South Africa DTA:
● Taking extra due diligence on applying the exemption through payroll to avoid possible
penalties and interest for under deduction of PAYE;
● Extra tax costs for tax equalised individuals; and
● How they compensate and/or incentivise South African nationals.
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South African national considerations
South African nationals should analyse their specific facts and circumstances to:
● Understand whether they are still considered to be a South African tax resident;
● If so, whether they can be considered a tax resident of the UAE based on the UAE-South Africa
DTA;
● Calculate any resulting exit taxes (deemed disposal of assets for tax on capital gains) which
would arise in South Africa;
● Declare their position appropriately to the SARS; and
● Obtain the required supporting documentation to demonstrate non-tax residency in South
Africa to SARS (i.e. a UAE tax residence certificate)
Commercial companies law update
The UAE Ministry of Economy issued a resolution which waives the previous legal requirement for
LLCs, joint partnerships, and limited partnerships to amend their memorandums of association
(memorandums) and articles of association (AoAs) in accordance with the UAE Commercial Companies
Law of 2015 (the CCL). It should be noted that this resolution does not apply to public and private joint
stock companies.
Conflicts of jurisdiction between DIFC Courts and Dubai Courts
A Judicial Tribunal (also known as the Joint Judicial Committee) was established by Dubai Decree no.
19 of 2016. The Judicial Tribunal’s objective is to determine conflicts of jurisdiction between the Dubai
International Financial Centre Courts (DIFC Courts) and the Dubai Courts. The Judicial Tribunal has
jurisdiction to determine conflicts of jurisdiction where the DIFC Court and the Dubai have both: (i) not
abandoned hearing a case with the same parties and the same subject matter; (ii) abandoned hearing
the case with the same parties and the same subject matter; or (iii) rendered conflicting judgements on
a case with the same parties and the same subject matter.
New UAE Mortgage law
The UAE Federal Law no. 20 of 2016 on the Mortgage of movable Property to Secure Debt (the
“Mortgage Law) entered into force on 15 March 2017. The Mortgage Law provides that a mortgage can
be created over certain classes of “movable” assets and will be perfected against third parties upon
registration in a centralised and publicly searchable register. The Mortgage Law intends to offer a new
form of non-possessory registered security over certain classes of movable assets. The category of assets
include (i) receivables; (ii) deposits at licensed banks and financial institutions; (iii) written bonds and
commercial documents; (iv) work equipment and tools; (v) tangible and intangible elements of a
business concern; (vi) goods intended for sale or lease; (vii) agricultural crops, animals and their
products; and (viii) fixtures. The Mortgage Law also introduces new enforcement mechanisms including
sale of mortgaged assets with agreement.
The UAE adds to its visa exemption list for visitors
Currently, nationals of 49 countries are eligible to receive visas-on-arrival for the UAE. The length of
stay permitted by the visa depends on the visitor’s nationality, but in most instances visas range from 30
to 90 days. Most recently, Indian nationals with valid US visas and green cards are now allowed to
obtain visas-on-arrival for the UAE. Brazilian nationals are expected to be included in the UAE’s visa
exemption list very soon as well.
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The decision to extend this option to Brazilian and Indian nationals holding US visas should serve to
facilitate business travel in the region and aid companies operating locally.
Further government milestones towards VAT implementation
The UAE Ministry of Finance (MoF) published a series of VAT information workshops. The events are
aimed at all businesses within the UAE to explain the rules of the new VAT system which is expected to
be implemented on 1 January 2018.
The Federal National Council (FNC) also approved the tax procedures law which provides the legal
framework and certain organisational elements, including procedures for tax collection, tax audits, and
penalties for non compliance.
It is expected that a separate laws will be issued regarding VAT and Excise Tax, their obligations, and
exact implementation dates. Companies and groups are encouraged to advance their implementation
plans.
UAE introduces labour market testing program
The Ministry of Human Resources and Emiratisation (MOHRE) introduced a labour market testing
program which requires participating employers to advertise jobs on a new portal referred to as the
Tawteen Gate (Tawteen). The new portal aims to make these roles more accessible to Emirati nationals
by requiring certain companies to formally post openings on Tawteen prior to hiring any foreign
national employees.
Another initiative in line with the country’s long-term Emiratisation goals is the establishment of an
Emiratisation Partners Club that is designed to provide incentives to companies who maintain a high
level of “quality Emiratisation”. Companies which are established in mainland UAE (outside of a
Freezone) will be selected for membership through an online system which allocates points based on:
● Employment structure;
● Work environment;
● Training/development;
● Innovative employment opportunities; and
● Overall commitment to Emiratisation.
The testing programme is a significant development reflecting the government’s intention of achieving
improvements to the representation of UAE nationals in the private sector. The UAE is the second
country (after KSA) to implement such a system as part of the work authorisation process. Employers
operating in the UAE should note that the requirement comes into operation immediately and
incorporate the increased government fees in their mobility planning and forecasting efforts.
Positive news for UAE employers with employees traveling to the UK
The new DTA between the UAE and the UK, which became effective as of 6 April 2017 covers key areas
such as residence and employment income for the first time. In particular, this DTA will allow many UK
employers to include UAE short-term business visitors (STBV) on a STBV agreement which will relax
the strict and onerous UK payroll and withholding obligations, providing the relevant conditions are
met.
Notably, an individual is considered resident of the UAE if they are domiciled in the UAE, have habitual
abode in the UAE or if their centre of vital interests is in the UAE.
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Individuals resident in the UAE now have the opportunity to claim non-residence status in the UK
under the UK-UAE DTA (providing they meet the conditions) and exempt their UAE source earnings
from UK tax even if they would have normally been considered a UK tax resident under the UK’s
statutory residency test.
The UAE government announced the introduction of Excise Tax
The UAE government has also announced the introduction of an Excise Tax. This tax is expected to be
applicable to tobacco products, energy drinks, and carbonated soft drinks. Other goods might be
included. As with other GCC countries, the exact date of implementation is also not yet known, however,
excise tax is expected to be introduced during the fourth quarter of 2017.
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Regional indirect tax updates
GCC VAT framework
The Unified Agreement for VAT of the Cooperation Council for the Arab States of the Gulf was
published on 21 April 2017 by the GAZT of KSA. This agreement sets forth the unified legal framework
to introduce VAT in the GCC states which will be imposed on the supply of goods & services.
Key features of the Unified Agreement for VAT for the GCC Region include the following:
● VAT will apply on goods services at a standard rate of 5%;
● All businesses with an annual turnover of Saudi Riyals 375,000 (or the equivalent from any
GCC member state local currency) are required to register for VAT;
● Voluntary registration will be available for all businesses with an annual turnover of at least half
of the mandatory threshold;
● VAT compliance procedures and requirements can be modified and adopted locally by each
member state according to their own local legislation;
● Input VAT can be deducted when making taxable supplies for goods and services by taxable
persons;
● Input tax credit is allowed to be used as a refund or carried forward;
● The VAT treatment of some sectors (i.e. healthcare, education, real estate and transport) is left
to be decided by the individual member states;
● As a general rule, financial services are exempt from VAT. However, each member state can opt
to have a different treatment for financial services;
● Food and related products are subject to a standard rate of 5%. However, each member state
could opt to apply a 0% VAT rate on a list of food commodities;
● Medicine and medical equipment is subject to VAT at 0%;
● Oil and gas is subject to VAT at either 5% or 0%, at the discretion of each member state;
● Transport of goods and services (international and intra GCC) are subject to VAT at 0%;
● Export of goods outside the GCC region will be subject to VAT at 0%;
● Supply of goods under suspension agreements are subject to VAT at 0%;
● A reverse charge mechanism will apply to services acquired from abroad; and
● VAT on imported goods shall be paid on the first point of entry in the GCC region.
The deduction mechanism also makes the VAT generally neutral on businesses. Businesses will act as
“agents” of the tax authorities in collecting the VAT from their customers.
Nonetheless, businesses will have to comply with the VAT obligations and review their supply chain to
avoid any VAT leakages.
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Base Erosion and Profit Shifting (BEPS)
The Organisation for Economic Cooperation and Development (OECD) published Base Erosion and
Profit Shifting (BEPS) peer review documents for exchanges of tax rulings and country-by-country
reports
On 1 February 2017, the OECD published documents detailing the processes for review of countries’
implementation of two of the OECD/G20 BEPS’ minimum standards. These relate to the compulsory,
spontaneous exchange of information amongst tax authorities of:
● Tax rulings (the transparency framework), in accordance with Action 5; and
● Country-by-country reports (CBC reports), in accordance with Action 13.
These annual reviews encourage comments on a country’s implementation of the respective standards
from its peers in the BEPS Inclusive Framework, currently comprising approximately 100 countries.
The review of the minimum standards’ implementation needs to be robust and challenging. These peer
review documents set out detailed processes for evaluating the automatic exchange of information of tax
rulings and CBC reports.
Efficient, effective, and consistent implementation of the BEPS recommendations is critical to the
experience multinationals will face in future potential disputes that might arise involving different
countries. Multinationals should take the opportunity to provide feedback regularly to the OECD and to
their local tax authorities about the framework and practical behaviour of any country.
Signing of the multilateral instrument in June
Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit
Shifting (BEPS) (known as the MLI). In addition, 8 countries expressed an intent to sign the MLI in the
coming months.
The MLI has two main objectives:
● to transpose a series of tax treaty measures from the Organisation for Economic Co-operation
and Development (OECD)/G20 BEPS project into existing bilateral and multilateral tax
agreements; and
● set a new standard for mandatory binding arbitration in relation to resolving double tax
disputes.
The MLI operates to modify tax treaties between two or more parties to the MLI. It will not function in
the same way as an amending protocol to a single existing treaty, which would directly amend the text
of the double tax treaty; instead, it will be applied alongside existing tax treaties, modifying their
application in order to implement the BEPS measures.
The two key provisions of the MLI that are likely to impact the financial services industry, as well as
global investors are:
i. Principal Purpose Test (PPT) in respect of gaining treaty benefits under BEPS, Action 6 is
likely to be an important provision in the MLI for many groups. In accordance with Action 6,
treaty benefits will be denied if it is reasonable to conclude that obtaining the benefit was one of
the principal purposes of any arrangement or transaction that resulted directly or indirectly in
that benefit. We anticipate that the UK will adopt this provision but won't elect for the
simplified limitation on benefits (LOB) provisions.
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ii. Permanent Establishment –The UK is not expected to adopt the majority of the Permanent
Establishment recommendations set out under BEPS Action 7, except for the an
anti-fragmentation clause. The UK legislation on PEs is not therefore expected to change
significantly.
Following the signing ceremony, it is possible that signatories may ratify the MLI before 1 October 2017
and the MLI could therefore be effective for withholding taxes and the PPT between residents from as
early as 1 January 2018, although some countries will take longer to adopt and therefore 1 January 2019
would appear more likely.
The Organisation for Economic Cooperation and Development (OECD) published the 2017 update to
the OECD Model Tax Convention
On June 22, 2017, the OECD released two public discussion drafts providing further guidance on the
Final Reports on Base Erosion and Profit Shifting (BEPS) published in October 2015, both replacing
previous drafts released on 4 July 2016 which were subject to public consultation on 11-12 October
2016.
The first discussion draft provides practical guidance on how to attribute profits to permanent
establishments (PE) following the finalisation of the BEPS Action 7 report, while re-emphasising that
the principles of the Authorised OECD Approach (AOA) to attributing profits to PE remain unchanged.
The paper sets out high-level general principles for the attribution of profits to PE, including no double
taxation in the source country as a result of Articles 7 and 9; risk allocation between the intermediary
under Article 9 MTC and the non-resident enterprise or the PE under Article 7 MTC; and the possibility
of zero profit PE. The discussion draft also addresses administrative approaches to simplifying
compliance. The discussion draft includes four examples addressing issues concerning commissionaire
structures under the revised Article 5(5) OECD Model Tax Convention (MTC) and the
anti-fragmentation rules in the newly added Article 5(4.1) MTC, providing qualitative guidance on the
underlying principles of the profit attribution.
The second discussion draft provides revised guidance on profit split methodologies (PSM). This
discussion draft links with BEPS Action 10 and serves to clarify and strengthen the guidance in Chapter
II of the OECD Transfer Pricing Guidelines (TPG). Focus areas are situations in which a profit split
methodology is appropriate on either an anticipated profits base or an actual profits base. The
discussion draft further contains guidance on the split factors to use under profit split methodologies,
illustrated in 10 practical examples.
Comments on both discussion drafts are invited by 15 September 2017, with public consultations
planned in November 2017.
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Transfer pricing updates
The UN updates its Practical Manual on Transfer Pricing for Developing Countries
On 7 April 2017 the UN released the second edition of its Practical Manual on Transfer Pricing for
Developing Countries. The revised edition provides detailed guidance on application of the arm’s-length
principle for developing countries in order to mitigate base erosion related issues. The revision
incorporates various aspects of the changes which were introduced in the OECD Transfer Pricing
Guidelines following the final papers of the OECD/G20 BEPS Project released in October 2015.
The initiative is intended as further endorsement of the arm’s-length principle as stipulated in Article 9
of both the UN Model Convention and OECD Model Tax Convention, as well as the OECD Transfer
Pricing Guidelines. The Practical Manual is intended to strengthen the consistency of international tax
rules and facilitate inclusion of developing countries.
Mohamed Serokh, PwC's Middle East Transfer Pricing leader, discusses the adoption of a Value Added
Tax (VAT) by the Gulf Cooperation Council countries (GCC) during a series of webcasts. Among the
issues discussed are the importance of managing the interaction between VAT and Transfer Pricing, the
impact of Transfer Pricing adjustments on VAT, and some of the broader economic trends driving tax
reforms in the region. To listen to the webcast please refer to our Tax & Legal news page or click here.
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Trade Facilitation Agreement updates
The World Trade Organisation’s (WTO) Trade Facilitation Agreement (TFA)
Two thirds of the WTO membership (i.e. 110 members) were required to ratify the TFA for it to enter
into force. With the recent ratification by Rwanda, Oman, Chad and Jordan, this threshold has now
been reached and the TFA is now in force with effect from 22 February 2017.
Trade facilitation from an international trade perspective, can be defined as the simplification and
harmonization of processes, procedures, and information required to move goods from exporter to
importer.
Importers and exporters from around the world have often highlighted the large amount of
administrative “red tape” that exists in moving goods across borders in certain countries. This is one of
the issues the TFA seeks to address. The following are additional goals of the TFA:
● Improve the availability and publication of information about cross-border procedures and
practices allowing exporters and importers to plan accordingly;
● Reduce the fees and formalities connected with the import and export of goods;
● Improve the appeal rights for traders;
● Expedite the movement, release, and clearance of goods cross-borders, including goods in
transit;
● Reduce the scope for corruption and increase revenue; and
● Promote and enhance effective cooperation between customs and other authorities on trade
facilitation and customs compliance matters.
It is important to note that the TFA does not aim to replace any current bilateral or multilateral Free
Trade Agreements. However, significant non-tariff barriers and operational hurdles impacting
shipment timelines are envisaged by the proposed measures. The TFA is expected to reduce the time
needed to import goods over a day and a half and to export goods by almost two days, representing a
reduction of 47% and 91%, respectively over the current average.
The following countries in the Middle East have at this stage ratified the TFA:
● Bahrain
● Jordan
● Oman
● Kingdom of Saudi Arabia
● United Arab Emirates
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Double tax treaty updates
The following double tax treaties have been signed, ratified, or brought into force since 1 January 2017:
Countries Dates Key information
Bahrain - Philippines 13 April 2017 - treaty signed The treaty will enter into force when
it is ratified by both countries.
Bahrain - Portugal 26 May 2015 - treaty signed
1 November 2016 - in force
1 January 2017 - effective date
No changes
Egypt - Kuwait 16 December 2014 - treaty signed
23 February 2017 - treaty ratified by
Egypt
The treaty will replace the existing
agreement once it is in effect.
Jordan - Saudi Arabia 19 October 2016 - treaty signed No changes
Jordan - Thailand 11 May 2017 - agreed on the text of a
treaty
No changes
Oman - Hungary 2 November 2016 - treaty signed
14 January 2017 - treaty ratified by
Oman
15 December 2016 - treaty ratified by
Hungary
The maximum withholding tax rate is
10% on dividends for individuals and
0% in all other cases, and 8% on
interest and royalties.
Oman – Ireland The governments of both countries
initiated process to conclude a treaty
The treaty is not available yet and is
expected to take time.
Oman - Lithuania
The governments of both countries
initiated process to conclude a treaty
The treaty is not available yet and is
expected to take time.
Qatar - Kazakhstan 19 January 2014 - treaty signed
21 March 2017 - treaty ratified by
Qatar
The maximum withholding tax rate is
5% or 10% on dividends and 10% on
interest and royalties.
Qatar - Niger 9 February 2017 - treaty negotiated The treaty is still pending signatures
Qatar - Tajikistan 12 January 2017 - treaty negotiated The treaty text is not available yet.
Qatar - Turkey 18 December 2016 - treaty signed
8 March 2017 - treaty ratified by Qatar
The maximum withholding tax rate is
10% on interest and royalties and 5%
or 10% on dividends.
Saudi Arabia - Egypt 8 April 2016 - treaty signed
1 May 2017 - treaty ratified by Saudi
Arabia
16 May 2016 - treaty ratified by Egypt
No changes
Saudi Arabia -
Lebanon
10 January 2017 - treaty negotiated No changes
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UAE - Andorra 28 July 2015 - treaty signed
1 March 2017 - approved by Andora
No changes
UAE - Burundi 16 February 2017 - treaty signed
The treaty will enter into force when it
is ratified by both countries.
UAE - Cameroon 16 July 2017 - treaty signed The treaty will enter into force when it
is ratified by both countries.
UAE - Croatia 13 July 2017 - treaty signed The treaty will enter into force when
is ratified by both countries.
UAE - Jordan 5 April 2016 - treaty signed
January 10 2017 - entered into force
1 January 2018 - effective date
The maximum withholding tax rate is
7% on dividends and interest and 10%
on royalties.
UAE - Kosovo 20 May 2016 - treaty signed
The treaty will enter into force when it
is ratified by both countries.
The maximum withholding tax is 5%
for dividends and interest, and 0% for
royalties.
UAE - Liechtenstein 1 October 2015 - treaty signed
30 October 2016 - UAE Cabinet
approved the pending treaty
24 February 2017 - entered into force
Dividends, interest, and royalties are
taxable only in the beneficial owner's
state of residence.
UAE - Macedonia 26 October 2015 - treaty signed
7 February 2017 - entered into force
1 January 2018 - effective date
The maximum withholding tax rate is
5% for dividends, interest, and
royalties.
UAE - Moldova 9 February 2017 - treaty negotiations
began
5 April 2017 - treaty negotiated
The treaty text is not available yet.
UAE - Paraguay 16 January 2017 - treaty signed The treaty will enter into force when it
is ratified by both countries.
UAE - Senegal 22 October 2015 - treaty signed
22 October 2015 - ratified by the
UAE
1 february 2017 - ratified by Senegal
No changes
UAE - Slovakia 21 December 2015 - treaty signed
1 April 2017 - entered into force
1 January 2018 - effective date
The maximum withholding tax rate is
10% for interest and royalties, and 0%
on dividends.
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Further information
Please follow the link to PwC’s Middle East Tax and Legal news webpage to access all the latest updates and
webcasts.
Our services
PwC helps organizations and individuals create the value they’re looking for. We’re a network of firms in
157 countries with more than 223,000 people who are committed to delivering quality in assurance, tax and
advisory services.
Established in the Middle East for 40 years, PwC has firms in Bahrain, Egypt, Iraq, Jordan, Kuwait,
Lebanon, Libya, Oman, the Palestinian territories, Qatar, Saudi Arabia and the United Arab Emirates, with
over 4,000 people.
We provide a comprehensive set of services covering
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The Middle East Tax practice offers expertise in jurisdictions across the region with over 500 staff. We can
provide assistance with the following areas:
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© 2017 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity.
Please see www.pwc.com/structure for further details. This publication has been prepared for general guidance on matters of interest only, and does
not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional
advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this
publication, and, to the extent permitted by law, PricewaterhouseCoopers (Dubai Branch), its members, employees and agents do not accept or
assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the
information contained in this publication or for any decision based on it.
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Let’s talk
For a deeper discussion of how any of these issues might affect your business, please contact:
PwC’s Middle East country leaders
Ken Healy, Bahrain
+973 3840 0897
Darcy White, Energy leader
+971 4304 3113
Abdallah El Adly, Egypt
+20 2 2759 7700
Wael Saadi, Palestinian territories
+970 532 6660
Stephan Stephan, Iraq & Jordan
+962 6 500 1300
Neil O’Brien, Qatar
+974 4 419 2812
Sherif Shawki, Kuwait
+965 2227 5777
Mohammed Yaghmour, Saudi Arabia
+966 2 667 9077
Nada El Sayed, Lebanon
+961 7110 0866
Husam Elnalli, Libya
+218 21 3609830/32
Jochem Rossel, United Arab Emirates
+971 4 304 3445
PwC’s Middle East specialist network leaders
Darcy White, Energy leader
+971 4304 3113
Dennis Allen, HRS / Global Mobility
+ 974 4419 2830
Jeanine Daou, Indirect tax / Fiscal Reform,
Customs
+971 4 304 3744
Jonathan Gibson, Legal
+971 4 304 3424
Jochem Rossel, M&A / International Tax
+971 4 304 3445
Mohamed Serokh, Transfer Pricing
+971 4 304 3956
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