posted on 18/10/2012: 576 views
The United Arab Emirates and Japan have signed an initial agreement to avoid double taxation on income.
The agreement was signed at the Japanese Ministry of Finance in Tokyo, on behalf of the UAE, by Khalid Ali Al Bustani, Assistant Undersecretary of International Financial Relations Sector of the Ministry of Finance, meanwhile, the Japanese Director of the Middle East and Africa, who is responsible of managing agreements to avoid double taxation, signed it on behalf of Japan.
The agreement aims to identify all the recipients of tax and financial benefits that will be covered by the main agreement, including federal government institutions and local and sovereign funds, in addition to UAE nationals and private sector institutions that own investments in Japan.
This agreement also exempts national airlines from taxes, as well as any other airlines based in the UAE.
Furthermore, this agreement states that taxes are reduced on dividends from 20% to 5% with a reduction rate of 75% in cases where any UAE institution or company owns 10% capital of any Japanese company. Additionally, in cases where companies do not own that percentage, the taxes will be decreased from 20% to 10% with a reduction rate of 50%.
According to the agreement's provisions, Japan will exempt all UAE federal and local government institutions in addition to the UAE sovereign funds from 20% tax on interest profits.
Japan imposes a 30% tax on capital profits as well, for residents and non-residents. The provisions of this agreement stipulate exemption of capital profits tax which results from owning shares or any interest in a company, including trust funds.
The agreement also provided various provisions and a protocol stating that no prohibition or restriction on tax exemptions or reductions will be applied, regardless of current or future local laws or as a result of any bilateral agreement between the two countries or multilateral agreement that either countries takes part in.
In conclusion, the parties agreed to complete the procedures for the final signing of the agreement as soon as possible, to strengthen the strategic partnership between both countries and facilitate the movement of capital, investments and technology as well as to promote trade, tourism and air transport between the UAE and Japan.
It is worth mentioning that the UAE has signed and adopted 66 agreements to avoid double taxation. These agreements included the most important trading partners of the UAE in order to strengthen its regional and international role through creating a distinctive investment climate of public and private sectors and developing of the air transport sector. In addition, these agreements increased the volume of trade and tourism exchange, which contributed to the achievement of economic and social development for the UAE. – Emirates News Agency, WAM
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