The new agreement of double taxation avoidance between Russia and the United Arab Emirates

16.01.2012 In the end of last year between Russia and the United Arab Emirates the new agreement of double taxation avoidance has been signed.

Subject of the given agreement is regulation of the state investments of Russia and the United Arab Emirates. It is important to notice that feneration (taking usurious interest for loans) is forbidden by Sheriyat. In accordance with the given circumstance, the Agreement for the Russian Federation provides for the first time clearing of withholding tax for the income in the form of dividends as for payment from one State-participant of the Agreement to another.

The percent which is paid to legal bodies in the United Arab Emirates having the right to benefits under the agreement on the taxation, also they are released from deduction of the tax in Russia.

The agreement contains article about information interchange which provides that competent bodies cannot refuse granting of the information to relevant authorities of other state by their inquiry on the basis of that such information is not required to other state for own tax purposes. They also cannot refuse granting of the information on the basis of the legislation on confidentiality or on the basis of that the owner of the information is the bank, the nominal holder or the person acting as the attorney.

It is expected that the agreement will come into force from 2013 or 2014 year.    

Expert’s opinion

“Certainly, signing of any sort of such agreements between the countries raises the statehood. It is necessary to notice that the United Arab Emirates have been brought in so-called «the black list» Ministry of Finance of the Russian Federation in 2007. And here now the Emirates become the country second on Cyprus from the list of offshore jurisdictions with which the agreement on a full information exchange has been signed. Nevertheless, it is not necessary to think that ratification of such agreement means automatic transfer of all information about beneficial and owners of accounts. Though, to refuse to give any sort of information only because of it is confidential will be impossible.  

Therefore it will be necessary for businessmen estimate the risks connected with possibility of reception of access by the Russian tax departments to significant information which can to be transferred them from sources in the United Arab Emirates”.

On the basis: http://taxpravo.ru/

Irina Lomakina ( Director of Moscow office “Honest and Bright Ltd”)