According to a communique published by the United Arab Emirates’ Ministry of Finance, the Ethiopia – UAE income tax treaty has entered into force.
The treaty was signed on 12 April 2015.
The treaty will apply retroactively from 1 January 2018 for the UAE and from 8 July 2019 for Ethiopia.
Income Tax Treaty Details:
Taxes Covered
Ethiopia:
- Income tax
- Income from mining
- Income from petroleum
- Income from agricultural activities.
UAE:
- Income tax
- Corporate tax
Service PE
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services through employees or other engaged personnel in a Contracting State if the activities continue for a period or periods aggregating more than 6 months within any 12-month period.
Income from Hydrocarbons
Article 7 provides that the treaty will not affect the right of either one of the Contracting States to apply their domestic laws and regulations related to the taxation of income and profits derived from hydrocarbons and its associated activities situated in the territory of the respective Contracting State.
Withholding Taxes
- Dividends – 5%
- Interest – 5%, this will however be subject to the main purpose test.
- Royalties –
- 0% in respect of royalties for the use of, or the right to use any copyright of scientific work, patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial, or scientific experience
- 5% in respect of royalties for the use of, or the right to use, any copyright of literary, artistic work (including cinematograph films and works or tapes for radio or television broadcasting
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