The income tax treaty between Ethiopia and Saudi Arabia reportedly entered into force on 1 October 2016. The treaty, signed 28 February 2013, is the first of its kind between the two countries.
The treaty covers Ethiopian tax on income and profit imposed by the Income Tax proclamation, and the tax on income from mining, petroleum, and agricultural activities. It covers Saudi Zakat and the income tax including the natural gas investment tax.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State
Both countries apply the credit method for the elimination of double taxation.
Article 27 (Miscellaneous Provisions) includes that nothing in the treaty will affect the application of domestic anti-evasion/avoidance provisions concerning the limitation of expenses and any deductions arising from transactions between enterprises of a Contracting State and enterprises of the other State, if the main purpose or one of the main purposes of the creation of such enterprises or of the transactions undertaken between them, was to obtain the benefits under the treaty that would not otherwise be available.
The treaty applies in Ethiopia from 8 July 2017 and in Saudi Arabia from 1 January 2017.
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