On 10 December 2014, the income tax treaty between Hong Kong and the United Arab Emirates entered into force. The treaty, signed 11 December 2014, is the first of its kind between the two jurisdictions.
The treaty covers Hong Kong profits tax, salaries tax and property tax. It covers United Arab Emirates income tax and corporate tax.
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services within a Contracting Party through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 183 days within any 12-month period.
The following capital gains derived by a resident of one Contracting Party may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting Party may only be taxed by that Party.
A protocol to the treaty, signed the same date, further clarifies that gains from the alienation of shares or comparable interests in a company or of securities or debentures will only be taxable in the Contracting Party in which the alienator is a resident.
Both jurisdictions apply the credit method for the elimination of double taxation.
The tax treaty applies in Hong Kong from 1 April 2016 and in the United Arab Emirates from 1 January 2016.
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